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USTR nominee Froman to face questions on White House trade plans

By Doug Palmer

WASHINGTON (Reuters) - President Barack Obama's choice to be U.S. trade representative is expected to face questions at a Senate confirmation hearing on Thursday about the White House's commitment to pursuing legislation to strike new trade deals as well as his investment in an offshore tax haven.

Obama tapped Mike Froman, his chief international economic affairs adviser, in May to be the next USTR, replacing Ron Kirk who left in early March after four years in the job.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, will press Froman at the hearing at "to engage with Congress to pass TPA (trade promotion authority) legislation," a committee aide said.

The committee's senior Republican, Senator Orrin Hatch of Utah, will ask whether "the administration will formally request trade promotion authority," said a spokeswoman for Hatch.

Trade promotion authority is major piece of legislation that would allow the White House to submit trade agreements to Congress for straight up-or-down votes without any amendments.

The law expired in 2007 under former President George W. Bush, who had used to it negotiate about a dozen trade deals.

Obama has not formally asked for it to be renewed, although administration officials recently have said they are now prepared to work with Congress on drafting the legislation.

Hatch and Baucus have been in talks with the top Republican and Democrat on the House of Representatives Ways and Means Committee in the hope of producing a bipartisan TPA bill that could be approved this year.

The bill has historically been difficult to pass because many Democrats and union groups believe trade deals lead to more jobs moving overseas. As a result, a push by Obama could be needed for a bill to succeed.

Business groups say the legislation is necessary to assure other countries that any deal they strike with the United States won't be picked apart by lawmakers during congressional debate.

The White House already is in a major trade negotiation with 11 other countries in the Asia Pacific region that it hopes to wrap up by the end of the year, and plans to start talks in July with the European Union on a transatlantic free trade pact.

CAYMAN ISLAND ACCOUNT

Froman is also expected to face questions from Senator Charles Grassley, an Iowa Republican, about investments totaling about $500,000 in a Cayman Island account.

In a statement on Tuesday, Grassley accused Obama of hypocrisy for railing against offshore tax avoidance schemes during his re-election campaign and then nominating Froman for the USTR job, former White House budget director Jack Lew to be U.S. Treasury secretary and Chicago billionaire Penny Pritzker to be Commerce secretary.

"President Obama called the Ugland House ‘the biggest tax scam in the world,'" Grassley said, referring to a building in the Cayman Island where the fund is registered.

"Yet he nominated two top advisers in a row who invested in the Ugland House. He also nominated a Commerce secretary with significant offshore income."

Lew's nomination was approved several months ago, but Pritzker's nomination is still pending.

White House officials said Froman disclosed the Cayman Island investment made through his former employer Citigroup when he joined the administration in 2009 and in annual reports since then.

"Mike Froman has paid every penny of his taxes and reported all of the income, gains and losses from the investment on his tax returns. The existence of this investment is not news. It has been available online for over four years," said White House spokesman Bobby Whithorne.

On the advice of USTR ethics officials, Froman plans to extricate himself from the investment within 90 days if he is confirmed. He was not required by White House ethics official to divest the funds in his old post, Whithorne said.

(Reporting by Doug Palmer; editing by Christopher Wilson)

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