Washington Insider-- Thursday

New Trade Tensions with Europe

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

US Meat Industry Capacity Rising: USDA

USDA is touting improved capacity utilization at U.S. meat plants that have been hit by the COVID-19 pandemic.

“Across the cattle, swine, and broiler sectors, processing facilities are operating more than 95% of their average capacity compared to this time last year,” USDA said in a release late Tuesday. “In fact, beef facilities are operating at 98%, pork facilities are operating at 95%, and poultry facilities are operating at 98% of their capacity compared to the same time last year.”

USDA has been working with the Occupational Safety and Health Administration and the Centers for Disease Control and Prevention to make sure the plants are following the guidelines issued by the agencies for operations to protect workers and ensure the food supply.


House Judiciary Members Ask USDA to Ease Restrictions On Small Meat Processors

A revisit of “burdensome regulations” on small meat processors is being called for by Republicans on the House Judiciary Committee, with the lawmakers urging USDA Secretary Sonny Perdue to make several changes as the “high cost of complying with meat processing laws has made it hard for smaller processors to compete and has led to significant consolidation in the industry.”

Citing the reduced operating capacity at meat plants amid the COVID-19 pandemic, the lawmakers noted that it has left “ranchers and other livestock farmers with few alternatives for getting their meat processed.”

The letter urges USDA to consider giving small meat processors flexibility on complying with Hazard Analysis and Critical Control Point (HACCP) plans, streamlining the approval process for labels, encourage more states to participate in the Cooperative Interstate Shipment (CIS) program and increase flexibility and lessen expenses on smaller processors for inspectors needed beyond normal hours.

Taking action in these and other areas will “lower barriers to entry and expansion that smaller meat processors face,” the letter said. Expectations are, however, that food safety advocates will fight any efforts by USDA to relax food safety protocols.

Washington Insider: New Trade Tensions with Europe

Bloomberg is reporting this week that European Union efforts to soothe transatlantic trade tensions have stalled.

Washington has “stepped back” in recent weeks from talks aimed at defusing a longstanding dispute over aircraft subsidies, chief EU trade negotiator Phil Hogan, told a conference of EU trade ministers on Tuesday. “Failure to reach an accord could pave the way for Europe to impose tariffs on billions of dollars of American goods as soon as July,” he said.

“We must acknowledge that the U.S. is now in a pre-election phase,” Hogan said. “Political attention in Washington is therefore much more on the immediate challenges in U.S. domestic politics.” The EU wants to renew a July 2018 truce that began to fray late last year when the U.S. targeted Europe with new tariffs or warnings of them.

Chief among Europe’s worries is a lingering U.S. threat to hit EU cars and auto parts with duties based on national-security grounds.

President Donald Trump revived that possibility on June 5 during comments in Maine, where he demanded the EU “drop” its 8% tariff on imports of American lobster “immediately.” Trump was speaking to fishing-industry representatives who complained about European market barriers.

“The European Union has ripped this country off so much, it’s unbelievable and it’s so easy to solve,” Trump said. “If they don’t change, we’re going to put a tariff on their cars until they change. And they’ll change right away.”

Hogan warned the EU trade ministers on Tuesday to expect more such rhetoric as a European push for a deal with the U.S. to cut industrial tariffs across the board stalls. Meanwhile, the spotlight in transatlantic trade relations is likely to turn back to the nearly two-decade-old dispute over aircraft subsidies.

Last year, the U.S. was given the green light by the World Trade Organization to impose tariffs on $7.5 billion of European goods in retaliation over illegal government aid to Airbus SE. Hogan said he expects the WTO to rule “around” early July on a parallel EU case against American aid to Boeing Co.

“I regret that the U.S. has stepped back from the settlement talks in recent weeks,” Hogan said. “Positions are therefore still quite far apart. If this remains the case, the EU will have little choice but to exercise its retaliation rights and impose our own sanctions in the Boeing case, once we have the WTO award.”

On a separate WTO matter, Bloomberg reported that Hogan commented that he was weighing the possibility of becoming an EU candidate in the race to lead the global trade arbiter.

The EU trade ministers discussed the WTO process for selecting a successor to Director-General Roberto Azevedo, a Brazilian national who will step down a year early at the end of August. The WTO is accepting nominations between June 8 and July 8.

“Certainly, I am exploring the option of being a candidate for the director-general of the WTO,” Hogan told reporters after the video conference. “There is an important amount of work to be done to reform the organization.”

Europe is keen on strengthening the WTO amid growing U.S.-China tensions which threaten to undermine the global commercial order established after World War II.

A European candidate for the WTO leadership would enter a field that already includes official or presumptive nominees from countries ranging from Mexico to Nigeria. The last European in the job was Azevedo’s predecessor, Pascal Lamy, a Frenchman who held the post between 2005 and 2013.

So, we will see. The current political moment certainly would be especially sensitive for the Trump administration to open a new front on the lingering trade fights already underway. Still, the “get tough” trade policy has long been a central feature of the current administration’s trade arsenal as the President has already indicatedâ??and it likely will continue to be in the future. Thus, trade policies toward Europe should be watched closely by producers as these battles intensify, Washington Insider believes.

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