A senior Cabinet minister accused the United States of "hypocrisy" yesterday by preaching free trade while putting up barriers to foreign takeovers of US assets.
In an outspoken attack, Alan Johnson, the Secretary of State for Trade and Industry, said protectionism was on the rise in the US and on the Continent.
He pointed to political opposition in the US to the acquisition of American ports by a Dubai company as part of its takeover of the UK shipping giant P&O.
He also criticised plans by Congress to seek wide powers to block takeovers in the food and telecoms sector that have already met fierce opposition from US business leaders.
"Free trade is not, and cannot be, a one-way street," he told the annual British-American Business Council conference. "There can't be one set of rules when your team plays away and a different set of rules when they play at home. Such hypocrisy makes global progress impossible. How can the richest countries in the world lecture others about the gains from liberalisation whilst adding further barriers to entering their own markets?"
Mr Johnson's comments come at a tense time for world trade, with talks of a new global deal hanging in the balance amid signs of a rising tide of protectionism on both signs of the Atlantic. His intervention came a day after some of Wall Street's biggest names warned Congress to temper its moves towards economic protectionism. The chief executives of 17 financial firms - including the banks Goldman Sachs, Citigroup, JP Morgan and Lehman Brothers - said new trade barriers would have "a chilling effect on foreign investment".
Last month, Dubai Ports World was forced to give up contracts to run five US ports which it had acquired as part of its £3.9bn takeover of the London-listed P&O. In defiance of President George Bush's support for the deal, Congressmen decided a Middle Eastern company should not be entrusted with port security.
And yesterday, the powerful Senate banking committee proposed an overhaul of the rules governing foreign takeovers, which would give Congress greater powers to examine such deals. Under the plan, countries will be ranked according to their perceived threat to national security and US interests, and these rankings will be taken into account when a deal goes before regulators.
The board of the French telecoms equipment manufacturer Alcatel met yesterday to discuss its $35bn (£20bn) merger talks with Lucent Technologies of the US, amid fears that the deal too could fall foul of national security concerns in Congress. The French and Spanish governments took action last month to stymie potential takeovers of their national energy companies by foreign rivals.Reuse content