Washington Insider-- Monday

DTN's Washington Insider

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

Airbus Removes Subsidies Found In Violation By WTO In Bid To End US Sanctions

Airbus announced it reached agreement with the French and Spanish governments to amend repayable launch aid arrangements deemed by the WTO to be an unfair subsidy relative to the Airbus A350 airplane.

The launch aid arrangement was a loan linked to exports that helped Airbus develop new models with low interest rates on the loan.

“After 16 years of litigation at the World Trade Organization, this is the final step to stop the longstanding dispute and removes any justification for U.S. tariffs,” Airbus said in a statement. “The tariffs imposed by the United States Trade Representative (USTR) are currently harming all targeted industry sectors, including U.S. airlines, and are adding to a very difficult environment as a consequence of the COVID-19 crisis.”

There are a number of ag products already hit by tariffs and more that the U.S. is considering hitting with heavier tariffs in the dispute, setting a deadline of August for comments on the plan.

“With this final move, Airbus considers itself in complete compliance with all WTO rulings,” Airbus said. A loan from the UK, also part of the dispute, has already been repaid, and the aid extended to Airbus by Germany has already been amended.

There has been no reaction yet from the U.S. side.

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Trump Warns China Trade Deal Means Less to Him Now

President Donald Trump Thursday remarked during a briefing on the COVID-19 situation that the U.S.-China Phase One trade deal “means less to me now than it did when I made it. It just means much less to me, can you understand that?”

Earlier this week, Trump had touted the recent corn sales to China as a notable development. This does not necessarily mark a shift with Trump who has stepped up his negative comments on China in recent weeks.

And, China has continued to purchase U.S. ag goods with announcements of daily sales taking place and additional purchases confirmed in the Weekly Export Sales report.

The harsh rhetoric from both sides in their diplomatic disputes has not yet led to China halting its purchases or pulling out of the Phase One agreement.

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Washington Insider: House Passes Spending Package

POLITICO is reporting this week that the House approved a $259.5 billion government spending package on Friday in the Democrats' opening bid to ward off a government shutdown -- a potentially devastating scenario while the nation is embroiled in a pandemic and the worst economic downturn since the Great Depression.

The four-bill minibus boosts budgets at the departments of State, Interior, Agriculture, Veterans Affairs and other agencies with billions of additional dollars, while imposing new restrictions on the administration “that guarantee it will never become law,” POLITICO says.

It's the first appropriations measure to move through any chamber of Congress this year but lawmakers are seen as almost certainly hurtling toward a stopgap spending bill to keep the government open beyond the end of the fiscal year on Sept. 30. Election year politics are expected to “sap political will to craft a bipartisan spending deal in the coming weeks, while Congress wrestles with another $1 trillion-plus coronavirus response package to combat creeping unemployment and spiking infections across the country.”

The four-bill minibus is the first of two Fiscal Year (FY) 2021 funding bundles that House Democrats plan to pass by the end of the month. The House will take up a seven-bill, $1.4 trillion package next week that would fund the Pentagon and the departments of Labor, Health and Human Services, Education, Homeland Security, Justice, Transportation, Energy and more.

Once both packages are passed, the House will have approved nearly all of their fiscal 2021 appropriations bills, except the measure that funds parts of the Legislative Branch. That bill didn't include a cost-of-living adjustment for lawmakers, which a number of members believe is crucial to living in DC after enduring more than a decade of pay freezes. House leaders could still decide to bring the Legislative Branch bill to the floor as a standalone measure.

The Congressional Progressive Caucus is also pushing to strip the Homeland Security spending bill from the $1.4 trillion minibus, with some members loath to fund the agencies charged with implementing the president's immigration agenda and carrying out paramilitary action in Oregon and Washington state.

But the Congressional Hispanic Caucus is backing the Homeland Security bill and top appropriators say they have no plans to yank it from the floor. CHC Chair Joaquin Castro, D-Texas, Reps. Earl Blumenauer, D-Ore., Suzanne Bonamici, D-Ore. and others have also submitted an amendment that would rein in the administration's efforts to quell protests in Oregon and Washington.

“We really can't afford not to pass this,” Rep. Lucille Roybal-Allard, D-Calif., chair of the House Homeland Security spending panel, told POLITICO on Friday. “We need to send a very clear message to DHS that this isn't business as usual. They have to be held accountable and there's going to be consequences.”

The four-bill measure passed by the House on Friday would provide $65.9 billion for the State Department, the U.S. Agency for International Development and other programs, marking an $8.5 billion increase over current funding or a nearly 15 percent hike. That includes more than $10 billion for global efforts to combat the coronavirus pandemic.

Democrats also included $12.5 billion in emergency funding to address rising veterans' health care costs. The Environmental Protection Agency and the Interior Department would receive more than $9 billion and nearly $14 billion, respectively. More than $4 billion would go to rural development programs and more than $3 billion would flow to the Food and Drug Administration.

The package also includes a number of “poison pills” aimed at the administration, including provisions that would criticize the president's “go it alone” approach to foreign aid, restore funding for the World Health Organization, block the administration's crackdown on food stamps and bar drilling in the Arctic National Wildlife Refuge.

The Senate, meanwhile, hasn't even begun its appropriations process this year. Democrats in the upper chamber want to add billions of dollars in emergency pandemic aid to annual spending bills, in addition to police reform provisions, just as House Democrats did. But Senate Appropriations Chair Richard Shelby, R-Ala., has said those issues should be dealt with separately.

The first House minibus comes after Congress secured a two-year budget deal last summer which boosted spending and allotted a total of $740.5 billion in defense funding and $634.5 billion in nondefense funding for fiscal 2021.

So, we will see. At this point in this year, nearly every decision is political and many are toxically so — and, none more than the spending bills. Certainly, these fights should be watched closely by producers as they proceed, Washington Insider believes.

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