U.S. airlines must pay for their carbon dioxide emissions or face a curb on flights to the European Union, the E.U. Transport Commissioner warned on Friday. The green ultimatum was issued by Jacques Barrot as the transatlantic airline market undergoes its biggest shakeup in 30 years when limits on flights between the E.U. and U.S. are lifted this month. Mr. Barrot said negotiations on a second phase for the treaty will include a demand that U.S. carriers join the E.U. emissions trading scheme or an equivalent system in the U.S. He added that requests by Washington for data on passengers over-flying the U.S. are disproportionate and will not be accepted by the E.U., which fears that security measures across the Atlantic are becoming too draconian. However, the environmental dispute with the U.S., which is refusing to let airlines join a carbon trading scheme, is likely to escalate following Mr. Barrot's comments on "open skies' negotiations. Discussions on a second phase with the U.S. Department of Transportation begin in May and Mr. Barrot said the E.U. had the power to withdraw flying rights if a deal is not reached. "It's always possible to imagine reducing the number of flights or suspending certain rights,' he said, adding that a member of the U.S. Congress environment committee believed a deal will be possible once the Bush administration ends. "He told me that attitudes are changing. Particularly with Bush and Cheney gone, there is a real hope of things moving on. The new administration will be under pressure to take new measures.' E.U. airlines must join the emissions trading scheme in 2012, which could add up to