US ‘hyprocrisy’ attacked

DIPLOMATIC relations between the United States and Britain will come under strain today as Alan Johnson, the Trade and Industry Secretary, levels accusations of hypocrisy at America for throwing up barriers to foreign trade. Mr Johnson, a former general secretary of the Union of Communication Workers, will deliver an unusually harsh condemnation of US trade and foreign investment policy in a speech on globalisation at a London conference.

The speech will focus on proposed legislation in the America that, it is feared, will punish British businesses that want to buy American companies.

American lawmakers are trying to strengthen the laws that govern foreign investments in America because of fears that terrorist groups or foreign powers might use business deals to gain access to vital infrastructure or secret national security contracts.

The planned reform from the Committee on Foreign Investments in the United States (CFIUS), which is to be voted on in the US Senate today, has sparked outrage among America’s biggest foreign investors, with particular criticism coming from Britain.

But Mr Johnson’s proposed speech, a copy of which was obtained last night by The Times, contains perhaps the strongest condemnation yet of American policy on foreign trade.

“There can’t be one rule away and one rule at home,” he is expected to say. “Such hypocrisy makes global progress impossible. And how can the richest countries in the world lecture others about the gains from liberalisation whilst adding further barriers to entering their own markets?” The CFIUS reforms were drawn up last week by Senator Richard Shelby, a Republican and chairman of the US Senate Banking Committee.

Senator Shelby’s draft legislation is understood not to enjoy the full support of the Bush Administration. White House officials are said to have expressed concern that the proposed reforms might go too far. President Bush, meanwhile, threatened to use his veto to block any legislation to stop the recent Dubai ports deal and would probably do so again should any similar circumstance arise.

Calls for reform reached fever pitch when Dubai Ports World (DPW), a company controlled by the Government of Dubai, acquired P&O, a British company, and with it several key port facilities in the US. After an unprecedented public outcry in America, DPW was allowed to proceed with the P&O deal only once it agreed to sell off the US assets. The reforms seek to broaden the scope of the CFIUS laws to govern almost all takeovers by foreign companies of US assets.

Opponents of the reforms fear that the proposed rules, under which foreign takeover proposals would be held up by CFIUS for as long as 120 days, would give an unfair advantage to American companies. They propose lengthy scrutiny of any company wanting to buy American assets.

“Where there is no genuine concern on national security, there is no excuse for protectionism,” Mr Johnson is expected to say. “Protectionism destroys what it seeks to protect and free trade is not, and cannot be, a one-way street.”

The comments, to be made before a meeting of British American Business Inc, the former British American Chambers of Commerce, are expected to pose a serious embarrassment to Jack Straw, the Foreign Secretary.

Mr Straw will be at a United Nations Security Council Five Nations meeting in Berlin with Condoleezza Rice, the US Secretary of State, while Mr Johnson delivers his speech.

Tomorrow Dr Rice will visit Britain for a series of informal meetings with Mr Straw, including a trip to Sir Paul McCartney’s former school in Liverpool and the Blackburn Rovers football ground in Mr Straw’s constituency.

Mr Johnson will also sound a warning over the growing threat to the WTO talks aimed at reducing barriers to international trade. “The recent drumbeats of protectionism could sound the death march not just for this round, but potentially for any future development round and indeed for the whole concept of multilateralism.”

A spokesman for Senator Shelby told The Times that amendments would be made to the draft reforms before they are read in the Senate today.

PRESSURE POINTS

There is growing tension between the US and Britain over the Joint Strike Fighter programme — the multi-billion-dollar project to replace ageing fighter aircraft on both sides of the Atlantic

Britain has raised concerns about access to certain sophisticated technology needed to mantain and upgrade the new aircraft. It says that the US must take into account Britain’s interests

A rift has also arisen after plans for an engine for fighter planes to be built jointly by Rolls Royce and General Electric were cancelled by President Bush. The engine was to be used alongside another, developed by Pratt and Whitney

The tension over the fighter programme comes after the row over President Bush’s decision to introduce steel tariffs in 2003. The tariffs were aimed at protecting US steel firms from overseas competition. They were opposed by individuals including Tony Blair and were withdrawn after it was ruled they were illegal.

James Doran in New York