Washington Insider -- Tuesday

Trade Policy Fights Still Chaotic

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

Lawmakers Urge Implementation of Farm Bill Cover Crop Provisions

Farm-state lawmakers want USDA to expedite cover crop rules for acres that farmers were unable to plant because of the wet weather.

A group of senators wrote a letter to USDA Undersecretary Bill Northey asking him to speed up new rules under 2018 Farm Bill that would “provide important flexibility and greater certainty for farmers to harvest, graze and terminate cover crops” and remain eligible for crop insurance on their primary cash crop.

The biggest issue as that lawmakers said that forcing farmers not to do anything with cover crops until November 1 would be a major drain this year.

USDA Probing New GE Wheat Discovery

Genetically engineered wheat has been discovered in an unplanted field in Washington state, USDA's Animal and Plant Health Inspection Service (APHIS) confirmed on Friday (June 7).

Federal officials said there is "no evidence" the wheat -- genetically engineered to resist Monsanto's glyphosate herbicide -- has entered the field supply.

APHIS says it is collaborating with "state, industry and trading partners, and we are committed to providing all our partners with timely and transparent information about our findings."

U.S. wheat growers issued a statement confirming they are working with APHIS and noting that samples of the wheat plants were sent to USDA facilities in Missouri and Washington for testing and confirmation.

Washington Insider: Trade Policy Fights Still Chaotic

By and large, the press is fascinated with the numerous rolling battles being fought over trade policies. For example, Bloomberg says this week that the President’s decision not to impose tariffs on Mexico removed one obstacle for Congress to approve the North American trade deal but that the administration has more work to do to smooth the final stages of the accord’s ratification.

The administration’s decision on Friday to accepted Mexico’s offer of tougher immigration enforcement as sufficient to dissuade it from levying tariffs on all imports from Mexico deflated tensions with Mexico and, as far as Canada is concerned, clears a path for the US-Mexico-Canada Agreement (USMCA) to move forward, Canadian Finance Minister Bill Morneau said Sunday.

That leaves House Democrats as the last major stakeholders still to get on board. Speaker Nancy Pelosi, D-Calif., and her decision on when (and whether) the deal will get a vote depends on talks with the administration to address Democrats’ concerns, Bloomberg said.

During last week’s uncertainty over trade with Mexico, most Democrats publicly separated USMCA issues from the President’s tariff threat but removing that threat “doesn’t necessarily clear the way for the new NAFTA”. For example, Rep. Debbie Dingell, D-Mich., said recently she wants changes to the agreement’s labor, environmental and enforcement provisions that would satisfy her skeptical colleagues.

Deciding against the Mexican tariffs did, however, help the president with his own party – especially in the Republican-led Senate, Bloomberg said.

Finance Committee Chairman Chuck Grassley, R., Iowa., warned last week that the USMCA – the President’s top legislative priority this year – would be in peril if the threatened tariffs were implemented.

House Republicans for weeks have said the revamped trade deal, which updates but doesn’t fundamentally alter the decades-old NAFTA, would pass the House if only Pelosi would bring it to the floor. Representative Steve Scalise, R-La., a top member of GOP leadership, renewed that call Friday after the administration threats of tariffs against Mexico were pulled back and the breakthrough lauded as “putting us in a better position to make USMCA a reality.”

The lawmaker working groups that Pelosi appointed to negotiate with U.S. Trade Representative Robert Lighthizer are beginning to drill down on the details of how to resolve Democrats’ outstanding issues, Bloomberg said.

Pelosi has repeatedly said that her members “want to get to yes,” but only if the agreement resolves their doubts. Democrats have pushed Mexico to pass and swiftly implement labor reforms that would, among other things, allow workers there to vote for union representation with a closed ballot.

Trade in general has become a complicated ideological and electoral issue since the Trump campaign in 2016 denounced NAFTA as the worst example of globalism run amok with little regard for US workers. The President’s position sets him apart from traditional free-trade Republicans and it also creates a dilemma for 2020 Democratic candidates since Democrats traditionally have been more skeptical than Republicans regarding free trade.

The 2020 presidential race also squeezes the timing for a vote on the bill to implement the USMCA. Lawmakers of both parties have warned that passing such a deal will be politically tricky in an election year. That means the best chance for a vote would be before Congress recesses in August to avoid typical end-of-the-year budget fights, according to Representative Mark Meadows, R-N.C., a close Trump ally.

“Hopefully, we can get together and make sure that happens in the latter part of July,’’ Meadows said.

Even amid rising tensions from the administration’s tariff threat, Mexican President Andres Manuel Lopez Obrador reaffirmed his support for the new NAFTA deal. Its prospects in Mexico’s Congress are good, given the support of Lopez Obrador, whose party controls the nation’s legislative branch. Major opposition parties also want it to be enacted.

Nonetheless, the tariff confrontation may have created lasting damage to ties between the two countries. Republicans previously pleaded with Trump to remove steel and aluminum tariffs on Canada and Mexico – which he did – but they also have publicly worried about the lasting impact of changes to global commerce as a result of the administration’s multi-front trade wars.

Even though the administration retains some bipartisan support for its hard stance against Chinese trade practices, few lawmakers wanted to dump the accord with Mexico and Canada without a replacement. The USMCA came together after more than a year of painstaking negotiations.

Senator Thom Tillis, R-N.C., who’s up for re-election in 2020, said he has “no doubt’’ there’s enough support in the Senate to ratify the agreement. With help from pro-trade Republicans, Tillis said last week, the Democratic-led House should be able to pass it as well.

“Now that we’ve gotten the threat of tariffs out of the way, I hope that Speaker Pelosi will put that on the House floor,’’ he said.

In spite of deeply held convictions by the multitude of political factions involved, many levels of horse trading appear to hold strong potential for approval for the new NAFTA – a process and debate producers should watch closely, Washington Insider believes.

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