ZOELLICK TALKS TOUGH ON TRADE

Byline: Joanna Ramey

WASHINGTON--President Bush's trade representative designee went before a Senate panel Tuesday and reaffirmed the administration's free-trade agenda, but he also talked strongly about being tough with trading partners that don't live up to agreements.
However, Robert Zoellick, who's expected to be confirmed by the Senate, never tipped his hand to the Senate Finance Committee about how the Bush administration will handle several trade disputes that have kept U.S. trade policy in knots for the last eight years.
Chief among these quarrels is a simmering trade war between the U.S. and European Union over EU restrictions on banana imports and beef treated with hormones.
Zoellick wouldn't say whether President Bush might employ the so-called "carousel amendment" that would periodically change a list of EU products upon which the U.S. has levied hefty retaliatory duties. Retailers have been battling to keep the list from changing, fearing that European cashmere sweaters, fragrances and luxury goods might become targets. The list now includes few products carried by department stores, like bath gels.
"I see the carousel as a potentially powerful tool," is how Zoellick sized up the issue, while reiterating his desire for the administration's trade policy to remain flexible with the goal being "to solve the problem, open markets, as opposed to create barriers."
On whether trade agreements should tie U.S. market access to countries improving their labor and environmental standards, Zoellick acknowledged the need to address the issue before Congress will give Bush's trade agenda a green light.
However, other than expressing the desire to "work it out as best we can" and the need to "get the broadest possible support in Congress" on labor and environmental standards, Zoellick was vague about how he'll bridge the divide on Capitol Hill over the issue.
"When President Bush was asked about this he said it was important to try and improve environmental standards and working conditions. He just wants to be sure we don't do so in a protectionist fashion," said Zoellick, adding that he's already called contacts at the AFL-CIO and environmental groups to work on a solution.
The administration will face the labor and environment issue in coming months when it asks Congress to grant Bush trade negotiating authority, often called fast-track. The designation means Congress agrees not to amend trade agreements, only to vote for or against them. The authority is considered crucial to engage trading partners in negotiations and the lack of it is holding up completion of a Free Trade Agreement of the Americas--one of Bush's priorities.
"Certainly, labor and the environment have to be considered in terms of fast-track," warned Sen. Max Baucus (D., Montana), the lead Democrat on the committee.
Zoellick placed an April 20 deadline for garnering congressional support for the negotiating authority--the day Bush travels to Quebec for the Summit of the Americas when the FTAA will be the top agenda item.
"In the absence of this authority, other countries have been moving forward with trade agreements while America has stalled," Zoellick told the panel. "Given the size of the U.S. economy+we could be and can be shaping the rules of the international economic system for the new century."
Regarding enforcing U.S. trade laws protecting against unfair foreign competition, like imports priced below the cost of production, Zoellick pledged to "enforce, vigorously and with dispatch, our trade laws against unfair trade practices." However, he said anti-dumping duties and other remedies designed to ward off unfair competition shouldn't be used as an excuse to protect an industry that needs "restructuring" in order to compete globally.
Zoellick also appeared receptive to the idea of providing improved textile and apparel import benefits to Colombia in order to help bolster the economy of the country besieged by unrest. Sen. Bob Graham (D., Fla.), suggested the U.S. grant Colombia and other Andean countries the same duty-free apparel benefits granted to the Caribbean Basin last year for garments made of U.S. textiles.
"Would you support...access to the U.S. market for apparel and possibly other products" from the region? asked Graham.
Zoellick, who earlier said Colombia needs "alternative economic opportunities and reasons for hope within the country and region," responded to Graham by saying, "That topic you raise on apparel will be a sensitive one,"--an apparent reference to the volatility of apparel and textile issues in U.S. politics.
Zoellick, who worked in the administration of Bush's father and under President Reagan, is a well-known trade and foreign policy authority. The committee hasn't scheduled a vote on his nomination, but he is expected to be confirmed by the panel and the full Senate.
Doug Bulcao, director of government relations with the American Textile Manufacturers Institute, said he was buoyed by Zoellick's comments about protecting U.S. industries via enforcement of trade laws. The textile industry often complains about unfair foreign competition.
"His stressing the need to seek open markets for exports and that he would vigorously enforce our trade laws against unfair trade practices is encouraging," Bulcao said.
Erik Autor, vice president and international trade counsel for the National Retail Federation, said he wasn't overly concerned that Zoellick may seek to order trade protections for industries like textiles or steel, given Zoellick and Bush's overall open-market stance.
However, Autor said he was concerned by Zoellick's comments about apparel being a "sensitive" issue regarding expanding apparel benefits to Colombia and its neighbors.
"We need to get past this notion at USTR that textiles is a special case that should be treated differently than any other good," Autor said.

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