Brussels - The European Commission on Friday threatened to refer the United States to the World Trade Organization (WTO) over Washington's plans to subsidize its ailing car industry.

"Of course, if it is illegal state aid, we will act at the WTO level," Commission President Jose Manuel Barroso told French radio station Europe 1.

A spokeswoman in Brussels later stressed the "conditional" nature of Barroso's remarks, saying "we are not there yet."

"We are going to study in detail the aid that is being proposed for the US auto industry, so as to make sure that whatever aid is given is in compliance with the rules of international trade," said Pia Ahrenkilde Hansen.

US congressional leaders have called on Treasury Secretary Henry Paulson to tap money from the 700-billion-dollar financial rescue package to help the country's struggling car industry.

President-elect Barack Obama has also signalled his intention to help the likes of General Motors and Ford, which have been shedding jobs amid plummeting sales and massive losses.

The European Union is also considering ways to help Europe's struggling car industry sell more environmentally-friendly cars.

But the EU executive insists that any such plans would not discriminate against carmakers from non-EU countries that operate in Europe.

On Friday, data from the European car makers association, ACEA, showed that the economic slowdown and the global credit crunch were continuing to impact the sale of vehicles in Europe, with new passenger car registrations dropping in October by 14.5 per cent on the year.

Car sales in Europe have been falling for six months in a row.

Of the major manufacturers operating in Europe, the worst affected in October were GM (-25.9 per cent), Toyota (-25.4 per cent), Renault (-18.6 per cent) and PSA (-16.7 per cent). (dpa)