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Silicon Valley Goes to Washington

A free-trade accord with Central America is the latest priority for a sector that once steered clear of Capitol Hill.

June 05, 2005|Jonathan Peterson | Times Staff Writer

WASHINGTON — A traveling corps of Silicon Valley executives descended on Capitol Hill last week, touting the Central American Free Trade Agreement as vital for the success of U.S. technology products in a global economy.

In the eyes of some CAFTA supporters, the weight of that message was amplified considerably by the people relaying it.

"Members pay special attention to the high-tech community," said Rep. Kevin Brady (R-Texas), a champion of the hotly contested trade deal that may reach the House floor in June. He added, hopefully: "They're key to the passage."

At least, they would like to be. The escalating struggle over trade is just the latest uphill fight for an industry that once steered clear of Washington but has now poured hundreds of millions of dollars into its goal of becoming a player in the capital.

High tech spends more than $80 million a year on lobbying -- sixth among major industries and up from 17th in the late 1990s -- according to the nonprofit Center for Public Integrity.

Tech lobbyists even have their own name for Franklin Park, the downtown block surrounded by the Washington offices of Microsoft Corp., Dell Inc., EBay Inc. and others: Silicon Square.

Yet a sector that was the glamorous new kid in the capital just a few years ago faces growing pains.

So many high-tech associations have emerged that even members of Congress have trouble keeping track. Compared with old-line lobbies of labor and industry, high tech still has a limited track record of delivering votes. And in the aftermath of the dot-com bust, the industry has lost some of its luster.

What's more, tech lost a fierce battle last year to derail new rules requiring companies to report stock options as an expense on their financial statements -- a stinging defeat for an industry that, more than any other, uses options to attract and retain talent. Nor has it succeeded in winning more spending for math and science education, despite a growing competitive challenge from overseas.

"I don't think anybody in the tech industry will tell you they're calling the shots," said Daniel Lathrop, who monitors industry lobbying expenditures at the Center for Public Integrity. "They're still reacting to a lot of issues. But on some issues they've been able to set the agenda."

The Central American Free Trade Agreement may not be one of them. House Democrats, backed by labor, are broadly opposed because of fear that it will hurt U.S. workers. Unions at tech companies are also against it. Members with close ties to the sector, including Reps. Anna Eshoo (D-Palo Alto) and Zoe Lofgren (D-San Jose), have not yet committed on the matter.

The technology industry has argued that the Central American deal would yield it quick savings of $75 million a year through lower tariff costs. The sector also expects long-term benefits as U.S. technology companies supply many of the products needed by Central American nations as they modernize and build their infrastructure.

A defeat of the trade deal, its advocates fear, could jeopardize future efforts to ease barriers elsewhere in the world.

But in the Bush administration and on Capitol Hill, some proponents of the accord are waiting for high tech to translate its words into votes.

"I've been saying to them, they need to plead with my Democratic colleagues in their community to be supportive of the CAFTA," said Rep. David Dreier (R-Glendora), chairman of the powerful House Rules Committee.

Dreier, who counts himself as a big fan of high tech, said the industry's track record in Washington was mixed: "Like any agenda, it's got wins, it's got losses, and it's got challenges that lie ahead."

The challenges no longer seem limited to matters of emerging technology.

Rather, amid increasingly intense competition, high-tech executives have become newly sensitive to an array of issues that affect their future labor force, including education and science funding.

Last week, for example, 20 corporate officers from California companies including Solectron Corp. and Rambus Inc. went on a marathon of meetings with dozens of members of Congress to make their case on CAFTA and other issues, including transportation funding. It was the first such trip to the capital by the Silicon Valley Leadership Group, which in the past has focused more exclusively on regional concerns.

"We don't operate in a Silicon Valley bubble that is not affected by the outside world," said Charles Kenmore, chief executive of ANDA Networks Inc. in Sunnyvale, Calif., who arrived with his colleagues Tuesday. "Issues in Washington really do affect our business."

That realization is a far cry from the days when Jack Krumholtz had to bide time between meetings in his Jeep Cherokee on quiet Capitol Hill streets. Microsoft hired him as its first full-time Washington lobbyist in 1995, squeezing him into a sales office on the city's northwest fringe -- too far to make extra trips between Congress and his office on busy afternoons.

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