* Britain, France, Germany seen watering down EU position
* UN group seeking global deal on aviation emissions
* European Parliament can block a weak deal
By Barbara Lewis and Valerie Volcovici
BRUSSELS/MONTREAL, Oct 2 (Reuters) - Britain, France andGermany are ready to water down the EU's position on aviationemissions to try to strike a global deal after some regionsthreatened a trade war when the EU put in place restrictions onits own, sources close to the talks said.
But the sources said the shift in stance by the countriescould jeopardise the EU's carbon trading scheme - the centralplank of its climate policy - and put them on collision coursewith the European Parliament, which could reintroduce the EUemissions restrictions if it is not happy with a global deal.
"These three countries - France, Germany and Britain - areputting the whole deal at stake," one of the sources said oncondition of anonymity.
The U.N.'s International Civil Aviation Organization (ICAO)is meeting in Montreal this week to try to resolve the globalrow which was sparked when the EU introduced a law makingairlines using EU airports pay for their carbon emissions.
The outcome of the talks will have implications forinternational relations, aviation competitiveness and the EUEmissions Trading Scheme (ETS), which is already strugglingunder a burden of surplus carbon allowances.
The EU introduced its law after a decade of ICAO talks hadfailed to reach a deal on aviation emissions, which account forfive percent of global warming, according to U.N. data, and areexpected to triple by 2050.
But, after international outrage, the bloc agreed to suspendfor one year its law for intercontinental flights.
Sources close the matter said Britain, France and Germany -which represent some of the EU's biggest aviation interestsincluding IAG, Airbus, Deutsche Lufthansa and Air France-KLM - were instrumental inagreeing the delay, and were ready to back down again.
While the three powers dominate the European Council ofmember states, their influence in the European Parliament islimited, and parliament has said it needs a strong deal or itwill be unable to agree.
NEARLY 200 NEGOTIATORS
Negotiators from 191 countries are debating a globalmarket-based measure by 2020, plus a framework on regionalschemes for the interim.
That proposal was supported by the 36-member ICAO governingcouncil in early September as the basis for talks at the ICAOgeneral assembly, which concludes on Friday.
The framework is needed to allow the EU ETS, the onlyexisting regional scheme that applies to foreign carriers, tocontinue to function until 2020.
But it has drawn fierce opposition from the United States,Singapore and emerging economies and Britain, France, Germanyare willing to yield, the sources said.
Michel Wachenheim, France's ICAO representative andpresident of the two-week assembly will on Wednesday unveil arevised negotiating text, which has drastically watered down theframework language, a document seen by Reuters showed.
Britain and Germany declined to say whether they backed awatered down deal, while the French government was notimmediately available to comment.
"The UK is continuing to work closely with EU andinternational partners to achieve an ambitious package towards aglobal market-based aviation emissions measure by 2020, plus aframework on regional schemes which allows the EU ETS tocontinue to function in the interim," Britain's department ofenergy and climate change said.
European Commission spokeswoman Helen Kearns said anyagreement was unlikely before the very end of the talks inMontreal, which are scheduled to end on Friday.
"Europe has already been extremely flexible in agreeing tostop the clock," she told reporters. "In doing this we avoided aprobable trade war. We now have a very important window ofopportunity between now and Friday."
- Politics & Government