Clinton on defensive amid Colombia trade flap

HILLSBORO, Oregon (Reuters) - Democratic presidential candidate Hillary Clinton found herself on the defensive over a top aide's meeting with Colombia on a trade deal, as she and rival Barack Obama courted voters on Saturday in Western states.

Mark Penn, chief campaign strategist to the New York senator, has apologized for meeting with Colombia's U.S. ambassador in his separate role as a lobbyist hired by the South American country to win congressional approval of the trade deal with the United States.

But the issue poses problems for Clinton for political reasons as well as diplomatic ones as she vies with Obama to become the Democratic nominee to run against Republican John McCain in the November election. Anxiety about free trade runs high with the working-class voters Clinton and Obama are courting and both oppose the deal with Colombia.

The president of the politically powerful Teamsters Union, Jim Hoffa, said Penn's meeting with the Colombian officials undermined Clinton's stance on labor issues as well as trade.

"How can we trust that a President Hillary Clinton would stand strong against this trade deal when her top advisor is being paid by Colombia to promote it?" he asked in a statement. He said the trade deal was "anathema to the labor movement."

The controversy also prompted an angry reaction from Washington's close ally Colombia, which took offense at Penn's statement in which he called his meeting with the country's ambassador "an error in judgment."

"The Colombian government considers this a lack of respect to Colombians, and finds this response unacceptable," the Colombian Embassy in Washington said in a statement on Saturday in which it announced it was ending a contract with Penn's firm, Burson-Marsteller Worldwide. The firm had been hired about a year ago.

A Clinton campaign spokesman said on Saturday that Penn's action was "independent of the campaign."

Clinton and Obama have both said they intend to vote against the deal with Colombia and she reiterated her opposition to the pact on Friday, when news surfaced of Penn's March 31 meeting with Ambassador Carolina Barco Isakson.

The two candidates have been sparring for months over the issue of trade, with each questioning the other's credibility in their pledges to renegotiate the North American Free Trade Agreement.

The flap over the Colombia trade deal could provide ammunition for Obama, not only in his attacks on Clinton over trade but also in his contention she has closer ties to lobbyists who might have too much say in shaping policies should she become president.

Obama's campaign has so far declined to weigh in on the Penn controversy.

Without mentioning Clinton by name, Obama criticized the influence of lobbyists in government, referring to the failure to overhaul the health care system in the administrations of both President George W. Bush and Clinton's husband, former President Bill Clinton. As first lady, Hillary Clinton led the failed 1993 effort to revamp health care.

OBAMA: INSIDERS SET AGENDA

"People don't feel like anybody is listening to them," Obama told a rally in Missoula, Montana. "They have a sense that the insiders, the lobbyists, the fat cats -- that they are the ones that are setting the agenda in Washington."

"Think about it -- we've been talking about health care reform for decades now through Democratic and Republican administrations. And yet year after year nothing happens," Obama said, blaming the inaction on the influence of drug companies and big health insurance firms.

Obama last month faced questions over his credibility on trade after his top economic adviser, Austan Goolsbee, discussed NAFTA during a meeting with a Canadian official.

A memo leaked to media said the aide played down Obama's opposition to NAFTA, saying the candidate's comments were designed for a political audience. The Obama campaign said the memo mischaracterized the conversation but Clinton seized on the issue, saying it showed Obama was willing to say one thing in private and another in public.

There was a possibility Clinton and Obama could cross paths later. Both were scheduled to attend a Democratic party dinner in Butte, Montana.

Clinton spent the early part of the day campaigning in Oregon, which holds a nominating contest on May 20. Montana holds a primary on June 3.

McCain on Saturday went to the site in Prescott, Arizona, where another Arizona Republican politician, Barry Goldwater, announced his presidential run in 1964, and talked about the need for bipartisan cooperation.

(Writing and additional reporting by Caren Bohan and Jim Vicini; additional reporting by Tim Gaynor, editing by Jackie Frank)

(To read more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/)