Washington Insider-- Monday
Asia Pacific Nations Sign Trade Deal
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
California Groups Back Rep. Costa To Lead House Ag Panel
More than 60 California farm and ag groups have joined the California Farm Bureau Federation in backing Rep. Jim Costa, D-Calif., in his bid to become Chairman of the House Ag Committee.
The California Farm Bureau earlier this week declared their backing of Costa who is seeking the top spot on the panel in the wake of current House Ag Committee Chairman Collin Peterson, D-Minn., losing his bid for re-election to the House. Costa ranks third on the panel in terms of seniority, behind Rep. David Scott, D-Ga., who is also seeking the gavel.
Scott has picked up the endorsement of Peterson, which many view as a key backing to lead the panel.
USDA Sets General CRP, CRP Grasslands Signup Efforts For 2021
A general Conservation Reserve Program (CRP) signup will be held from January 4-February 12 and a CRP Grasslands signup will run from March 15-April 23, USDA's Farm Service Agency announced Thursday.
As of September, there were 21.9 million acres enrolled in CRP with contracts on 5.36 million acres expiring as of September 30. Via the last general CRP signup, contracts on 3.4 million acres were approved with an October 1 starting date. USDA data shows another 1.2 million acres were approved for CRP Grasslands enrollment with 425,777 acres enrolled via continuous CRP signup efforts during Fiscal Year 2020.
USDA has not indicated what the CRP acreage total is as of October, but it would appear that around 21.6 million acres are enrolled in the program.
Bloomberg is reporting this week that several Asia Pacific nations including China, Japan and South Korea on Sunday signed the world's largest regional free trade agreement, encompassing nearly one-third of the world's population and gross domestic product.
Top officials from 15 nations that also include Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations signed the Regional Comprehensive Economic Partnership which was nearly a decade in the making. The deal was signed on the final day of the 37th ASEAN Summit hosted virtually by Vietnam.
“The completion of negotiations is a strong message affirming ASEAN's role in supporting the multilateral trade system,” Vietnamese Prime Minister Nguyen Xuan Phuc said ahead of the virtual signing ceremony. The agreement will contribute to “developing supply chains that have been disrupted due to the pandemic as well as supporting economic recovery,” he said.
A minimum of six ASEAN countries in addition to three non-ASEAN partners must ratify RCEP for it to come into force, Singapore's Minister of Trade and Industry Chan Chun Sing told reporters following the signing. Singapore plans to approve the deal “in the next few months,” he said.
Supporters of the pact, which covers 2.2 billion people with a combined GDP of $26.2 trillion, said it will bolster pandemic-weakened economies by reducing tariffs, strengthening supply chains with common rules of origin, and codifying new e-commerce rules.
Among the benefits of the agreement include the elimination of at least 92% of the tariffs on traded goods among participating countries, as well as stronger provisions to address non-tariff measures. Provisions also include “enhancements” in areas such as online consumer and personal information protection, transparency and paperless trading, according to Singapore's Ministry of Trade and Industry. It also includes simplified customs procedures while at least 65% of services sectors will be fully open with increased foreign shareholding limits.
Negotiators pushed the deal across the finish line after India surprised participants late last year by abandoning the agreement. Prime Minister Narendra Modi said he pulled out over concerns about how RCEP would affect the livelihoods of Indians, particularly the most vulnerable. India, though, will be allowed to rejoin the trade pact.
“The clause allowing India to join at a later date is symbolic and shows China's desire to build economic bridges with the region's third-largest economy,” said Shaun Roache, Asia Pacific chief economist at S&P Global Ratings.
Whether RCEP changes regional dynamics in favor of China likely depends on the U.S. response, experts said. The agreement underscores how U.S. President Trump's 2017 decision to withdraw from a different Asia Pacific trade pact – the Trans-Pacific Partnership or TPP – diminished America's ability to offer a counterbalance to China's growing regional economic influence.
That challenge is expected to shift to President-elect Joe Biden once he is officially named the winner of the Nov. 3 election. Still uncertain is how the Biden team will approach this and other potential trade deals and whether it will attempt to re-enter the 11-nation TPP.
Nations participating in the new treaty see it hastening economic recovery from the global pandemic. For example, Australian farmers and businesses say they expect to benefit from “better export opportunities” under RCEP. There will be greater investment certainties for companies and gains for Australian providers within the financial services, education, health and engineering sectors, Bloomberg said.
Australian Prime Minister Scott Morrison said, “With one in five Australian jobs reliant on trade, the RCEP agreement will be crucial as Australia and the region begin to rebuild from the COVIDâ??19 pandemic.”
The trade agreement will help Indonesia recover from the pandemic and possibly increase its GDP by 0.05% from 2021 to 2032, Trade Minister Agus Suparmanto said at a briefing. Citing a private study, he added that RCEP could boost exports by as much as 11% and investment by as much as 22% five years after its ratification.
Japan too is looking for the pact to be a catalyst for its post-coronavirus economy, trade minister Hiroshi Kajiyama told reporters. “Through the tariff removals, I believe there'll be a major impact on improving Japan's exports and making the region's supply chains more efficient,” he said. “I strongly believe we are building free and fair economic rules on data free flows and bans on demands for technology transfers, as well as the protection of intellectual property.”
The agreement will make exports of participating countries more competitive and create an integrated market for China and regional nations, Singapore's Chan said. “Over the past years, there have been several ups and downs and it has certainly not been an easy journey,” he said. “At one point, the prospects of concluding the agreement were shaken by geopolitical and domestic preoccupations. We have all had to make difficult trade-offs to advance the negotiations.”
So, we will see. The new Biden administration says that it will pursue stronger trade deals with China and likely with the Pacific region as well. How it will react to this new pact is among the uncertainties that will need to be defined and addressed in the weeks and months ahead—issues that should be watched closely by producers as they emerge, Washington Insider believes.
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