Obama golfs with trade envoy as China case looms

WASHINGTON Mon Aug 31, 2009 5:44pm EDT

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WASHINGTON (Reuters) - Facing a September 17 deadline on whether to restrict tire imports from China, President Barack Obama Monday met with U.S. Trade Representative Ron Kirk over a game of golf.

Neither the U.S. Trade Representative's office or the White House would comment on what was discussed or say whether Kirk has given Obama his recommendations in the case, which is being portrayed as a key test of Obama's trade policy.

Kirk is required to deliver his recommendations in the matter by Wednesday.

"USTR will submit its recommendation to the president by Wednesday, as the statute requires. The president will then have 15 days to consider that recommendation and make a determination," said Carol Guthrie, a spokeswoman for USTR.

The Emergency Committee for American Trade, a U.S. business group, has warned Obama he risks "creating a downward protectionist spiral that will hurt millions of American workers" if he imposes import curbs.

But the U.S. Steelworkers union, who filed a "Section 421 petition" asking for the import relief, said they are confident Obama will rule in their favor after promising during last year's campaign to get tough on China trade.

The U.S. trade deficit with China hit a record $268 billion last year, the largest by far with any single country and a political headache for the White House.

Reduced U.S. consumer spending as a result of the worst economic downturn since the Great Depression has cut imports from China, but the trade gap still totaled $103 billion in the first half of 2009.

TEE TIME BUMPS CALL

Kirk had been scheduled to talk by telephone with reporters Monday about his trip to New Delhi this week to meet with other trade ministers on the Doha round of world trade talks.

Instead, Kirk went golfing with Obama and the Doha briefing was rescheduled for Tuesday.

Obama could be tempted to decide the tires case early to avoid it overshadowing a September 24-25 meeting of G20 leaders that he will host in Pittsburgh.

The U.S. Labor Day holiday, which falls next Monday, also could set the stage for a decision that pleases labor groups.

The U.S. International Trade Commission, a federal agency that hears trade complaints, voted 4-2 earlier this year in favor of import relief in the tires case.

It recommended a three-year program of additional tariffs, starting at a 55 percent level in the first year and falling to 35 percent in the third.

Obama is expected to decide the issue based on USTR's confidential recommendations, rather than follow the ITC plan.

It is only the seventh petition filed under the anti-surge Section 421 provision, which China accepted as a term of its entry into the World Trade Organization in 2001.

Former President George W. Bush turned down four petitions that reached his desk and the ITC rejected two others.

Eventually, companies stopped seeking relief from Bush under the provision.

Obama promised last year in a letter to a textile industry group to decide Section 421 cases "on their merits, not on the basis of an ideological rejection of import relief like that of the current administration."

(Reporting by Doug Palmer; editing by Paul Simao)

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