Washington Insider -- Tuesday

By DTN's Washington Insider

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Brazil Shifts Rules on Ethanol as Imports From the US Rise

Buyers of imported ethanol in Brazil will have to follow the same capacity and inventory requirements as those that apply to domestic producers, according to a ruling published in Brazil's official gazette.

The effort is aimed at giving "fair treatment" to importers and producers after a "violent" increase in imports of U.S. ethanol into Brazil, Energy Minister Fernando Coelho.

While Brazilian Agriculture Minister Blairo Maggi requested the country impose import duties on U.S. ethanol, Coelho indicated that could prove costly to Brazil.

"I think tariffs could cost us even more in retaliation," he said, noting his agency would not adopt any other measures to protect the Brazilian ethanol industry despite the requests for such action.

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Canada Foreign Affairs Minister to Visit Washington to Discuss NAFTA

Canada's Foreign Affairs Minister Chrystia Freeland announced that she will meet with U.S. Secretary of Commerce Wilbur Ross on Tuesday to discuss the renegotiation of the North American Free Trade Agreement (NAFTA).

The visit of the Canadian Foreign Minister, who is in charge of the NAFTA renegotiation case, comes to the U.S. after the Senate last week confirmed Robert Lighthizer as President Trump's U.S. Trade Representative.

The Canadian Minister arrived in Washington Monday for a two-day visit, during which she will also meet her American counterpart Rex Tillerson, Radio Sawa reported.

Freeland will be accompanied by Canadian Defense Minister Harjit Sajjan, who will meet his U.S. counterpart James Mattis. These meetings come ahead of a NATO countries' meeting scheduled for the end of May in Brussels, which will be followed by a summit of the Group of Seven (G7) industrialized countries in Italy.

President Donald Trump agreed at the end of April to renegotiate NAFTA, which has been in effect since 1994. However, the U.S. government has yet to formally inform Congress of its intention to renegotiate this agreement, and if doing so, U.S. lawmakers will have 90 days to consider the government's request and then inform the Canadian and Mexican sides.

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Washington Insider: New USAID Head Named

The Washington Post is reporting this week that the administration has nominated a former Republican congressman from Wisconsin and ex-ambassador to Tanzania, Mark Green, to head the U.S. Agency for International Development (USIAD). The Post sees the nomination as a “rebuttal to the hyper-partisanship of Washington.” It notes that support for the appointment came from “across the ideological spectrum.”

Fiscal hawks in Congress expect that Green would work to make sure programs receiving tax dollars are run more efficiently, the Post said. At the same time, aid groups that focus on development and disaster relief are “welcoming someone who cares about foreign economic aid to argue on their behalf.”

Republicans said Green would promote liberty and human rights. Democrats said he would work in a bipartisan fashion, the Post said somewhat breathlessly.

“There’s a sense of relief,” said Scott Morris, a senior fellow at the Center for Global Development. “In the environment we’re in, with real alarm being expressed by advocates for foreign assistance and engagement, people were desperate for something like this — to be reassured the whole aid enterprise was not simply going to disappear.”

Green’s nomination comes as the Trump administration is proposing drastic budget cuts of about 30% for the State Department, with a “large proportion of those expected to come from USAID, the lead agency for U.S. economic assistance,” the Post said.

Less than 1% of federal spending goes to foreign assistance, which has strong bipartisan support in Congress. It also is backed by the Defense Department, where the military leadership considers it a way to prevent conflicts that would require U.S. intervention.

Green has spent much of his career in politics and development work. He served four terms in Congress, from 1999 to 2007. While in Congress, he helped create the Millennium Challenge Corp., an independent foreign aid agency that fights poverty. As U.S. ambassador to Tanzania from 2007 to 2009, he oversaw the management of large development and anti-AIDS programs.

After returning to the United States, he led an organization that worked with business leaders to reduce poverty through economic growth in Africa. He is president of the International Republican Institute, a pro-democracy group that helps aspiring democracies work on governance, leadership and election issues.

“He’s built a reputation in all the various communities — in politics, in development and in diplomacy — of working across party lines,” said Kenneth Wollack, Green’s counterpart at the National Democratic Institute.

Sen. John Boozman, R-Ark., who got to know Green when they were both in the House of Representatives, said members of Congress would listen to Green’s advice because he is known as something of a fiscal hawk.

“We all agree there’s a finite amount of money and we want it to go to people who need it,” he said. “Mark has a very strong record regarding fiscal issues. That’s why the administration is looking to him. They want to stretch the dollars as far as they can.”

Many aid organizations have begun making preparations for big drops in their federal assistance. No one expects Green would be able to prevent that entirely.

“His appointment is not going to change what the president is proposing,” said Tom Hart, North American executive director of ONE, which fights poverty and disease primarily in Africa. “But Mark is an encouraging sign that the administration, despite some pretty severe cuts on the spreadsheet, is investing in strong leadership.”

Nevertheless, many who work in the field expect Green would be willing to advocate for them, the Post said.

“People are still anxious and concerned,” Liz Schrayer, head of the U.S. Global Leadership Coalition, a network of groups that urge investing in development aid and diplomacy to complement military spending told the Post. “As long as Ambassador Green is given a seat at the table, and they listen to his voice, I think people will be relieved.”

So, we will see. Many ag groups support USAID efforts because they support U.S. overseas markets—as well as provide emergency help to many needy people. However, international support has been shifting away from the provision of commodities toward financial help and local purchases, and political support appears to have weakened as a result. It also is likely to be weakened further by the strong political anti-trade policies that emerged during the recent election campaigns.

As a result, Mr. Green likely will have his work cut out for him as tight budgets appear to face USAID far into the future. That's a trend U.S. producers should watch closely as it emerges, Washington Insider believes.

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