EU and U.S. tackle protectionism, commit to trade

By Huw Jones

BRUSSELS, May 13 (Reuters) - Top European Union and U.S. officials, seeking to counter "protectionist sentiment," said on Tuesday 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 United States 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 U.S. airlines and require detailed checks of containers arriving at U.S. 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 U.S. goods such as poultry, beef and genetically modified farm goods are held up by EU red tape and rules.

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