Washington Insider -- Thursday

GOP Criticizes Protectionist Trade Policies

Trump: Not Planning On Taking US Out Of WTO

President Donald Trump said he was not planning on withdrawing from the WTO, following a published report that aides have crafted a bill that would allow him to unilaterally withdraw from the WTO and raise tariffs at will.

"WTO's treated the United States very badly," Trump told reporters at the White House. "We are not planning anything now, but if they do not treat us properly, we will be doing something." he said.

On Sunday, Axios reported that the White House has drafted a bill that would allow Trump to skirt Congress and WTO rules on trade, giving him the power to raise tariffs and set different rates for member countries with little to no oversight, running afoul of long-established global trade rules.

Asked what Trump meant by "doing something," White House spokeswoman Sarah Huckabee Sanders said: "I do not have a specific announcement on what he would do. Right now, he would like to see the system get fixed, and that is what he is focused on doing."

Commerce Secretary Wilbur Ross Monday echoed that the U.S. is not planning an imminent departure from the WTO despite Trump's frustrations with the global body. Ross said it is a "little premature" to talk about withdrawing from the WTO. "We have made no secret of our view that there are some reforms needed at the WTO," Ross said in a CNBC Squawk Box interview. He said that WTO members have acknowledged that reforms are needed.

But any legislation to withdraw from the WTO stands little chance of passing on Capitol Hill. Congress can vote every five years on whether to stay in the WTO and no votes were taken in either 2010 or 2015. The next possible vote would be 2020.

Mexico's New NAFTA Negotiator Sees Momentum Rising in Talks

Negotiations under the NAFTA 2.0 effort to update the trade pact will accelerate now that Andrés Manuel López Obrador has won the Mexican presidential election, his incoming chief negotiator in the talks, Jesus Seade told Reuters.

"We are basically supporting what Mexico has been putting forward," he said. "And we will be more than happy to explore, proactively, ways to energize the negotiation." Seade said he will work with outgoing Economy Minister Ildefonso Guajardo as the talks conclude and Mexican negotiators will meet in coming weeks to set their plans.

While backing the positions Mexico has taken, Seade said he has ideas on how to improve the deal for the U.S. without hurting Mexico. He did not provide details on what those ideas may involve.

A key in the talks has been the auto sector and its rules of origin, with Seade labeling the 70 percent content threshold Mexico offered as being "high, but I will not fight it... but going beyond that, I think it begins to hamper the efficiency of our car industry collectively."

As for raising wages for autoworkers, Seade backs the concept but said NAFTA is not the right place. "It begins to create all kinds of precedents for other sectors," he said. "Why not the tourism industry? Why not kitchen equipment?"

Regarding potential U.S. auto tariffs, Seade said he leaned toward retaliation, noting U.S. corn could be a good product to target.

Seade was Mexico's trade ambassador during the negotiations to set up the WTO, and pledged to "make every effort to stop the Americans from leaving."

Thurs. July 5 Washington Insider GOP Criticizes Protectionist Trade Policies

POLITICO is reporting this week that Congressional Republicans are increasingly critical of administration trade policies -- to the point that "not a party meeting goes by these days at which multiple Republicans don't vent that the president isn't listening to them -- and plot how to fight back."

POLITICO argues that "mounting frustration with the Republican president could be seen as a warning sign" for the party amid "a surprisingly favorable stretch." The president appears, at least for now, to have weathered the internal GOP backlash against his family separation policy, the group said. He has a new Supreme Court vacancy to fill, and he ended last week celebrating the "economic miracle" he said his tax cuts created.

But Republican senators say they can't get the president to comprehend that his tariffs offensive could upend all of that progress in short order. Commodity prices in the heartland are sagging, U.S. allies are retaliating with tariffs of their own -- and GOP leaders are fretting that the booming economy is about to go into a pre-midterms nosedive.

"Individual senators have met with the president, including me, Ag Committee chair Pat Roberts, R., Kan., said. "The Ag committee met with him, the Finance Committee met with him. And there's nobody for this." He said that "Trump is protectionist who has his policy wrapped around the rear axle of a pickup. And it's hard to get out."

GOP senators say Trump has heard them out at White House meetings and in phone calls. But he has plowed ahead, anyway. The tit-for-tat is accelerating: Tariffs against China are expected to take effect this week.

After a fruitless diplomacy campaign, some in the party are weighing confrontation. Most notably, Senator Orrin Hatch, R., Utah, is pushing legislation in his Finance Committee to rein in the president. POLITICO says this effort seems to have more support from GOP leaders than legislation that would place new checks on Trump's power to impose tariffs, which Roberts dubbed the "hand-grenade" option.

Hatch "is pretty fired up," said Sen. John Thune, R., S.D., the No. 3 GOP leader. And "there's definitely a lot of sentiment among members of the Finance Committee that the administration's tariff positions are going to step on the economic gains that we've made."

But the action isn't just in the finance panel, which could take weeks, if not months, to write and pass a bill that balances the Republicans' support for Trump with their opposition to his trade policies. GOP Sens. Bob Corker of Tennessee and Pat Toomey of Pennsylvania are now trying to attach their own tariff proposal -- which would allow Congress to vote up or down on any tariff with a national security rationale -- to almost anything that moves across the Senate floor.

Senate Majority Leader Mitch McConnell, R., Ky., met privately with Corker and Toomey last week to discuss a strategy for how to get them a vote on their plan as part of the farm bill debate. But when Senate Republicans finally agreed to let them have their roll call on the Senate floor. Sen. Sherrod Brown, D., Ohio, blocked them in a surprising defense of a president from the opposing party.

But Corker and Toomey said they're going to keep at it. "We're not going to abandon our efforts," the Pennsylvanian vowed.

Corker and Toomey's tactics annoyed a number of Republican senators who wanted to protect the farm bill from being tarnished with an amendment that might make Trump veto the entire bill. The duo tried to do the same on a defense bill earlier in June, leading Sen. Lindsey Graham, R., S.C., to snap at the retiring Corker in a party lunch: "You don't care about the Republican Party because you're leaving."

Those tensions haven't abated. Sen. Jeff Flake, R., Ariz., has blocked confirmation of Republican judges, hoping to force a vote on the Corker-Toomey plan. Among those thwarted is Georgia Circuit Court nominee Britt Grant, who is on Trump's list of potential Supreme Court nominees.

And, even the excitement the pending confirmation of a conservative justice on the high court may do little to relieve the pressure that rural Republicans are feeling back home as a result of the tariffs, POLITICO says.

For example, Sen. Joni Ernst, R., Iowa, said her state is hurting because of retaliatory tariffs aimed at agriculture industries -- and Iowans are fast running out of patience, POLITICO said.

But there are some Trump allies who may never vote to do anything that could be perceived as undercutting the President.

"Everything the White House does, they're in it every day," said Sen. David Perdue, R., Ga., a close Trump ally who nonetheless opposes tariffs. "For me as a legislator here in the Senate to second guess? I am kind of reluctant to do that."

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com