As Congress tries to deal with the rapidly expanding field of genetic engineering, also known as biotechnology, it finds itself caught in a political, ethical, and economic dilemma. As a result, it is having a hard time coming to any decision.

On the one hand, Congress is correct in not wanting the U.S. to lose its position as world leader in biotechnology, especially since the Japanese are determined to grab the lead.On the other, there are real ethical problems and risks that must be faced, particularly the dangers of creating new organisms and having potentially harmful ones escape into the atmosphere. How far should science go in making new kinds of plants and animals? What about gene splicing when it comes to humans?

So far, the nation has no clear policy on any of these issues. Various federal agencies oversee biotechnology research and regulate its byproducts. Everything is done on a piecemeal basis. It would help to have some clear goals and procedures.

So far, the industry has managed to defeat most of the restrictive regulatory proposals. That is just as well, because if vague fears were allowed to become the basis for controls, biotechnology could be fatally hampered before it could properly begin. Some who would prefer that.

But if the nation is to reap the benefit from biotechnology is must be allowed to go forward in a responsible way. Most of the fears appear to be vastly over-blown anyway, consisting mainly of "What if . . . ".

The issue of biotechnology is not a small one. In another 10 to 12 years, genetic engineering is expected to be a $40 billion industry. The promise it holds out is enormous.

In the meantime, Congress is bogged down in a debate over establishing an executive branch advisory board on biotechnology, including a clearing house for biotech research data. This is not exactly a wonderful idea since the field hardly would be helped by more bureaucracy.

Funding for a comprehensive effort to map man's entire genetic code already is tied up in a bureaucratic turf battle between the National Institutes of Health and the Department of Energy.

What is needed are some clear policy guidelines, not a feud over who controls the purse strings. This is an issue that is going to raise ethical questions in Congress for years to come - arguments that will be voiced again and again with each new biotech discovery.