K Street pushes Chinese textiles interests

Trade issues fuel much of China's lobbying efforts—and few may be more important than textile imports

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Top lobbying and law firms—including Wexler & Walker Public Policy Associates, Patton Boggs, and McDermott Will and Emery LLP—have helped mainland China and Hong Kong with outreach to key U.S. textile negotiators and policymakers, as well as with obtaining strategic advice on trade matters.

The analysis is part of a comprehensive Center investigation into Chinese lobbying activities in the United States released last week. The report found that since July 1997, the Chinese and Hong Kong governments and their government-controlled companies and organizations have spent at least a combined $19 million lobbying the U.S. government and trying to sway public opinion.

Although China and Hong Kong have lobbied the U.S. government separately, many of the issues they've lobbied on have been the same—including textile imports.

In a letter to the Center for Public Integrity, Stephen Wong, regional director of the government-backed Hong Kong Trade Development Council, emphasized that his organization is focused "purely on protecting Hong Kong's interest," but explained how that interest overlaps with China's. "On textile matters, Hong Kong, as a major textile manufacturing and exporting economy, is concerned about safeguarding its legitimate rights and trade interests as provided for under the WTO," Wong wrote. "With a significant number of Hong Kong businesses having investments in textile manufacturing operations in Mainland China and with Mainland China being subject to certain China-specific trade measures, we are naturally concerned about how such measures impact our trade interests."

According to the Center's initial study, the Hong Kong Trade Development Council has spent $7.2 million on lobbying and public relations activities since July 1997, more than any other Chinese organization.

China's increased lobbying presence comes at a time when the U.S-China trade deficit continues to grow—last year it hit an all time record high of $162 billion—and textile agreements have become a crucial part of the two nations' already complicated relationship. In January 2005, a 30-year-old agreement on textile and clothing quotas from China expired. Chinese textile imports to the United States immediately surged. When American manufacturers complained, the U.S. government imposed what it called a "safeguard": a 7.5 percent annual growth restriction on import levels of several categories of textiles from China, including shirts and trousers. The U.S. could impose such a limit under terms China agreed to when joining the World Trade Organization in 2001.

Not surprisingly, American manufacturers want to keep these restrictions in place. They claim that the boost in Chinese clothing imports has eliminated nearly 30,000 textile and apparel-related jobs this year alone. The U.S. and Chinese governments have engaged in negotiations aimed at limiting a wide range of clothing imports through 2008, the maximum time restriction allowed under the WTO safeguards provisions. A second round of talks broke down in Beijing Aug. 31.

Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which lobbies on behalf of small and medium-sized U.S. companies, said that China would be the group's "Number one priority now that the Central America Free Trade Agreement has passed." The organization opposed CAFTA, and it strongly supports restrictions on Chinese textile imports.

But Tonelson and the U.S. manufacturers are facing opposition from some of the top U.S. lobby shops and law firms in their efforts; those that have represented Chinese interests on textile issues in recent years include:

McDermott Will and Emery LLP. One of the largest law firms in the United States, it was hired by the Chinese Ministry of Commerce in May "to present [China's] views that threat-based special safeguard actions on textile imports from China should not be imposed by the United States," lobbying records show. The firm's director of government relations, Paul Hatch, was a consultant to the Bush-Cheney 2004 campaign. According to lobbying records, McDermott lawyers anticipated contacting members of the executive branch and Congress, as well as the media. However, in a phone conversation, Michael House, a partner in the firm's International Trade Practice Group, said that the work for the Chinese government had been "strictly [offering] legal advice," on the safeguard cases filed by U.S. manufacturers.

Wexler & Walker Public Policy Associates. Since 1998, this lobbying firm has represented the interests of Hong Kong on areas such as textiles, export control and strategic trade. Recent lobbying activities include several contacts with the House International Relations Committee, the House Ways and Means Committee and the Senate Finance Committee, as well as meetings with officials at the U.S Trade Representative's Office. The firm is headed by former Pennsylvania U.S. Rep. Robert Walker and Ann Wexler, who was a top official in the Carter administration. So far, the shop has received slightly more than $3 million from the Hong Kong Trade Development Council.

Patton Boggs. The firm lobbied Congress and U.S. Customs officials on textiles and bilateral trade issues on behalf of HKTDC between 2001 and 2002. Its assignment included "analyzing the trade and political scenes of the constituencies of targeted Congressmen who are influential on textiles and to spread the message of Hong Kong industry as a potential business ally [rather] than a threat," lobbying records show. In one year, the firm collected $250,000. In July, Patton Boggs was hired by the Chinese Embassy in Washington, D.C., to counsel officials on "congressional matters." The firm declined to comment on its work for China. Currently, there are several bills pending in Congress that touch on aspects of the U.S.-China trade relationship, including textiles.

Powell, Goldstein, Frazer & Murphy LLP. This blue chip law firm based in Atlanta also maintains a substantial lobbying practice in Washington, D.C. Between July 1997 and 2002, it lobbied on behalf of the Commercial Office of the Embassy of China, the state-owned China Textiles Import/Export Corp. and the Hong Kong Government. The bulk of the firm's work involved international trade matters and textiles, and it included contacting U.S. government officials and legislators and drafting "Dear Colleague" letters on behalf of its clients.

Sidley Austin Brown & Wood. The Chicago-based law firm is one of the largest in the country, with offices in Hong Kong, Beijing and Shanghai. Since 2002, it has represented the interests of the Hong Kong Government in Washington, D.C., on trade matters, "particularly the textiles and apparel trade." Lobbying records don't provide details on the specific activities performed.

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