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UPDATE 3-Enforcement top U.S. trade priority - USTR nominee

Published 03/09/2009, 07:27 PM

* Nominee doesn't have "fever" to strike new trade deals

* US will use all tools, including WTO, to pressure China

* Says trade deal with Korea needs to be changed

(Adds detail from testimony; byline)

By Doug Palmer and Roberta Rampton

WASHINGTON, March 9 (Reuters) - The Obama administration will focus first on making sure countries play by trade rules and only second on negotiating new trade deals, U.S. Trade Representative-designee Ron Kirk said on Monday.

"As I've said to many of you in private, I don't come to this job with deal fever, and we're not going to do deals just for the sake of doing some," Kirk told the Senate Finance Committee at a hearing on his nomination.

The former Dallas mayor and friend of President Barack Obama is expected to win Senate confirmation, even though the vetting process revealed a number of errors in his tax returns that will require him to pay about $10,000 in back taxes.

Kirk, who was the first black mayor of Dallas from 1995 until 2001, was not asked about the tax issue in a rapid-fire hearing that lasted about 45 minutes.

But he was peppered with questions on a number of hot-button issues including trade with China and Obama's plan to update the 15-year-old North American Free Trade Agreement.

However, the beleaguered seven-year old Doha round of world trade talks got scant mention at the hearing.

Kirk told lawmakers the United States would use all its diplomatic tools, including those at the World Trade Organization, to pressure China to rely less on exports for its growth and more on domestic demand.

Kirk described himself as "a raging pragmatist" who tried to remain above partisan politics. He promised a big push to make sure that other countries live by the commitments they have made in international trade pacts.

"This administration's starting point on trade will be to ensure the strongest possible enforcement of existing rules and increase the transparency of current and future trade agreements," he said.

PANAMA, COLOMBIA, SOUTH KOREA DEALS

Kirk would take over as U.S. trade representative at a time when many members of Obama's Democratic party are deeply suspicious of trade deals that former President George W. Bush pursued over the last eight years, including three pending pacts with Colombia, Panama and South Korea.

He promised to work with Congress to try to resolve obstacles blocking those pacts, and agreed with Senate Finance Committee Chairman Max Baucus that the Panama deal was the closest to possible passage.

But in an exchange with Senator Charles Grassley he refused to commit to a year-end deadline for resolving concerns about labor violence in Colombia that have blocked approval of the free trade pact with that country.

He also echoed concerns Obama raised last year about the automotive and other manufacturing provisions of the South Korean agreement and said the deal had to be changed.

"The president has said, and I agree, the agreement as it is just simply isn't fair and if we don't get that right, we'll be prepared to step away," Kirk said, adding that the pact presents a big economic opportunity for the United States.

In his written comments, Kirk said the Obama administration hopes to use trade as a force to improve worker rights and environmental standards around the world.

He acknowledged a deal the Bush administration struck with Congress in May 2007 to add enforceable labor and environmental provisions to free trade agreements, but said it was important to build on that work.

Grassley, a Republican from the farm state of Iowa, said he feared reopening the May 2007 deal would make it harder to win approval of trade deals by upsetting a delicate balance that many Republicans reluctantly supported.

However, Kirk appeared able to soothe Grassley on another point by saying he did not expect Obama's plan to work with Mexico and Canada to update NAFTA would reverse any of the agricultural tariff cuts that have already occurred.

Many U.S. business groups fear they will be disadvantaged if trading partners such as the European Union push forward with new trade agreements and the United States does not.

Kirk nodded to those concerns and said Obama, "at an appropriate time and with proper congressional inputs and concerns addressed," would ask Congress for new fast-track authority to negotiate trade deals.

Fast track has long been considered an essential tool for U.S. negotiators. It allows the White House to negotiate trade deals that Congress must approve or reject without making any changes. The Democratic-controlled Congress refused to renew the authority for Bush after it expired in July 2007. (Editing by Eric Walsh)

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