WHEN PETER MANDELSON slammed the telephone down on Bob Zoellick during a conversation over subsidies received by Airbus, he was applying to the former U.S. trade representative and current State Department number-two the intimidating tactics honed in dealing with Britain’s editors and reporters in his previous life as Tony Blair’s hit man. If, indeed, that is what happened. Staff at the E.C. trade commissioner’s office say it didn’t, and that the conversation ended with the simultaneous slamming down of receivers.

Both sides say negotiations will continue. But success is far from assured. America’s negotiators are determined to end the European Union’s subsidized financing of Boeing’s leading competitor by bringing suit at the World Trade Organization, if need be. The Europeans know that, without state aid, Airbus cannot finance the development costs of new aircraft. Burdened with more than double-digit unemployment, they are determined to preserve uneconomic jobs by continuing the subsidies.