European Union leaders meeting at a summit in Greece failed to agree to match the United States in pledging $1 billion next year to a global fund to fight AIDS, malaria and tuberculosis, as the U.S. had requested.
Also Friday, the European Union's top trade official dismissed as pointless a U.S. plan to take a dispute over a European moratorium on biotech food to the World Trade Organization.
The United States has set $1 billion aside this year for the disease fund — but only if other countries come up with money as well. Otherwise, the U.S. contribution could be only $200 million.
Fund officials appealed to donors last month to boost spending after warning it would have to cut projects aimed at treating HIV/AIDS, malaria and tuberculosis in the world's hardest-hit countries, mostly in Africa and the Caribbean.
Officials said the fund was short $1.6 billion for this year.
The EU leaders issued a statement saying they were committed to fighting the diseases "on a long-term basis." However, with tight budgets due to sluggish economies, German Chancellor Gerhard Schroeder and Dutch Prime Minister Jan Peter Balkenende blocked the EU matching donation.
Of the 15 EU member nations, only Britain, Ireland, the Netherlands, Germany, France, Italy, Sweden, Luxembourg, and Belgium have made separate commitments totaling $338 million this year.
The issue of GM food looms as the latest trade dispute between the United States and Europe.
The European Union imposed a moratorium on the farming and import of biotech foods and grains in 1998 because of safety concerns.
But recently, EU officials have been working on a system that would allow them to label genetically engineered food so that European customers can choose whether to buy it.
Biotech crops have been widely grown in the United States for years.
U.S. officials have said they are turning to the WTO because they worry that European anti-biotech sentiment is influencing developing countries, leading to bad decisions by their governments.
Some African countries rejected U.S. biotech food aid last fall, citing biotech fears.
Talks between the two sides broke off Thursday in Geneva, and U.S. officials said they would soon ask the WTO to order the 15-nation European Union to end the moratorium on grounds that it is an unfair trade barrier.
EU Trade Commissioner Pascal Lamy said any U.S. move to start formal — and lengthy — legal proceedings at the WTO would be overtaken by events.
"I think that by the time we get to real litigation there will have been new authorizations (for genetically modified organisms sales) so that this question will be behind us instead of being ahead of us," Lamy said.
A fight over biotech products would join a lengthening list of high-profile WTO disputes between Brussels and Washington.
Earlier this year, the WTO ruled U.S. tax benefits for corporations operating abroad are illegal and gave approval for the EU to impose as much as $4 billion in sanctions on U.S. imports in retaliation. The EU is also fighting to overturn the Bush administration's wide-ranging tariffs on imported steel.