CONGRESS PASSED a foolish law concerning the Palestine Liberation Organization last December. In an amendment to the $8.3 billion State Department appropriations bill, it mandated closing of the PLO's observer post at the United Nations. This step was vigorously protested by the State Department, which cited this country's international treaty obligations regarding the U.N.

The reaction in New York has been predictable. Immediately after the law was enacted, the General Assembly voted to condemn the move as a violation of agreements signed at the time the U.N. was located in New York. If the PLO office is closed on schedule next month, these countries threaten to reconvene the General Assembly and invoke the dispute resolution mechanisms that were put in place to deal with treaty violations. Arbitration is the first of these, and the World Court can also be asked for a ruling. The United States would undoubtedly lose.

This country should back down not because of this pressure from the U.N., but because it is an attempt to override an international obligation and because it is just plain wrong in the first place. Legislators might have felt righteous and might also have pleased a lot of people by giving this kick in the teeth to the PLO. But in spite of the fact that a shameful number of liberals joined in sponsoring the law, and that the State Department weakly offered to close a PLO office in Washington as an alternative, this action has only made the United States appear to be afraid of speech -- not terrorism, but speech.

The PLO's observer office was set up to disseminate information, to serve as a propaganda arm, if you will. There is no charge that anyone connected with the office has engaged in a criminal act. It is really being shut down because most Americans don't like the PLO or what it stands for. That kind of retaliation runs directly counter to free speech protections of the Constitution. The State Department has now asked Attorney General Meese to delay the closing of the office until the conflict between the new statute and American treaty obligations is resolved. A better solution would be for Congress to reconsider this unnecessary and wrongheaded law and repeal it.