December 29, 2008    Volume 15, No. 22

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'Fair' Traders Are Perplexed By Obama's Pick For USTR

By Richard McCormack

President-elect Barack Obama's selection of former Dallas, Texas, mayor Ron Kirk as his United States Trade Representative has thrown the fair trade community for a loop.

Kirk, a lawyer with the respected Houston firm of Vinson & Elkins, has been a supporter of the NAFTA superhighway and of free trade, both of which have been held in low regard of late among recently elected populist Democrats in Congress, and even among some Republicans. Perplexing to many in the "smart" trade community is the fact that Kirk is perhaps the only person in the new Obama cabinet who doesn't have experience in the area over which he will preside. The USTR might be considered a minor player among the administration's economic policy team, but not at this time in history, given the size of the trade deficit and loss of millions of U.S. industrial jobs that provide taxes to a government that is broke.

Most of those contacted by MTN over the past week did not know how the selection was made, and they were left scratching their heads. The speculation was that Obama's first pick for the job, Rep. Xavier Becerra (D-Calif.), unexpectedly turned down the offer. Kirk was available. He had worked on the Obama campaign and has many of his same personal attributes as Obama. He is a self-made, extremely smart and articulate African American lawyer from humble beginnings.

Those in the trade community representing the interests of domestic manufacturers and labor organizations described the pick as being "odd," "mysterious," and "discouraging." They questioned why Obama would have chosen somebody without a rudimentary knowledge of trade issues or background in trade negotiations, during a period of global economic strife.

"Nobody is painting this as one of the great nominations of this administration," said one Washington trade lawyer. "This sounds like patronage," said another.

The hope now is for Obama's USTR transition team to select strong deputies. But Kirk's appointment raises questions as to whether experienced people will want to work for somebody who has little trade knowledge and who will need to be "educated" on the intricate nature of trade negotiations. He must also be able to tactfully deal with potentially bruising ideological trade debates during what will be a period of the most intense scrutiny over trade policy in modern history.

People were looking on the positive side of the nomination. "I would say that at least he's not a theoretical ideologue who is convinced that free trade policy has to be continued in the maniacal fashion that so many previous holders of that office have held," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. "There is hope that this nominee will have an open mind and will listen to all sides of an argument, which will be a significant improvement for U.S. manufacturing." Another Washington trade lawyer said: "There are a lot of people who would have been worse, such as the hard-line, free-trade ideologues who actually know what they are doing."

Bob Baugh, executive director of the AFL-CIO's Industrial Union Council, said he is taking a "wait and see attitude" over the pick. "I believe that a number of things that Obama said on the campaign trail have not changed -- about taking a different outlook on [trade]," said Baugh. The economic and political situation has changed so dramatically "that trade policy cannot continue in the manner in which it has been pursued over the past two administrations."

Kirk will be pressed hard by Congress to step up the USTR's efforts in enforcement, for which there is a great deal of pent-up demand, particularly as the industrial heartland withers. Early tests may come when Congress begins pressing the USTR to revive the Section 301 of the Trade Act on Chinese currency and on Chinese workers' rights. The Obama team will also be judged early based on whether it decides to declare that China and Japan are manipulating their currencies, with the scheduled April 15 release of the Treasury Department report on the subject. There is also concern that Kirk will not be an integral part of Obama's economic team at a time when trade policy needs to be interwoven with the investment and stimulus plans being proposed to revive the U.S. economy.

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