U.S. Trade Representative Robert Zoellick logged 32,000 miles in a single month last year as he conducted intensive negotiations from Kenya to Singapore to rescue stalled 147-nation trade talks. This year, Zoellick's most critical negotiations may be much closer to home. The main task: lobbying Congress to ratify President George W. Bush's proposed Central American Free Trade Agreement while fending off any attempts by lawmakers to derail other parts of the administration's trade agenda.

For the 51-year-old Zoellick, 2005 will test whether he can transfer his international deal-making skills to Washington. "He's had some success in these negotiations, but it remains to be seen if he can deliver on Capitol Hill," says Peter Morici, former chief economist of the International Trade Commission and now a professor at the University of Maryland in College Park. Zoellick was unavailable to be interviewed for this story. The acid test is Cafta, the free-trade agreement Zoellick negotiated in 2003 with five Central American nations. (A sixth was added last year.) The measure wasn't submitted to Congress in 2004 after U.S. labor leaders, textile makers and sugar growers lined up to oppose it; in an election year, supporters couldn't be confident that it would pass.

They still aren't, says Republican Representative Donald Manzullo of Illinois, chairman of the House Small Business Committee. "This is going to be an extremely difficult vote with the huge, monstrous trade deficit,'' Manzullo says in an interview. The $500.5 billion U.S. trade deficit through October 2004 surpassed the record of $496.5 billion for all of 2003.

Determined to Try

Even so, supporters are determined to try. "Cafta is crucial," says Myron Brilliant, a vice president of the U.S. Chamber of Commerce in Washington. "If we don't pass Cafta, we send a very negative message to Latin America and the world."

The accord would immediately end duties on up to 80 percent of the $15 billion in U.S. exports to the region. It would help Peoria, Illinois-based Caterpillar Inc. sell earthmoving equipment and protect investments by household-goods company Procter & Gamble Co., which has an administrative center in Costa Rica. Cincinnati-based Procter & Gamble and the National Pork Producers Council, a trade group based in Urbandale, Iowa, briefed congressional staffers last month on the benefits of the agreement, says Calman Cohen, president of the Emergency Committee for American Trade, a Washington-based lobbying group. The group will organize meetings with hundreds of lawmakers in the next few months, Cohen says.

Appealing Disputes

Zoellick reached the Central American agreement in December 2003 with Nicaragua, El Salvador, Honduras, Costa Rica and Guatemala. The Dominican Republic was added later. In addition to the tariff limits, Cafta would protect companies that invest overseas by setting up a system for them to appeal disputes with local officials. The deal had a rocky road, starting in 2003 when Costa Rica wouldn't accede to U.S. demands to open its insurance and telecommunications market to foreign investors.

Zoellick decided to finish an agreement with the other four nations, initially leaving out Costa Rica. The tactic paid off: Within a month Costa Rica gave in to most U.S. demands and joined Cafta. "He upped the pressure and it paid off," says David Snyder, vice president of the Washington-based American Insurance Association, which represents Warren, New Jersey-based Chubb Corp. and more than 400 other companies.

Big Markets

When officials signed the agreement on May 28, Zoellick said in a statement it would provide significant economic gains for the U.S., "for these small countries are very big markets." U.S. companies in 2003 exported $15 billion in goods to the six nations in the Central American accord, said the U.S. trade representative's office. Under Cafta, those exports probably would rise by $2.7 billion, said a study by the International Trade Commission, an independent U.S. agency. Labor and other opponents say Cafta needs stronger protection for workers in Central America, while the textile industry says it would allow too much Chinese fabric in duty-free clothing and the sugar industry says it would let in too much foreign sugar.

"They need to face up to their failure to address squarely and fairly the issue of incorporating core labor standards," Representative Sander Levin of Michigan, ranking Democrat on the House Ways and Means Committee's trade panel, says of Bush administration officials.

Prospects for Passage

Levin, who opposes the agreement, says the deal doesn't have enough support to pass. Frank Vargo, vice president for international affairs at the National Association of Manufacturers in Washington, disagrees. "It is going to be a tough vote," he says. "There will be a lot of fireworks and really heavy lifting, but I believe it will pass."

Even as Zoellick battles to push Cafta through, he and other Bush officials will have to defend against attacks on other trade fronts, fueled by concern over the size of the trade deficit. "The trade deficit is a ticking time bomb out there, and when it goes off a lot of other things will fall apart," says Thea Lee, the chief international economist at the AFL-CIO, the largest U.S. labor organization.

One battle that's shaping up centers on a potential congressional vote over extending Bush's "fast-track" trade negotiating authority. That authority -- requiring Congress to vote on trade agreements negotiated by Bush within 90 days, and without amending them -- had lapsed in 1994, during President Bill Clinton's administration. In 2002 Bush won renewal of the authority through June of this year, and he has until then to request a two-year extension that would take effect automatically unless disapproved in Congress.

WTO Membership

Another clash may arise over continued U.S. membership in the World Trade Organization. Zoellick is required to report to Congress by March 1 on whether the U.S. should stay in the WTO. Federal law allows Congress to consider a withdrawal every five years, and lawmakers would have 90 days to act on a non-binding resolution. While such a repudiation of Bush's and Zoellick's policies isn't likely with Republicans controlling both houses of Congress, opponents may use the issue to score political points against them. "We now have a strange idea that if we can just open up all markets," the U.S. would be better off, Democratic Senator Byron Dorgan of North Dakota said in a Dec. 7 speech. "At some point those who predicted a good outcome for these trade agreements, and were so fundamentally wrong, should be discredited."

Cotton Conflicts

As Zoellick navigates the congressional currents this year, he'll be calling upon diplomatic skills honed in the course of his globe-trotting negotiations over the WTO. At one point in September 2003, at talks in Cancun, Mexico, he clashed with cotton-producing nations of West Africa that sought up to $1 billion to compensate for subsidies to U.S. farmers. Developing countries also objected to farm subsidies in the European Union. The Cancun meeting collapsed with a diminished outlook for any WTO agreement.

"There were 'can do' countries here and there were 'won't do' countries," Zoellick said at a news conference at the time.

Early last year, though, he struck a different tone in a letter to trade ministers. He encouraged ministers not to abandon talks, and he suggested the outlines of what would be the deal that was finally agreed to in July: The U.S. and EU would agree to phase out export subsidies for farm goods, and would negotiate only one of four items on government services that the EU had sought.

Overreacted

He overreacted, but soon realized he needed to shift gears, Clayton Yeutter, U.S. trade representative during President Ronald Reagan's second term, says in an interview. "He accelerated the healing process."

For Zoellick, a veteran of the administrations of Presidents Ronald Reagan and George H.W. Bush, proving to be as adept at handling lawmakers as trade ministers may lead to a larger role. The New York Times on Dec. 20 listed him as a candidate to succeed Franklin Raines as chief executive officer of Fannie Mae, where he was formerly general counsel.

Meanwhile, Republican Representative Mark Kirk of Illinois says that even though he has sometimes criticized Zoellick in the past, he's advising Bush to appoint him to head the World Bank. The term of its current president, James Wolfensohn, who was appointed by Clinton, expires this year, and Wolfensohn said yesterday on ABC's "This Week" program that he expects to leave.

Kirk, who worked with Zoellick at the State Department in the elder Bush's administration, says, "We need a guy at the World Bank who can build coalitions and get things done."

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