Washington Insider -- Thursday

Agenda for Rest of 2018

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

More Details on Reworked US-Korea Trade Deal

Details are being released on the updated US-Korea Free Trade Agreement (KORUS), and would see South Korea allowing U.S. automakers to double their vehicle exports to 50,000 per year (and lift its cap on imports of U.S. trucks), while Seoul would win a permanent exemption from the 25 percent tariff on steel imports after agreeing to limit their steel exports to the U.S. at 70 percent of the average of shipments over 2015-2017— approximately 2.68 million metric tons.

The updated terms also would see South Korea agree to reduce regulatory and policy barriers to U.S. auto sales. U.S. tariffs of 25 percent on imported Korean pickups will remain in place until 2041 rather than phase out to zero over the next three years and South Korea will no longer require additional testing for U.S. vehicles that meet U.S. standards. South Korea will change its pharmaceutical payment program for innovative drugs to make U.S. companies eligible for reimbursements. The program has been limited to Korean companies.

US agriculture interests have expressed disappointment that there were not updates to agricultural provisions of KORUS, but the signals from the Trump administration are that the industry gains by not updating those provisions. The original KORUS trade deal has seen U.S. beef exports rise to $1.1 billion in 2017, nearly double what they were before the trade deal.

A side deal on currencies is also being finalized and, being a "side letter," is not officially part of the pact. South Korea will agree to provide more transparency into their foreign exchange activities and will avoid devaluing the won for competitive purposes. However, the full details of the side letter are still being finalized, according to reports.

Trump Talks China Trade With Germany, France

President Donald Trump spoke with both German Chancellor Angela Merkel and French President Emmanuel Macron on China trade issues, according to a readout of the discussions provided by the White House. Trump raised issues on intellectual property theft by China and other trade practices by the country with Merkel. "The president and the chancellor discussed joining forces to counter China's unfair economic practices and illegal acquisition of intellectual property," the White House said.

The goal was "to reaffirm the cooperative relationship between" the two countries. With Macron, the discussions were on "trade practices between the United States and European Union and the next steps in addressing China's unfair trade practices," the White House said in separate statement.

Washington Insider: Agenda for Rest of 2018

There still is a cloud of uncertainty regarding the Republican agenda for the rest of the year after passing a $1.3 trillion omnibus spending package, The Hill says. It expects that legislative activity will slow down dramatically after the Easter recess as incumbents seek to spend more time campaigning ahead of the fall midterm elections.

There also will be a fights over what should be debated and how political these battles will be—in case you thought they couldn’t get more political than they already are. Still, there are several “big deal” efforts outstanding that haven’t had much attention recently—and which the leadership hasn’t talked about much.

Infrastructure is one such issue. Pressure is growing for it to take center stage. However, there are deep divisions within the party over the scope of the package, how much it should cost and how to pay for it.

For example, Senate Energy Committee Chairwoman Lisa Murkowski R, Alaska, wants it to include energy infrastructure development. Commerce Committee Chairman John Thune R, S.D., wants it to include broadband development in rural areas. Sen. James Inhofe (R-Okla.), says he wants the package to focus on traditional projects such as roads and bridges.

And while Republicans agree that the package should be paid for with a mix of public and private financing, there’s no agreement on how much taxpayers should kick in, The Hill says.

Conservatives, led by Rep. Mark Meadows (R-N.C.), chairman of the House Freedom Caucus, said at the joint Senate–House GOP retreat in West Virginia that the federal government should contribute no more than $200 million. Other GOP lawmakers argue that Congress needs to spend more money to achieve something close to the $1 trillion package that President Trump promised during the 2016 campaign.

It the infrastructure package stalls, GOP leaders are looking at smaller, less-controversial bills. For example, reauthorization of the Federal Aviation Administration and another bill responding to the opioid epidemic, sponsored by Sen. Rob Portman R, Ohio, are options.

Portman also has a bill sponsored with Sen. Tim Kaine (D-Va.), to expand Pell Grant eligibility to help workers enter short-term training programs for technically demanding jobs. This effort already has White House support, The Hill says.

However, two issues that sparked intense debate in Congress in February and March, immigration and gun violence, are not expected to come to the floor anytime soon. The omnibus included a measure known as the Fix NICS Act designed to improve reporting to the National Instant Criminal Background Check System, dimming the chances of a vote on universal background checks, which Democrats are demanding.

“Republicans lobbied hard to get Fix NICS in the budget so that they didn’t have to have an open debate on the Senate floor,” said Sen. Chris Murphy (D-Conn.), an outspoken voice on gun violence.

Legislation to curb the rising costs of insurance premiums, which are expected to rise faster because of the repeal of the Affordable Care Act’s individual mandate, also is in limbo because of a fight over abortion language. Still, the most pressing priority after the break will be to confirm Mike Pompeo and Gina Haspel, Trump’s picks to head the State Department and CIA, respectively, The Hill said.

Pompeo is likely to have a relatively smooth ride to confirmation, as he received 66 votes to serve as CIA director last year. But, Haspel’s prospects are cloudier as senators have questions about her record on using harsh interrogation tactics. Last week, Sen. John McCain (R-Ariz.), asked Haspel, now the deputy director of the CIA, to explain her role in the agency’s enhanced interrogation program.

In addition, Sen. Rand Paul (R- Ky.), has accused her of helping to develop techniques that the federal government now classifies as torture and of destroying video evidence.

In addition, the Senate has a backlog of 131 nominees. Majority Leader McConnell set up six nominations before the Senate left for recess. Debate and procedures could easily eat up weeks of April floor time.

As the midterm elections near, GOP leaders will look for bills that help their candidates go on the offensive in September and October, The Hill says. It notes they are flirting with moving another tax-reform bill and daring vulnerable centrist Democrats to oppose it.

On another front, the Senate Foreign Relations Committee is gearing up to revive the chamber’s war authorization debate. Chairman Bob Corker (R-Tenn.), has scheduled a markup of an authorization for the use of military force for April 19. However, Corker may have difficulty getting floor time for the measure, which divides Republicans. Many in the party don’t want to place limits on the president’s war powers.

So, there’s still plenty to do, and plenty to fight about in the area of trade policy and the reauthorization of the new farm bill—which will be highly controversial. These are debates producers should watch closely as they emerge, Washington Insider believes.

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