The deal, ratified at an EU-US summit at Dromoland Castle in the west of Ireland, means the two sides will agree common operating standards for the American Global Positioning System (GPS) and the European Galileo project, currently under development.

Signed by US Secretary of State Colin Powell, EU Commissioner Loyola de Palacio and Irish Foreign Minister Brian Cowen, the accord is a major boost to the European project which would be hamstrung without inter-operability with

"This agreement will enhance the common benefits of the new technologies. It manages to balance the competition that is inherent in the commercial dimension with the cooperation necessary for the security dimension," said Powell.

"It was a fruitful exercise in transatlantic relations. Today we are confirming our commitment to develop a key technology which will bring significant benefits for our common future," said Palacio.

The two sides finalised their accord less than a week ago after months of hard negotiations triggered by American concerns that the Galileo system will compromise the security of GPS, on which the US military is heavily dependent.

Despite the US reservations, Europe forged ahead with the project, which is described as the first satellite system designed specifically for civilian use world-wide.

A joint initiative between the European Commission and the European Space Agency, Galileo is set to be operational by 2008 with 30 satellites encircling the globe in medium orbit. EU officials say it will create 150,000 jobs.

Late last year, the Europeans agreed to change the modulation of Galileo signals intended for government use so they would not disrupt encrypted GPS signals to be used by the US military and NATO.

SPACE.WIRE