Washington Insider-- Wednesday

A Surprising China Defender

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

CFAP 1 Payouts Pass $10.2 Billion But No CFAP 2 Data Yet

Payouts under the Coronavirus Food Assistance Program 1 (CFAP 1) moved up to $10.2 billion as of October 4, according to the Farm Service Agency (FSA).

That includes $4.97 billion for livestock, $2.63 billion for non-specialty crops, $1.76 billion for dairy, $743.7 million for specialty crops and $103.8 million for aqua, nursery and flora crops.

Iowa continues to lead all states with $968.7 million followed by Nebraska at $715.1 million. California has moved up to the third post at $662.4 million followed by Texas at $629.7 million, Minnesota at $608.6 million and Wisconsin at $522.9 million.

Even as farmers are reporting already receiving payments under CFAP 2 where enrollment started September 21, USDA has not made any payment data available. “CFAP 2 data will be available in the coming weeks,” FSA said.

FSA Clarifies Who Is A 'Contract Grower' For CFAP 2

For the Coronavirus Food Assistance Program 2 (CFAP 2), the Farm Service Agency (FSA) has issued guidance to further clarify who is considered a “contract grower” relative to eligibility for the program.

“For CFAP 2, 'contract grower' is a person or legal entity who grows or produces an eligible commodity or livestock under contract for someone else,” FSA said. “The contract grower's income is dependent upon the successful production of a crop or livestock or offspring from livestock.”

FSA further noted that a contract grower “does not have ownership in the commodity or livestock and is not entitled to a share from sales proceeds of the commodity or livestock.”

Using that definition FSA said, “A person or legal entity that raises or grows an eligible commodity under contract and has both ownership and risk of production loss in the commodity or livestock is eligible for CFAP 2.”

That definition is key, FSA noted as those signing a CFAP 2 application are “certifying that they have both an ownership share and risk in the commodity or livestock included on the application.”


Washington Insider: A Surprising China Defender

Across the Trump administration U.S. officials have ramped up their criticisms of China for its international investments and social policies. However, the New York Times is reporting this week that while U.S. Trade Representative (USTR) Robert Lighthizer has for decades been one of China's toughest critics, that has changed.

Since brokering a trade deal with Beijing in January, he has “now become one of China's biggest defenders within the administration.” More recently, Lighthizer has criticized several proposed policy measures that likely rankled Beijing, arguing they could disrupt the U.S.-China trade pact that he and President Trump spent more than two years trying to forge. And, he has touted Beijing's efforts to uphold the pact and live up to its end of the deal.

These views have brought Lighthizer into conflict with more hawkish members of the administration, including State Department officials who have advocated closer ties with Taiwan, along with members of Congress.

Last week, 50 U.S. senators of both parties wrote Lighthizer urging him to begin the formal process of negotiating a deal with Taiwan. “We are confident that a U.S.-Taiwan trade agreement would promote security and economic growth for the United States, Taiwan and the Indo-Pacific as a whole,” they wrote. “We urge the administration to prioritize a comprehensive trade agreement with Taiwan, and we look forward to working with you to secure this framework.” Proponents say dealing directly with Taiwan could help counter some of China's growing influence in technology and commerce.

However, Bonnie Glaser, a senior adviser for Asia at the Center for Strategic and International Studies, said concerns over preserving the current trade deal with China were likely to sink the prospects of Taiwan negotiations, at least for the remainder of this administration.

“The administration, particularly of course USTR, they're focused like a laser on this trade deal with China,” she said. “The president doesn't want it to fall apart.”

The president has said he is “not happy” with China for allowing coronavirus to spread beyond its borders and has ratcheted up punishment on Chinese tech companies, like TikTok and WeChat. Still, he has not “ripped up the trade deal or threatened to take additional trade action against Beijing. In part, that's because he faces pressure—from American banks, businesses and farmers—not to let commercial ties with China deteriorate further, especially right before the election, NYT says.

The Times says important U.S. sectors eagerly greeted the signing of the trade deal in January as an end to months of uncertainty as it locked in new access to the Chinese markets for American banks and ag producers, as well as the promise of record purchases of soybeans, hogs and natural gas.

However, the Times says those commitments are “widely seen as unrealistic,” and so far, China is on track to purchase just some of the goods it has promised. Still, Lighthizer defends the deal and told a House committee in June that China was giving “every indication” it would uphold the agreement, in spite of coronavirus.

Instead, he reserved his harshest criticism for the WTO which he calls “a mess” in need of “radical reform,” and the European Union, which he threatened with more tariffs.

Lighthizer's shift in tone is notable, the Times says, given that his reputation as a China critic during a long career in Congress, the executive branch and as a Washington trade lawyer. His history of battling China, including pursuing trade cases against the country and opposing its entry into the WTO was what first ingratiated him to President Trump, who held a similarly dim view of China's trade practices.

But more recently, he has intervened to shoot down several policy measures that could have threatened China economically, including efforts by U.S. Customs and Border Protection to impose a sweeping ban on cotton and tomatoes from Xinjiang over concerns that they were made with forced labor by Uighurs and other Muslim minorities detained in camps.

Earlier this summer, as the administration sought ways to retaliate against China for its crackdown on Hong Kong, Lighthizer opposed the idea of placing tariffs — similar to those imposed on China — on Hong Kong. He was joined by other analysts who argued that the administration “should take strong action on Hong Kong and Xinjiang but only if those actions have a chance of changing behavior and don't have unintended consequences.”

Now, Lighthizer's reluctance to begin trade talks with Taiwan has been increasingly opposed by officials from the departments of State, Defense and Commerce and the National Security Council, NYT said.

Not everyone thinks trade talks with Taiwan would be a certain success, but the Times thinks that support in Washington for closer ties with Taiwan is growing. For example, when U.S. Secretary of Health and Human Services Alex Azar traveled to Taiwan in August, he was the highest ranking U.S. official to visit in decades. The hope was that U.S. initiatives would build momentum and pressure on USTR to advance trade ties, said Glaser of the Center for Strategic and International Studies.

The State Department “did what they could in their realm of responsibility,” she said. “But at the end of the day, State cannot negotiate trade agreements and that's what Taiwan wants.”

So, we will see. Clearly, U.S. relations with China are fragile, in spite of their importance. However, the Chinese markets for U.S. products are very important and efforts to impose changes in that region should be watched closely as the season advances, Washington Insider believes.

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