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US trade chief Kirk to outline new enforcement push

Forex Jul 29, 2010 02:48PM ET
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* Kirk to discuss new enforcement initiative in Pittsburgh

* Obama WTO case filings fall short of campaign rhetoric

By Doug Palmer

WASHINGTON, July 29 (Reuters) - During the heat of the 2008 presidential campaign, Democrats vowed to make enforcement of U.S. trade agreements a top priority if President Barack Obama won the White House. Now, with Democrats' grasp on Congress looking shaky, they are sounding the same note.

U.S. Trade Representative Ron Kirk will visit Pittsburgh on Friday to give a speech on Obama's trade enforcement agenda.

The spotlight on making sure other countries "play by the rules" follows Obama's decision to push ahead with free trade agreements with South Korea, Colombia and Panama that many Democratic voters in union-heavy states oppose.

With many Americans generally frustrated and angry with Washington, a Reuters/Ipsos opinion poll this week found 72 percent of Republicans certain that they will vote in November compared to 49 percent of Democrats.

Kirk's office said he would discuss "a new step the Obama administration will take on trade enforcement this year," but has given few details. Kirk himself provided only a teaser at a roundtable with reporters on Wednesday.

"Come to Pittsburgh and you'll get more," he said after one reporter joked that all Kirk does is talk about "negotiation, negotiation" instead of taking action, such as filing new cases at the World Trade Organization.

But in the same news conference, Kirk also made clear his dislike for WTO litigation, which can take years to resolve and often produce mixed results.

"My guiding principle is that where we can get issues resolved through direct negotiations, no matter how difficult they are, we're so much better served than saying 'I'm going to go to the WTO and file a case'," Kirk said.

"Because part of my concern was the number of matters we have with trade partners that have been at the WTO five years, 10 years, 20 years. Because at that point, you've got a war of wills between lawyers who are each concerned they're right."

In keeping with that philosophy, Kirk has filed just two WTO cases -- one against excise taxes the Philippines imposes on imported liquor and another in conjunction with the European Union against China's export restraints on raw materials used in the production of steel.

TRADE RULES ENFORCEMENT

U.S. trade officials argue enforcement is about more than going to the WTO and that they have been aggressive on other fronts, ranging from Obama's decision to slap tariffs on tires from China to settling disputes with the European Union over beef and with Israel over intellectual property rights.

Still, Kirk's aversion to WTO litigation is at odds with complaints Democrats made against former President George W. Bush during his eight years in office.

Lael Brainard, now U.S. Treasury under secretary for international affairs, accused Bush in 2008 of lax enforcement because the number of WTO cases brought by the United States fell during his two terms to about three per year compared to 11 annually under Democrat Bill Clinton.

Based on growth in world trade and the rise in the number of WTO members, "you would have expected 17 cases per year" if the Bush administration was serious about enforcement, said Brainard, who served in the Clinton White House.

Both Republicans and Democrats have repeatedly urged Kirk to file a case against China's currency policy at the WTO, so far to no avail. They argue China's yuan is so undervalued it effectively "frustrates" trade liberalization commitments Beijing made when it joined the world trade body.

Senators pressed Kirk on the issue at his confirmation hearing, and more than a year later his office has yet to give a definitive answer on whether it thinks a case is possible.

Many WTO experts, however, consider it a long shot and think it would be risky for the United States to launch such a challenge given vague WTO language on the issue. (Reporting by Doug Palmer; Editing by David Storey)

US trade chief Kirk to outline new enforcement push
 

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