The US has withdrawn a plan to give foreign investors more control over domestic airlines, a move likely to delay an "open skies" treaty.
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The European Union had said it would only allow the US freer access to its airspace if it approved the changes.
Unions and members of Congress had been lobbying against the plans, which hoped to boost investment and promote greater competition in the US industry.
Convincing critics would take longer, said Transport Secretary Mary Peters.
"We need a stronger national consensus about the best means of achieving that objective," Ms Peters said.
The US proposal would have given foreign investors more of a say in the marketing of airlines, flight routes and types of aircraft operated.
However, it would not have lifted the limit preventing a foreign company from owning more than 25% of an airline's voting rights.
One of the main arguments against giving foreigners more control over US airlines was that it might weaken security.
The decision by the US is a blow to the open skies treaty that it had hoped would leave US airlines free to fly to major airports in the EU and from there to other destinations within the trade bloc.
It would not have been one-way traffic, and in return EU airlines would have been able to fly to US airports and then on to other US destinations.
Airlines would also have been able to charge whatever ticket prices they wanted, on both sides of the Atlantic.
The deal also would have given US airlines greater access to London's Heathrow airport.