Economic isolation will hurt the nation

THE ISSUE Congress is weighing measures that would curb foreign investment in the United States.

PUBLIC fear of terrorism and anxiety about the global economy have combined with election-year politics to produce a xenophobic firestorm in Congress, ignited by the failed effort by a Dubai-owned company to manage several U.S. port terminals. As technology is rapidly breaking down barriers to foreign commerce, erecting new ones would lead to a new era of economic isolationism.

The Senate Appropriations Committee last week approved a proposal by Senator Inouye to prevent the Bush administration from relaxing restrictions on foreign investment in U.S. airlines. The measure, offered as an amendment to fund the Iraq war and hurricane relief, would torpedo a proposed agreement between the United States and the European Union to end airline restrictions between the two.

In the House, Rep. Duncan L. Hunter, chairman of the Armed Services Committee, has introduced a bill that would prohibit foreign companies from investing in about one-fourth of the U.S. economy unless the investment is placed in a trust under control of American citizens.

Meanwhile, the Senate Banking Committee approved a measure that would inject transparency and rigor to the process of reviewing foreign deals to determine whether they would threaten national security. The secretive interagency Committee on Foreign Investment in the United States has OK'd the vast majority of deals.

Only once has such a deal been killed by the White House: The first President Bush ordered a Chinese aerospace company to give up ownership of an American aircraft parts maker in 1990. Other companies, most recently Dubai Ports World, have withdrawn proposed acquisitions because of objections over security.

Trade lawyer Stuart E. Eizenstat, a senior official in the Clinton administration, told the New York Times that the Dubai fiasco "was combined with the backlash against globalization and the devil's brew of an election cycle where everyone is preoccupied by national security and terrorism issues. It was the perfect storm."