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Obama rounds out economic team with Commerce, trade picks

By Jeff Mason and Doug Palmer

WASHINGTON (Reuters) - President Barack Obama tapped Mike Froman and Penny Pritzker for the last two vacant Cabinet slots on his economic team on Thursday, turning to a law school classmate who is already one of his chief advisers and a billionaire businesswoman who helped put him in the White House.

As key members of his team, the two will work to boost demand for U.S. goods and workers, Obama said as he announced the nominations at the White House shortly before leaving on a trip to Mexico, a key U.S. trading partner.

He urged the Senate to quickly confirm the pair.

Froman, Obama's pick to be U.S. trade representative, is little known to the American public but a heavyweight in diplomatic circles for his role as the president's chief international economic affairs adviser, a post he has held since Obama took office in 2009.

Pritzker, tapped to become the U.S. Commerce secretary, is an heir to the Hyatt Hotel fortune and was finance chairman for Obama's 2008 presidential campaign. She is ranked 271st on Forbes Magazine's list of the wealthiest Americans and eighth on Chicago Magazine's list of the city's most powerful people.

If confirmed, as expected, Froman would succeed former Dallas Mayor Ron Kirk as the top U.S. negotiator on international trade. Kirk left the administration in March.

Senator Max Baucus, the Montana Democrat who chairs the Senate Finance Committee which will consider the nomination, said Obama's choice of Froman shows "the administration is sending a clear signal that trade is a top priority."

Some key Republicans in the House of Representatives also voiced support for Froman, but Senator Orrin Hatch, the top Republican on the finance panel, was more circumspect.

"I look forward to fully examining Mr. Froman's background and qualifications as the nomination moves forward," he said.

Pritzker would replace acting Commerce Secretary Rebecca Blank, who is leaving the government in July. As the head of the Commerce Department, she would serve in effect as an ambassador to the U.S. business community.

After winning re-election in November, Obama replaced several members of his economic and national security policy team. He tapped White House budget director Jack Lew to replace Timothy Geithner at the Treasury Department and put new leaders at the State Department, Pentagon and CIA.

'OPPORTUNITIES AND CHALLENGES'

Both of the nominees announced on Thursday have long ties to Obama, in Froman's case going back to the days when they were editors on the Harvard Law Review. Pritzker met Michelle and Barack Obama in the late 1990s, when she took her children to a basketball clinic run by the Michelle's brother, Craig Robinson.

Froman would take the reins at USTR in time to potentially oversee the completion of a landmark free trade agreement, the proposed Trans-Pacific Partnership among 12 countries in the Asia-Pacific region.

Those talks, which have recently been expanded to include Japan, are slated to conclude this year.

But tough decisions on issues including rules for state-owned enterprises, protections for workers rights and the environment, and phasing out tariffs on sensitive agricultural and manufacturing products could push the talks into 2014.

The United States and the 27 countries of the European Union are also preparing to launch talks on the proposed Transatlantic Trade and Investment Partnership, a free trade pact covering more than half of world economic output.

"The new USTR has both enormous opportunities and enormous challenges that have be reckoned with," said Charlene Barshefsky, who held the post in the late 1990s under former President Bill Clinton.

In addition to forging the regional trade pacts, the United States needs to confront threats to its competitive advantage from other countries that are stealing its intellectual property and valuable corporate trade secrets, she said.

During his confirmation hearing, Froman is likely to face questions on how forcefully Obama will push for "trade promotion authority." That legislation, also known as "fast track," allows the White House to submit trade agreements to Congress for straight up-or-down votes without any amendments.

The trade law tends to divide Democrats in Congress between those who see trade agreements as an engine for economic growth and those who blame them for manufacturing job losses.

Congress last passed a trade promotion authority bill in 2002 after a bitter fight in the House of Representatives.

OBAMA FUNDRAISER

Pritzker, a Stanford University-trained lawyer, would bring a member of one of the country's most successful business families to the helm of the Commerce Department.

The department has played a key role in Obama's five-year goal of doubling exports to about $3 trillion by the end of 2014. But after fast export growth in 2010 and 2011, the pace faltered in 2012, raising doubt the goal can be reached.

Pritzker would also be in charge of a diverse array of agencies, including the Census Bureau, the U.S. Patent and Trademark Office and the National Oceanic and Atmospheric Administration.

Pritzker is on the board of the Hyatt Hotel Corp, which her uncle founded in 1957 two years before she was born. She also has pursued a separate career in real estate and investment as founder and chairman of PSP Capital Partners and its affiliate, Pritzker Realty Group.

When she was finance chairman for the Obama campaign in 2008, she oversaw the raising of nearly $750 million, a record-breaker.

Pritzker could face questions over her family's reputation for sheltering income to avoid taxes, Hyatt's battle with the Unite Here labor union and the 2001 failure of Superior Bank, which was half-owned by the Pritzker family.

Unite Here has organized a boycott of Hyatt, which it calls "the worst hotel employer in America" because of the company's treatment of workers, failure to reach a new labor contract covering thousands of its employees and opposition to allowing workers at additional Hyatt hotels into the union.

During the 2008 presidential campaign, Republicans tried to tar Pritzker with the failure of Superior Bank, which in the 1990s was a pioneer in subprime mortgages, the type of loans that were blamed for the global financial crisis a decade later.

Regulators closed the bank in July 2001 after auditors concluded that income from mortgage securitizations had been overstated. Five months later, the Pritzkers agreed to pay the Federal Deposit Insurance Corporation $460 million over 15 years as part of a deal where the family and the other half-owner admitted no liability.

(Additional reporting by Susan Heavey and Matt Spetalnick; Editing by W Simon, Vicki Allen, Tim Ahmann and Cynthia Osterman)

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