Washington Insider --Friday

Focus on Nutrition Essential for Farm Bill

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

Judge Restores WOTUS Rule in 26 States

A federal judge has ruled the Trump administration did not meet legal requirements when it delayed implementation of the Obama-era waters of the US (WOTUS) rule, a move which means the rule would go back into effect for 26 states.

EPA and the U.S. Army Corps of Engineers failed to consider any comments on the WOTUS rule and a 1982 rule when it proposed the two-year delay in implementation, according to the ruling by Judge David Norton of the U.S. District Court for South Carolina.

This means the rule takes effect in 26 states. However, the Obama-era rule is not in effect in 24 other states covered by two separate injunctions. One was issued in 2013 that covers 13 states and another injunction was issued in June that covers 11 states.

Attention now turns to a federal court in Texas where three states asked for a nationwide injunction and that court has yet to issue its decision.

And the Trump administration is signaling they will come with a replacement WOTUS rule, with acting EPA Administrator Andrew Wheeler saying the plan will come within the next 60 days.

USDA Will Not Pursue Revisions To Standards On Grades Of Pork Carcasses

USDA's Agricultural Marketing Service (AMS) is set to announce it will not proceed with any proposed revisions to U.S. standards on grades of pork carcasses after reviewing comments received on their proposals, according to a notice to be published in the August 17 Federal Register.

AMS had sought public comments via a notice published October 23, 2017, with comments due on those proposals by December 22, 2017. AMS reopened the comment period for another 60 days, closing comments on March 19, 2018.

There were 47 comments received, with 19 backing updating the pork standards and 24 opposed -- two requested an extension of the comment period and two had no clearly stated positions. Most of the responses came from pork industry associations, packers and producers. Those backing changes said they were needed to "revitalize domestic consumer demand and that the updated standards may be helpful in addressing the decline in purchases of fresh pork products, citing data that the average American consumer buys fresh pork only seven times a year."

Those against the changes argued that new grades "would not add value for pork producers."

Some also noted that the "proposed nomenclature of Prime, Choice, and Select, if implemented for pork, could result in devaluation of the established beef grading system."


Fri. Aug. 17 Washington Insider
US, China to Resume Low-Level Trade Talks

Bloomberg and others reported this week that China will dispatch Vice Commerce Minister Wang Shouwen to the U.S. for low-level trade talks August 22-23, the first official exchanges since earlier negotiations broke down two months ago.

The Chinese delegation led by Wang will meet with an American group led by David Malpass, under secretary for international affairs at the Treasury Department, at the invitation of the U.S., China's Ministry of Commerce said in a statement on Thursday.

The news buoyed several markets, including soybean and corn futures, and it also resulted in the Chinese yuan gaining against the dollar for the first time in seven days. It also contributed to a strong rise in U.S. equity markets.

However, the news about resumed talks is being treated very cautiously. "This will be 'talks about trade talks,'" said Gai Xinzhe, an analyst at the Bank of China's Institute of International Finance in Beijing. "Lower-level officials will meet and haggle and see if there is a possibility for higher-level talks."

Nevertheless, much of the reaction on both sides was positive, even though the talks are at a relatively low level for now. The market reaction clearly shows that people and investors in Asia are hopeful for successful negotiations, Bloomberg said. Before the deal collapsed in May, China had agreed to "significantly" increase purchases of U.S. goods and services and that may provide a guide for the next round of discussions.

Restarting trade negotiations with the U.S. will require China to offer a package of measures, according to Jacob Parker, the vice president for China operations for the U.S.-China Business Council in Beijing. China needs to make an offer that slashes the bilateral trade surplus, lowers import tariffs, provides better protection for intellectual property and stops forced technology transfers, Parker said earlier this month.

Gai also advised caution. "Even if the senior officials reach a deal, things could still change, as President Trump can easily flip-flop. We have been there."

China's equity market has suffered declines and the yuan has been on a losing streak for more than a month. Chinese authorities, bracing for economic fallout, have introduced measures to support growth ranging from shifting toward a more accommodative monetary policy to boosting fiscal spending.

The two nations had appeared to reach a deal in May after Chinese Vice Premier Liu He -- President Xi Jinping's top economic adviser -- led a group of officials to Washington. But the U.S. administration backed away from the agreement soon afterward and the two sides have been locked in a trade standoff ever since as they slapped tariffs on billions of dollars of each other's goods.

China's Commerce Ministry reiterated in its statement that China is against trade protectionism and won't accept any unilateral trade restrictions. "China welcomes communications and dialogue on the basis of reciprocity, equality and integrity," it said.

The Trump administration imposed duties on $34 billion of Chinese goods last month, a move that also prompted immediate retaliation from Beijing and another $16 billion in levies will be effective August 23. Earlier this month, China announced a list of $60 billion worth of U.S. imports it plans to apply tariffs on, after Trump ordered officials to consider imposing a 25 percent tax on $200 billion worth of Chinese goods, up from an initial 10 percent rate.

Wang, who is the key official leading China's trade talks worldwide, led an advance team to Washington in May. In a July interview, he told Bloomberg that he didn't understand why the U.S. quickly reversed its course.

"Good faith negotiation is required," Wang said then. "For any talk to be successful, no party should point a gun at the other party."

Economists are not expecting much from the planned talks, and "Malpass has no trade authority," said Derek Scissors, chief economist at the China Beige Book. "But nice for Chinese stocks."

So, we will see what happens. In the United States, political pressure against the U.S.-China trade war has been building among many industry groups and members of Congress — especially, those in vulnerable districts -- so it would not be surprising if the administration is searching to find ways to lower the "trade war tension."

Both sides have been deeply dug in regarding this confrontation for some time so finding a pathway to a new, workable deal likely will be very difficult. Still, any movement toward talks is positive and clearly is a development producers should watch closely as it proceeds, Washington Insider believes.

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