Washington Insider -- Friday

By DTN's Washington Insider

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

US Requests Talks with South Korea for Possible KORUS Amendments

The U.S. has formally requested talks with South Korea to consider potential amendments to the U.S.-Korea Free Trade Agreement (KORUS), according to a letter sent by U.S. Trade Representative Robert Lighthizer to South Korea Minister of Trade, Industry and Energy Joo Hyunghwan. Link to letter.

Calling for a special session of what is called the Joint Committee soon in Washington, Lighthizer said, "I believe that this session and the follow-on negotiations will provide an opportunity to review progress on the implementation of the agreement, resolve several problems regarding market access in Korea for U.S. exports, and most importantly, address our significant trade imbalance."

Noting the Trump administration has a "key focus" of reducing trade deficits with partners around the world, Lighthizer said, noting "real concerns" with the imbalance that the U.S. has with South Korea. The U.S. overall trade deficit has increased and the U.S. deficit in goods has doubled since KORUS came into force, he added.

"It is critical that we achieve real progress that fosters a truly fair and level playing field, and a more balanced trade relationship," Lighthizer said.

Terms of KORUS require a special session of the Joint Committee be held within 30 days of a request, Lighthizer noted, proposing that staffs of the two officials meet to agree on a date for the session "in the very near term."

The U.S. Chamber of Commerce for one welcomed the effort. "The U.S.-Korea Free Trade Agreement has supported American exports such as agricultural products, manufactured goods, and services," U.S. Chamber Senior Vice President for Asia Tami Overby said. "The Chamber looks forward to working with the administration to identify possible ways to improve implementation and enforcement and to ensure that the agreement delivers on its potential to create jobs and grow our economy."

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European Commission to Clear GMO Soybean Variety for Import

Imports of a genetically modified (GMO) soybean variety will soon be allowed by the European Union (EU) despite an inconclusive vote by EU member countries July 12 and a negative European Parliament opinion, the European Commission (EC) told Bloomberg BNA.

Dow AgroSciences, applied in 2011 for an authorization permitting imports of its DAS-68416-4 soybean. The company "looks forward to a timely EU import approval," Dow said in an emailed statement to Bloomberg BNA. The soybean "has already been approved in the main soybean cultivating countries and export markets," and was judged safe by the European Food Safety Authority (EFSA), the company noted.

The EU authorization will cover the use of the soybean variety for food and animal feed. Anca Paduraru, spokeswoman for the European Commission (EC), said the EU's executive body will formalize the decision on the authorization "in the coming weeks or months." The Commission took the decision after a regulatory committee of EU countries was unable to produce a qualified majority either for or against the authorization.

No-opinion votes in EU regulatory committees are typical relative to authorizing imports of GMO crops because of differences among member countries over the use of the technology. In such situations, decision-making on authorizations for GMO crops defaults to the EC which follows the recommendations of the EFSA.

In a nonbinding opinion July 11, the European Parliament objected to the authorization partly because EU countries were unable to decide on GMO crop approvals. The Parliament also said the GMO variety is resistant to herbicides containing the hazardous substances 2,4-dichlorophenol and glufosinate ammonium.

The EU imports 36.1 million metric tons of soybeans annually, representing 97% of the bloc's consumption, Dow AgroSciences said. The main source countries for EU imports of GMO soybeans are Brazil, Argentina and the U.S., according to data from EuropaBio, a trade association which represents biotechnology companies.

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Washington Insider: FY2018 Ag Spending Bill Reaches House Floor

Informa Economics is reporting this week that in spite of the deep legislative logjam in Congress, the House Appropriations Committee approved by voice vote a $20 billion discretionary spending bill to fund USDA, FDA and the Commodity Futures Trading Commission. The measure now will move to the House floor.

The bill suggests a tight spending outlook for the coming year, but not quite as tight as the administration had requested. It would provide $1.1 billion less discretionary spending than was available in FY 2017—but would support combined discretionary and mandatory spending for programs like nutrition assistance and crop insurance in the amount of $144.9 billion, $4.1 billion above President Trump's request. That would be is down $8.6 billion below the FY2017 enacted level, Informa said.

In addition to providing funding, the bill includes several other requirements. For example, it would require USDA to conduct a “food safety equivalency determination” for all beef products eligible to be imported into the U.S. from Brazil.

Another amendment would require USDA to report measures China will take to inspect chicken and report disease outbreaks before it completes any rule allowing chicken raised and slaughtered in China to be exported to the U.S. The language was aimed at shoring up the administration’s May deal to allow China to send more Chinese chicken to the U.S.

The language would deny funding for carrying out U.S.-Chinese agreement unless USDA’s Food Safety and Inspection Service can “ensure that the poultry slaughter inspection system for the PRC (People’s Republic of China) is equivalent to that of the U.S.”

It also includes a prohibition on use by federal nutrition programs of raw or cooked Chinese chicken and sets out requirements China will have to meet to export cooked chicken to the U.S.

The bill also would expand the eligibility of farm workers for temporary housing. It is aimed at workers who enter under the H-2A visa program and would be limited to housing for those legally admitted to the U.S. for farm work.

A manager’s package increased proposed funding from $185 million to $201.6 million for the McGovern-Dole International Food for Education and Child Nutrition program that uses school meals to encourage families in developing nations to send their children to school. The spending level would be unchanged from FY 2017.

Informa noted that the bill includes a $200 million increase to USDA’s guaranteed farm operating loan program, although it cuts several other USDA farm loan programs sharply, including guaranteed ownership and direct ownership and operating loans.

One additional controversial feature was a narrow rejection of a proposed continuation of the federal ban on horse slaughter. In many areas of the U.S., surplus horses are abandoned and damage fragile environments heavily. However, Informa said this fight likely is not yet over since the topic will likely be part of the ag spending debate in the Senate, where it has supporters.

In addition, opponents of the ban argue that it simply shifts horse processing to Mexico, where the animals are often treated inhumanely.

Of course, the federal spending wars will continue as deep cuts are proposed in the Senate as well as some under Executive programs—and likely will intensify as the next Farm Bill debate gets seriously underway. Secretary Perdue says he has fought such battles before, and is prepared to defend important sector programs once again.

Already, the extensive structure of ag programs has come under pressure from budget hawks and others who want to dismantle, or at least sharply limit them. Agriculture has a much better economic case to defend its safety net programs in this debate than it did the last time around when farmers were doing relatively well--but it also can expect to face stronger, better positioned adversaries. The result can be expected to be bitter and protracted fights and likely some difficult alternatives, Washington Insider believes.

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