"Airbus has left us with no doubt that the threat of retaliatory action is a clear and present danger to its order list," Michael Fallon, new business minister in Britain, said at the ILA Berlin Air Show on Tuesday.

There is harsh opposition to the ETS from European air travel companies and countries outside the EU such as the United States, Australia and Brazil that have said they want a global agreement to curb carbon emissions rather than a European law that extends to non-EU companies.

China has threatened retaliation - including impounding European aircraft - if the European Union punishes Chinese airlines for not complying with its emissions trading scheme ETS.L, intended to curb pollution.

The dispute between China and the EU froze deals worth up to $14 billion, though China signed an agreement with Germany for 50 Airbus planes worth over $4 billion during Chancellor Angela Merkel's visit to Beijing last month.

If the dispute is not resolved, Airbus will have to cut its production target for the A330 "pretty soon", Airbus Chief Executive Fabrice Bregier said late on Monday.

"We are very much aware that the clock is ticking. We have very little time left," Fallon said, referring to airlines' first EU deadline in April 2013 to pay for their emissions.

He was speaking at a joint news conference of the four government officials from Britain, Germany, Spain and France - the so-called Airbus ministers - who usually meet at air shows to discuss matters related to Airbus (EAD.PA).

Chris Davies, the Liberal Democrat environment spokesman in the European Parliament, described the UK minister's remarks as "a stab in the back" for EU negotiators.

"Europe's negotiating strength depends on our unity and our determination. Nothing will be achieved by showing weakness in the way this poorly informed junior minister would like," he told Reuters.

DISCRIMINATION

The airline industry has said the ETS distorts competition, forcing European carriers to pay more simply because of the fact they are based in the EU.

"We feel we are being discriminated against," Germany's aerospace policy coordinator Peter Hintze said. "We demand a global solution from an industrial policy point of view because we could otherwise put ourselves at a disadvantage in major markets."

Hintze, Fallon and their French and Spanish counterparts will urge their national governments to push for a suspension of the EU's ETS until the next general meeting of global trade body ICAO - the United Nations' International Civil Aviation Organization - in September 2013.

Hintze said no decision had been made yet on what a global agreement on emissions trading could look like.

"The goal must be that the contribution of aviation is not just limited to one continent but is agreed worldwide," he said.

Airbus sales chief John Leahy suggested at a separate news conference on Tuesday that one possible solution could be that all airlines around the world pay a tax to ICAO for carbon emissions, regardless of where they are based.

(Additional reporting by Nina Chestney; Editing by David Holmes and Elaine Hardcastle)

• A Permanent Economic Emergency