Free-trade talks between the United States and United Arab Emirates fell victim to a political furore among US lawmakers over a UAE company's aborted takeover of US ports. President George W. Bush warned that the controversy could hurt US strategic interests in the Middle East, while Treasury Secretary John Snow said the United States must guard against trade protectionism.
A day after Dubai Ports World said it would cede control of the six ports, sparing the Bush administration a showdown with Congress, officials said the trade negotiations with the Gulf state had been postponed.
No date has been set for the next round of talks, which had been scheduled for next week in the UAE, said Neena Moorjani, spokeswoman for the office of the US Trade Representative.
"In order to get an agreement that both sides can successfully implement, we need additional time to prepare for the next round of negotiations," she said, while insisting that both countries were "strongly committed" to progress.
"This is not unusual. Just in the past few months, we've postponed rounds with Ecuador three times, Panama twice and Colombia once," Moorjani added.
Last year US companies exported goods worth 8.5 billion dollars to the UAE, making the small country of 2.5 million people a bigger export market for the United States than India or Spain.
House of Representatives Speaker Dennis Hastert said the postponement was wise coming just a day after DP World's pullout.
"Probably it would be a good time for both countries to kind of step back and evaluate a little bit. We'll move on from there," he said.
DP World, which took over port operations at Baltimore, New York, Miami, New Jersey, New Orleans and Philadelphia when it bought British firm P and O, said Thursday it would be handing over control of the ports to a US "entity".
Both Republican and Democratic lawmakers had threatened legislation to block the deal. Opponents cited the security fears of letting a Middle East country control US port facilities.
Bush had threatened to veto any such legislation but was faced with an unstoppable momentum on the part of lawmakers who are gearing up for mid-term elections in November.
The president, who wants the United States to secure a region-wide free trade deal with Middle Eastern countries, expressed anxiety about the wider implications of the furore.
"I'm concerned about a broader message this issue could send to our friends and allies in the world particularly in the Middle East," Bush said.
"In order to win the 'war on terror' we have got to strengthen our relationships and friendships with moderate Arab countries in the Middle East," he said.
Snow said the controversy was an "isolated instance" that should not affect the appeal of the United States for foreign investors. But, he added, "we need to keep our guard up".
"We don't want to be isolationists, we don't want to turn our backs on the rest of the world. We benefit enormously from participating in the global economy," he said on the CNBC network.
Commentators stepped up warnings of the potential impact both on foreign investment in the United States and on prospects for US companies winning new business overseas.
Last year, an equally ferocious storm of criticism from lawmakers forced Chinese state-owned energy company CNOOC to abandon a bid to take over US oil major Unocal Corp.
Daniel Ikenson, trade policy analyst at the free-market Cato Institute, said Congress had staged "an embarrassing display of the ascent of politics over rationality in Washington".
