Whitehall threatens trade war

BRITAIN is threatening to boycott American equipment worth billions of pounds unless the US allows access to its military technology.

Ministry of Defence officials spelled out the threat to Boeing chief executive Harry Stonecipher who was in London last week.

There is now a real threat that American protectionism will spark a bitter trade war that could lead to retaliation and job losses.

Defence chiefs have been angered by huge problems encountered by BAE Systems in its £10bn joint venture with US planemaker Lockheed Martin to build JSF fighter planes.

Whitehall is committed to buying 150 of the new generation fighters, but work has halted because of problems created by America's regulations on international traffic in arms.

These make it impossible for any foreign company to use American defence technology unless an exemption is granted, which involves lengthy bureaucracy.

Canada has a total exemption from the regulations and the Americans have promised for years that their closest ally, Britain, would be offered the same. But though the plan has the support of large US companies such as Boeing and Lockheed, the barriers remain.

Tony Blair has raised the issue repeatedly with President Bush, particularly after the absurd situation of British soldiers fighting shoulder-toshoulder with American troops in Iraq while not being allowed to share technological defence secrets.

Stonecipher told Financial Mail: 'I have argued strongly that there should be an overarching security agreement between both our countries. But the problem is Congress. In the end, this will have to be solved at the highest level.'

A spokesman for the MoD said there was no suggestion of a trade war, but the Americans were aware of the Ministry's concerns.