Washington Insider -- Monday

Both Parties Tiptoe Toward Congressional Approval of USMCA

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

Trump Notes China Not Buying US Ag Products

President Donald Trump took to Twitter Thursday, noting that China has not made purchases of U.S. ag products that he says were promised by Chinese President Xi Jinping.

"Mexico is doing great at the Border, but China is letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would," Trump said. "Hopefully they will start soon!"

China has not confirmed the pledge, and neither side has documented the discussion. Reports that the U.S. is working on a list of commodities for China to purchase are tentative at best.

Earlier, China said trade talks will resume "on a basis of equality and mutual respect," and that its core concerns must be addressed.

Fed's Powell Says Ag Banks Remain In Solid Shape

Banks remain in good shape to continue lending to farmers and ranchers despite deteriorating conditions in the agricultural economy, Federal Reserve Chairman Jerome Powell told lawmakers on Thursday.

"Our farm belt banks have had a lot of experience in dealing with the issues that farmers are confronting right now," Powell said at a Senate Banking Committee hearing. "As a whole, the agricultural sector is in a difficult place. It is a tough time. I know that banks are trying to work through those difficulties with farmers."

Washington Insider: Both Parties Tiptoe Toward Congressional Approval of USMCA

Bloomberg says this week that the president is pushing Congress to approve the new North American trade agreement with Mexico and Canada, saying it would bring jobs to the U.S. and stop factories from leaving. "I'm calling on Congress to pass the USMCA," he told an audience in Milwaukee on Friday, referring to the U.S.-Mexico-Canada Agreement. "Every day that goes by it gets more and more political."

House Democrats haven't yet signed onto the president's agreement, which would replace the North American Free Trade Agreement, saying they want to change provisions on pharmaceuticals, the environment, labor and overall enforcement.

As a result, Bloomberg says the fate of the deal depends on the administration's success in persuading Democrats who control the U.S. House to support it. Officials in his own administration are divided over how hard to press lawmakers for a quick vote on the issue. It notes that "as the 2020 presidential campaign heats up, Trump has argued he's a better trade negotiator than Democrats and that the USMCA is proof."

At Friday's rally, hosted at a Lockheed Martin Corp. facility, the president said the new deal "will close the biggest loopholes that caused the mass exodus" of manufacturing jobs from the U.S.

He argued that the pact could bring more than 1 million jobs to the U.S., far beyond other estimates. The U.S. International Trade Commission, whose findings are highlighted on the White House website, has estimated the agreement would add 176,000 jobs in the sixth year after it's passed.

Bloomberg focused on the fight to gain Congressional support and observed that administration officials who want to give Speaker Pelosi time to get House Democrats on board with the NAFTA overhaul have the upper hand--for now. The White House has stepped back from plans to try to force a vote, Bloomberg said.

However, it thinks that the White House's patience on the new trade deal comes with a caveat: Democrats have to show progress negotiating changes in the next month so that trade officials can persuade Trump there's a path to a vote in the near future.

In the meantime, administration aides appear to be split on the issue. U.S. Trade Representative Robert Lighthizer is in favor of working with Pelosi and addressing Democrats' issues, while a group led by Vice President Mike Pence's chief of staff Marc Short is pushing for a vote before Congress's six-week recess.

"I think that the reality is it's more likely to happen this fall," Short told the press, adding that the House speaker holds the "keys" to getting a vote. His statement echoed comments made by White House economic adviser Larry Kudlow earlier this week.

Bloomberg also says that Lighthizer's push for more time to work with Democrats was met with criticism from those aides who believe patience is pointless because congressional Democrats have no intention to give Trump a political victory. They also believe that Lighthizer is foolish to put his trust in traditional anti-free-trade Democrats such as Senator Sherrod Brown of Ohio to support the final agreement.

Short and those who agree with him have been targeting House Democrats who represent districts Trump carried in 2016, putting pressure on them to approve the agreement.

A delay deep into the fall risks making the trade deal a campaign issue among Democratic presidential contenders. If some were to come out against it, Pelosi could decide to shelve a vote.

Pelosi, D.-Calif., has made clear both publicly and privately that forcing a vote before she gives her blessing, or following through on Trump's threats to withdraw from the existing NAFTA to increase leverage, are bad ideas.

House Democrats signaled progress last week after meeting with Lighthizer on USMCA's labor provisions. Representative Earl Blumenauer of Oregon said he hopes for a vote in the fall but that he sees no deadline for when the agreement would come to the floor. He is in charge of changes to drug pricing provisions, and will lead a group of members who will travel to Mexico later this month to meet with labor leaders.

Clearly, Democratic approval of the new NAFTA will require careful leadership and support for a very complex deal, both in Mexico and the U.S. — debates producers should watch very closely as they emerge, Washington Insider believes.

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