Washington Insider -- Thursday

Trade War Politics

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

Small Refiner Waivers Among Topics in EPA RFS Hearing

Waivers of Renewable Fuel Standard (RFS) obligations for small refiners was one of the topics raised by those testifying at the EPA field hearing to gather public input on their proposed RFS levels for biofuels in 2019 and biodiesel in 2020.

"Small refinery exemptions are a cancer to every RFS category," according to Lucy Norton with the Iowan Renewable Fuels Association.

Others called on EPA to continue to follow the law, with a representative of small refiners saying the agency needs to shield the small plants from the law's requirements.

"In the last six months, we have seen ethanol blending remain robust, and in fact slightly up, compared to the same period from last year," Lee Ann Johnson, who represents small refiners, told EPA. "This proves there is no 'demand destruction,' which is logical since many of the small refiners receiving exemptions do not blend their own fuel."

FDA's Gottlieb Comments on Jurisdiction Over Lab-Grown Meat

FDA and USDA are working closely to come up with a regulatory framework for lab-grown meat, or what FDA prefers to call “cell-cultured foods," according to FDA Commissioner Scott Gottlieb.

In remarks at a Politico Washington meeting, he noted “cell-cultured foods do not involve the slaughter of animals, which is central to USDA’s authority. We are working closely with USDA to try to understand what, if any, jurisdictional lines there are to know what role [the department] would play potentially in this as well. But it is very clear to us that a lot of the scientific aspects of this is what [FDA] is going to be looking at, and certainly things like fish would fall squarely within our domain.”

Gottlieb said there may be collaborative efforts with USDA on meat and poultry, but a lot of the cell-cultured products will likely be outside that sector.


Washington Insider: Trade War Politics

Well, the issue of foreign relations is getting much more attention these days, The Hill says. This week, administration claims that trade wars are good and easy to win came under increasing pressure, especially as new tensions emerged with Europe and Russia. The group reported that the Federal Reserve Chairman Jerome Powell told lawmakers that mounting trade tensions between the United States and key economic partners could pose serious risks to the U.S. and global economy.

In testimony at the Senate Banking Committee, Powell was cautious in his remarks and attempted to avoid commenting directly on President Trump's policies but was unable to avoid pressure from lawmakers from both parties who pressed him on how deeply the U.S. could be harmed in a trade war.

In response, he noted that escalating tariffs between the U.S. and others had already stunted business growth even though it was still too early to know the final impact.

"If it results in lower tariffs for everyone, that will be a good thing for the economy," he said of the administration’s trade policy. "If it results in higher tariffs across a broad range of goods and services that remain that way for a long time, that will be bad for our economy and other economies, too."

Powell, a Republican, also defended the global trading system that Trump has sought to upend, and he advocated for the eventual removal of tariffs.

Lawmakers, business groups and agriculture exporters are continuing to worry that administration tariffs on steel, aluminum and Chinese goods -- and the retaliation they spur -- could cause widespread economic harm. As evidence, Powell and Fed officials have noted recently that U.S. businesses have abandoned expansion plans due to rising costs and growing uncertainty driven by tariffs.

Powell insisted that trade issues are not within the bank's mandate but he said that high tariffs and trade barriers are typically harmful.

The Powell comment came as the European Union (EU), Mexico, Canada and China have targeted agricultural and manufactured goods produced mainly by states that are home to the President’s electoral base. The retaliatory tariffs they imposed on corn, soybeans, cotton, pork, apples and other major crops could cause severe losses for U.S. farmers and are boosting pressure on lawmakers, The Hill said.

For example, it reported that Sen. Orrin Hatch, R-Utah, on Tuesday blasted President Trump's trade policies and vowed to move forward with legislation that would rein in his trade authority if the imposition of tariffs does not subside.

The Senate Finance Committee chairman urged the Trump administration to rethink its global trade strategy, arguing that billions in tariffs are hurting U.S. consumers and businesses and walling off foreign markets from American exports.

"If the administration continues forward with its misguided and reckless reliance on tariffs, I will work to advance trade legislation to curtail presidential trade authority," Hatch threatened during a speech on the Senate floor.

So, we will see. Clearly, the administration is facing significant political pushback on its tougher-than-tough trade policies but it is equally clear that it is deeply dug in and seems unwilling to even consider change. Whether this commitment continues if Congress proceeds with hearings and serious efforts to reduce the President’s trade policy authority remains to be seen, especially as the President’s commitment to protect producers is discussed and tested in greater detail. This is a debate producers should watch closely as it emerges, Washington Insider believes.

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