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Kellogg lobbied on sugar under Gutierrez

Commerce pick's record faces study

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

As Commerce secretary, Gutierrez would be responsible for helping US 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 Department nominee in some time not to be directly tied to major political fund-raising.

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, a trade association whose board members have included Gutierrez, praised Bush's selection of one of the food industry's own to head the Commerce Department.

"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 US 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.

Gaston Cantens, spokesman for sugar giant Florida Crystals, said the company and its owners, the Cuban-born Fanjul family, welcomed the appointment of a fellow Cuban-American and saw no need for him to step aside from sugar issues. Company president Jose "Pepe" Fanjul is a major Bush fund-raiser, helping to collect at least $200,000 for his reelection bid.

The US sugar industry supports opening sugar to free trade if it is done at the World Trade Organization level to prevent foreign producers and governments from dumping large amounts of it on the world market, which drives prices down, Cantens said.

"Sugar is different than other commodities in that just about every country in the world produces it. So because of that, the only way to treat it fairly is to treat it on a world level and put all countries on the same page," he said. "We look forward to having that dialogue with Mr. Gutierrez."

White House spokeswoman Claire Buchan said Gutierrez would work with ethics lawyers at the Office of Government Ethics and Commerce to determine whether he should remove himself from issues related to the US-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, US-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 US government advisory committee on trade in processed foods.

The company has pressed Congress for action to lower sugar prices.

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