Against a backdrop of growing scepticism about free trade on both sides of the Atlantic, the EU and the United States held a second meeting of the Transatlantic Economic Council (TEC) they set up last year to lower regulatory barriers and boost trade.

An open investment policy is fundamental to prosperity and compatible with policies that address genuine national security concerns, a statement adopted at the meeting said.

"We recognise our responsibility in resisting protectionist sentiment at home and in working together to oppose protectionism abroad," it said.

Europe has been frustrated by rules that limit foreign ownership of U.S. airlines and require detailed checks of containers arriving at U.S. ports.

"Measures that address national security concerns should be transparent, predictable and proportionate to the national security concerns identified, and precisely circumscribed so as to avoid unduly disrupting the flow of investment," the statement said.

Washington is unhappy that exports of U.S. goods such as poultry, beef and genetically modified farm goods are held up by EU red tape and rules.

The EU and United States are each other's largest foreign investor, each holding some $1.1 trillion in the other's markets in 2006.

But the threat of recession in the United States and a slowdown in economic growth in Europe has stoked protectionist pressures that both sides are keen to limit.

EU Trade Commissioner Peter Mandelson signalled concern last week about comments made by Hillary Clinton and Barack Obama who are fighting for the Democratic nomination in the November U.S. presidential elections.

There are fears that both may try to change any agreement for a global trade deal in the World Trade Organisation's long-delayed round of Doha talks if elected president.

Some EU leaders, such as French President Nicolas Sarkozy, have questioned the value of trade deals for Europe, saying it stands to lose out to new powers such as China and India.

Openness to transatlantic investment faces a key test this week when the next round of U.S.-EU "open skies" talks start and will touch on foreign control of U.S. carriers.

A federal law caps foreign control at 25 percent of the voting stock and some U.S. lawmakers oppose scrapping the limit.

The TEC statement welcomed the role of sovereign wealth funds (SWFs) but noted "the importance of transparent investment policies".

These vast pools of state-backed cash helped stabilise the finances of big U.S. investment banks during the credit crunch.

Efforts are under way at the International Monetary Fund to thrash out a code of best practice for SWFs, such as outlining their motives for investment to allay fears they are simply seeking control of strategic assets.

The TEC is also set to signal progress in tackling a range of regulatory bumps, from cosmetics and accounting to electrical appliances exports.

No final deal is expected on Tuesday regarding U.S. demands for the EU to lift a long-standing ban on U.S. poultry exports to the 27-nation bloc which the United States has said is a test of Europe's commitment to open up transatlantic trade.