Boeing boss caught in transatlantic cross fire over defence secrets

Britain has raised the stakes in the transatlantic row over arms deals, by warning America's largest aerospace company Boeing that trade will be cut unless an agreement can be reached.

Lord Bach, the defence procurement minister, issued the stark warning to Harry Stonecipher, the chairman of Boeing, in a private meeting on Wednesday.

Mr Stonecipher told The Independent on Sunday: "I had a long discussion with the Ministry of Defence. I was told in no uncertain terms that [unless an agreement can be reached] the UK will stop buying US equipment. If that happens then everybody loses."

The row centres on how the two nations share sensitive information on defence. The British Government allows its arms companies to pass on technical weapons data to US companies. However, US rules prohibit American firms doing the same with their British counterparts. Lord Bach has argued that this prevents Britain and America jointly working on defence deals.

The MoD refused to comment on the meeting with Boeing. But Mr Stonecipher said that he shared Lord Bach's concerns: "As nations, we have shed blood together, we have fought together, so for God's sake let's try to sort out a mutual security agreement."

Mr Stonecipher was in London last week to continue his campaign against the subsidies that Boeing's main rival, Airbus, receives. However, he said that reaching an Anglo-American agreement on defence "is far more of an important issue".

The Boeing chairman said he thought that there was willingness within the Pentagon to address the problem but opposition within Congress was the main stumbling block.

MoD officials don't expect the US to start negotiating an agreement until after the presidential elections in November.