Locke’s China Deals may draw scrutiny

Feb. 26 -- Gary Locke, President Barack Obama’s pick to be commerce secretary, persuaded Chinese President Hu Jintao in 2006 to visit Seattle, where he was feted at the mansion of Microsoft Corp. founder Bill Gates.

Both sides benefited from the trip, arranged by Locke as an attorney specializing in China trade. Before Hu arrived, China agreed to require computer makers to load legal software on new machines, a key to unlocking the $3 billion market to the maker of Windows software. Days later, Redmond, Washington-based Microsoft announced plans to invest $3.7 billion in China.

Earlier, when he was governor of Washington state, Locke, now 59, helped lumber-company Weyerhaeuser Co. and aircraft maker Boeing Co. win business with China. As he seeks the new post, and as secretary should he be confirmed, Locke may find his deals seen in a different light by lawmakers, unions and U.S. factory owners who say trading with China poses more peril than promise.

“Locke understands the benefits of trade up close and personal,” said Christopher Padilla, a former undersecretary of commerce and a managing director of C&M International, a trade and investment consulting firm in Washington. “But the question will be how he reacts to the enormous protectionist pressures he will face.”

Obama named Locke yesterday to head the Cabinet department responsible for adjudicating trade disputes, compiling economic data, overseeing the Census Bureau and providing help to exporters. The president said Locke, a Chinese-American, will be an “influential ambassador” for U.S. businesses in global markets.

U.S.-China Relations

At stake is the commercial relationship between the U.S. and China, the world’s largest and third-largest economies respectively. Many of the biggest U.S. companies see China as a rare export opportunity amid the global recession. U.S. exports to China grew 10 percent last year, and China is now the U.S.’s third-largest export market.

“We need a guy at Commerce who both understands the importance of trade and has the political know-how to get things done,” said Myron Brilliant, the senior vice president of the U.S. Chamber of Commerce, the largest business lobbying group. “Locke knows the importance of international engagement, with China as a key part of it.”

Some manufacturer groups point to China’s record trade surpluses with the U.S. as evidence that the pro-trade policies of Locke and Ron Kirk, Obama’s nominee for U.S. trade representative, need to be realigned.

‘Different World’

“We are in a different world now, and we need a total rethinking of our economic models,” said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents American-based manufacturers. “I hope Locke will be more flexible, but the jury is out.”

Obama pledged on the campaign trail to push China to raise the value of the yuan and said he would consider caps on certain Chinese imports.

Members of Congress, steelmakers and unions say China’s export subsidies and its refusal to float its currency are running up the U.S. trade deficit and putting Americans out of work.

Lawmakers such as Ohio Democratic Representative Tim Ryan are pushing a measure that would allow steeper tariffs on imports to compensate for what they say is China’s undervalued currency.

“We have every intention to push it this year,” Ryan, the bill’s sponsor in the House, said in an interview this month. “Any change in China’s currency means investment in American jobs.”

Steel companies and textile makers may bring new trade complaints against Chinese imports to the commerce secretary’s office.

Born in Seattle

Locke’s grandfather arrived in Olympia, Washington as a houseboy for a family there, according to a biography on the state governor’s Web site. Locke was born in Seattle, attended Yale University and received a law degree from Boston University in 1975. He served in the Washington state House and then as King County executive before being elected nation’s first Chinese-American governor in 1996.

As governor, Locke promoted Boeing airplane sales to China. He served his state well through his “global knowledge, balanced approach to business issues” and a “focus and energy on solving problems,” Boeing said in a statement yesterday.

China is the second-largest market for commercial jet-maker Boeing, a former Seattle-area company that still has factories in Washington state. The company, now based in Chicago, predicts China’s airlines may buy 3,400 aircraft over the next 20 years, worth $340 billion.

After leaving the governor’s mansion in 2005, Locke joined the law firm Davis Wright Termaine LLP as a partner in Seattle, working on behalf of U.S. companies trying to invest in China, among other issues.

In that role he helped convince Hu to stop in Seattle and visit with Gates on his way to a summit in Washington, D.C. Later, Microsoft hired Locke’s law firm to help it in China, according to spokeswoman Ginny Terzano.

(Bloomberg)