UK ambassador warns U.S. against protectionism

LONDON, Mar 30 (Reuters) The United States risks losing its dominant position in the world economy if it continues to adopt protectionist policies, the British Ambassador to Washington, David Manning, said on Thursday.

Manning warned the United States and European Union that failing to maintain free market principles and to welcome investment from rapidly developing countries such as China and India would leave both economies vulnerable.

''The lessons are clear, Europe needs to liberalise markets, the U.S. needs to resist protectionism,'' Manning told a conference in London.

''We must resist those voices which I believe are becoming stronger, which are calling for us to opt out and in some way or another close down our economies to outside competition.'' he said.

Manning said decisions based on anything other than business would send the wrong message to companies looking to invest and that the United States was struggling to come to terms with the ongoing threat from terrorism.

''The recent row over the Dubai World Ports has highlighted how easily investment decisions are criticised and it had generated concerns that future decisions by Cityists (financial decision-makers) for foreign investment in the United States are likely to make it more difficult and more expensive to invest in the U.S.,'' he said.

In January, Dubai Ports World had to drop plans to operate six U.S. ports after U.S. lawmakers demanded the Dubai company be stopped from running the terminals because of potential security risks.

Manning also said the European Union needed to do more to encourage economic growth.

''We in Europe also need to ensure the European Union develops an outward looking organisation that embraces deregulation and treats globalisation as an opportunity rather than a threat.'' REUTERS SD BD1905