Gutierrez Marshaled Markets at Kellogg

WASHINGTON – Under Carlos Gutierrez's (search) stewardship, Kellogg Co. lobbied to open U.S. markets to cheap Australian sugar and called the government's current system for propping up the U.S. sugar industry "one of the worst forms of protectionism."

As Commerce Secretary (search), Gutierrez would be charged with helping U.S. companies compete abroad, and his record at Kellogg will be scrutinized by the lawmakers who will review President Bush's nomination of the Cuban-born executive.

Gutierrez was credited with turning around Kellogg's struggling finances, opening up new factories in Mexico in hopes of attracting new customers.

He and his company left an unusually small trail of political donations for a major company — making him the first Commerce nominee in some time not to be directly tied to major political fund raising.

And his company had few major environmental or worker safety issues, but last year agreed to recall boxes of children's cereal that contained Spider-Man toys powered with mercury batteries.

Manly Molpus, president of the Grocery Manufacturers of America (search), a trade association whose board members have included Gutierrez, praised Bush's selection of one of the food industry's own to head Commerce.

"You can start with international trade. His knowledge of the global marketplace gives him some excellent preparation for his new job," Molpus said. "He has spent a great deal of time traveling throughout the world, working in various assignments from Mexico to Asia. I think he will bring a very practical set of realities to the issues of international trade."

The industry is hopeful one of those issues is the high cost of sugar for U.S. food manufacturers, but isn't counting on it, he said. "That is a very thorny issue, it is a very tough political issue," Molpus said, adding that sugar prices aren't typically in the commerce secretary's direct purview.

White House spokeswoman Claire Buchan said Gutierrez would work with the Office of Government Ethics and Commerce ethics lawyers to determine whether he should remove himself from issues related to the U.S.-Australia trade agreement, sugar prices or other subjects on which Kellogg has lobbied.

Gutierrez will also consult with government ethics officials to determine whether he needs to sell his Kellogg stock or put it in a blind trust. "He'll work with the Office of Government Ethics to ensure that he fully complies with all ethics rules and avoids the conflicts of interest or even any appearance" of them, Buchan said.

Kellogg spent nearly $300,000 lobbying in Washington last year. Its top issues have included sugar price reform, U.S.-Mexico sugar quotas, international tariff reductions and customs issues, economic development, tax deductions for advertising costs and food safety and labeling. In addition to its lobbying, Kellogg has a representative on a U.S. government advisory committee on trade in processed foods.

The company has pressed Congress for action to lower sugar prices. In testimony before the House Ways and Means Committee last June on the U.S.-Australia Free Trade Agreement, Kellogg vice president George Franklin said his company and the Grocery Manufacturers of America weren't opposed to the agreement, but wouldn't actively support it, either, because sugar was excluded.

Franklin called the U.S. sugar program "one of the worst forms of protectionism."

"The industry has lost thousands of domestic jobs as companies are forced to leave the United States to manufacture sugar-containing products in countries where there is access to lower-priced sugar," Franklin testified.

Last March, Kellogg announced it was building its third Mexican factory, attributing the growth to strong sales in Mexico.

In 2000, the Labor Department sided with 500 laid-off Kellogg workers in Battle Creek, Mich., who blamed the closing of their factory on Kellogg cereal imports from Canada and argued they qualified for federal job training and income assistance because of it.

Unlike several predecessors as commerce chief, Gutierrez doesn't appear to be a major political fund-raiser. He isn't one of Bush's $100,000-and-up fund-raising "pioneers" or "rangers," and isn't listed as a donor to either of Bush's presidential campaigns.

Gutierrez donated $10,500 at the federal level in 2003-04, including $4,000 to the U.S.-Cuba Democracy PAC and $6,500 to GOP congressional candidates, figures compiled by the nonpartisan Center for Responsive Politics show.