EU and US address protectionism, commit to trade

Top EU and US officials, seeking to counter "protectionist sentiment," said yesterday security concerns should only be used to curb foreign investment in exceptional situations.

Against a backdrop of growing scepticism about free trade on both sides of the Atlantic, the EU and the US held a second meeting of the Transatlantic Economic Council (TEC) they set up last year to lower regulatory barriers and boost trade.

An open investment policy is fundamental to prosperity and compatible with policies that address genuine national security concerns, a statement adopted at the meeting said.

"We recognise our responsibility in resisting protectionist sentiment at home and in working together to oppose protectionism abroad," it said.

Europe has been frustrated by rules that limit foreign ownership of US airlines and require detailed checks of containers arriving at US ports. "Measures that address national security concerns should be transparent, predictable and proportionate to the national security concerns identified, and precisely circumscribed so as to avoid unduly disrupting the flow of investment," the statement said.

Washington is unhappy that exports of US goods such as poultry, beef and genetically modified farm goods are held up by EU red tape and rules.

The EU and US are each other's largest foreign investor, each holding some $1.1 trillion in the other's markets in 2006.

But the threat of recession in the US and a slowdown in economic growth in Europe has stoked protectionist pressures that both sides are keen to limit.

EU Trade Commissioner Peter Mandelson signalled concern last week about comments made by Hillary Clinton and Barack Obama who are fighting for the Democratic nomination in the November US presidential elections. There are fears that both may try to change any agreement for a global trade deal in the World Trade Organisation's long-delayed round of Doha talks if elected president.