Paulson ready to talk trade with Pelosi

WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said he is willing to talk with House of Representatives Speaker Nancy Pelosi about new legislation to help the U.S. economy to try to set up a vote on the Colombia free-trade agreement.

"I look forward to ... talking to her," Paulson told Reuters in an interview on Thursday. "I think the last time I talked with her was last Tuesday. She said she was going to call me back with some ideas. I'm always willing to listen and I would very much like to see Colombia get done."

President George W. Bush has accused Pelosi of effectively killing the trade agreement by pushing through a vote in the House to indefinitely delay action on the pact.

Since then, Pelosi has said she is willing to talk with the administration about scheduling a vote, but only if other domestic economic concerns are addressed first.

"I look forward to working with you, the Bush administration, and our congressional colleagues on an economic recovery package that will be enacted swiftly," Pelosi said in a letter on Wednesday in response to a Republican request for her demands for moving the Colombia trade pact.

The U.S. Treasury will start sending tax rebate checks to Americans next week, as part of a $152 billion economic stimulus package in February.

Paulson stopped well short of committing the administration to a second economic stimulus package, but said he was open to "talking about all the legislative priorities" with Pelosi.

"With Colombia we've always said that we recognize the trade adjustment assistance is important. We need reformed TAA and the administration recognizes the two go together and are willing to move the bar on TAA," Paulson said.

That federal program provides extended unemployment and retraining benefits for workers who have lost their jobs because of import competition or companies moving their operations to a U.S. free trade partner.

Democrats have proposed a number of reforms, including opening up the program to service industry workers instead of only those in manufacturing.

Paulson's comments were less confrontational than Bush's have been or those voiced by many other Republicans.

"It's time for the speaker to either put up or shut up on when we're going to have a vote," House Republican Leader John Boehner told reporters on Thursday. He described Pelosi's letter as a "laundry list of political blackmail that she wants the president to consider before she'll consider moving the Colombia free trade agreement that will help American workers and help American businesses."

Paulson agreed, "on the substance, the Colombia agreement is a no-brainer ... but it's obviously complex politically."

U.S. labor groups -- a core base of support for Democrats -- strongly oppose the pact on the grounds that Colombia remains too violent for trade unionists.

However, Colombia already has duty-free access to the United States for almost all of its goods under a 17-year-old trade preference program. The Bush administration says the trade pact would level the playing field by eliminating Colombia's tariffs on U.S. exports.

U.S. Commerce Secretary Carlos Gutierrez, in an event on Thursday with congressional Republicans, said the delay in approving the agreement has cost U.S. companies $2 million per day in tariffs on exports to Colombia, or about $1 billion since the pact was signed in November 2006.

"The administration has always been willing to talk about projects and programs and initiatives that benefit the American people. What the president does not want to do is use Colombia, use an ally, as a bargaining chip ... The president would like to see a date on a calendar for a vote," Gutierrez said.

In addition to a robust job assistance reform package, Pelosi is pushing for other initiatives -- such as new infrastructure projects, increased food stamps and expanded unemployment benefits -- that were left out of the earlier stimulus package, a Democratic aide said.

Paulson did not comment directly on those ideas, but said housing was another area where Congress and the White House could work together to help the U.S. economy.

Paulson said he was "cautiously optimistic" the Colombia deal would be approved. But he expressed concern over how difficult it has become to get Congress to approve trade deals, which most economists believe are good for the United States.

"I think the question you have to ask yourself is why is the American public so protectionist right now. Why is there this isolationist sentiment, and maybe we all need to do a better job of explaining the benefits of trade," he said.

(Additional reporting by Richard Cowan; Editing by Andrea Ricci)