Washington Insider -- Thursday

By DTN's Washington Insider

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

Oil Industry Loses Case Challenging EPA's RFS Mandate

A federal appeals court this week ruled that the Environmental Protection Agency has considerable latitude when it comes to setting the annual Renewable Fuels Standard for different categories of biofuels.

The program had been challenged by Monroe Energy LLC, the American Petroleum Institute and American Fuel & Petrochemical Manufacturers, which argued the rule was issued retroactively, and that the EPA should have reduced the overall blending target when it reduced the cellulosic ethanol mandate. The EPA had a statutory deadline to issue the 2013 renewable fuel standard by Nov. 30, 2012, but the agency didn't finalize the rule until Aug. 15, 2013, halfway through the compliance year.

The ruling could have broad implications for the annual biofuel mandate, as various groups are said to be weighing challenges to EPA's management of the program. The agency is scheduled next month to issue its final RFS mandates for 2014.

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EU Tightens Pig Import Rules to Combat PEDv Threat

The European Union plans to implement new measures to guard against Porcine Epidemic Diarrhea Virus (PEDv), including tougher controls on imports of pig blood for use in animal feed. A decision on imports of live pigs was put on hold after the United States and Canada confirmed that no new consignments of live animals were in the pipeline.

Responding to calls for restrictions on imports of live pigs, the European Commission said the current health rules for import of live animals from the United States and Canada are "already very stringent," noting that only around 250 animals were imported from the two countries last year.

Since the spring of 2013, PEDv has spread to 30 U.S. states, four Canadian provinces and several areas in Mexico. There currently is no vaccine against the disease.

Washington Insider: More Trade Politics

Like it or not, everybody seems to be playing politics on trade while deep in denial. The process is complicated, however, as could be seen in the recent Senate Finance Committee recent hearing with U.S. Trade Representative Michael Froman as a key witness.

A key topic was Trade Promotion Authority for the president, a long-standing legislative device used in most trade negotiations in recent years. It typically includes "fast-track" provisions that establish broad congressional negotiating objectives but also lay out streamlined voting procedures and timelines for up-or-down votes on legislation to approve and implement the agreements. In the absence of such rules, trading partners frequently have proved unwilling to offer concessions that Congress may weaken later.

The most recent grant of TPA expired in 2007. Froman reported that the administration welcomed the introduction of the pending legislation last January and pledged to work with the committee when it is ready.

However, the issue already is highly political. For example, Sen. Orrin Hatch, R-Utah, argued that failure to have TPA in place creates a serious flaw in the president's trade agenda, and that that "I do not believe you can conclude high-standard agreements that will meet Congress' approval without TPA." He also criticized the president for "not doing enough" on the issue.

Others agreed that the White House had been too passive but some countered that the Republicans had not done enough either on an issue that is the centerpiece of their economic policy.

Hatch also offered a more subtle criticism. USTR has been too willing to allow regulatory agencies "just to say no" to cooperative participation in international trade negotiations. He cited tobacco regulations and financial service discussions that led to carve-outs in the talks. He also asserted that the Food and Drug Administration's fear of dispute settlement resulted in a weaker USTR proposal for the sanitary and phytosanitary chapter in the Trans-Pacific Partnership free trade talks.

A key issue in the TPP talks also concerned currency manipulations which many legislators would like to use to increase leverage against major competitors like China. Froman responded that such provisions have not yet been discussed at the talks and that the administration is discussing the best way to handle the issue, adding that the Treasury Department has the lead role on currency.

To a large extent, observers suggest, the minority's questions for Froman reflected modest disagreements over mechanics in a trade agreement they likely will eventually support if they get the chance. However, opposition of key Democratic leaders to TPA and to the TPP negotiations themselves seems surprisingly deep. In that connection, an early announcement by new Finance Committee Chair Ron Wyden, D-Ore., sent something of a chill through participants.

The topic was the possibility of major changes in the TPA, which more than a few observers see as an effort to strengthen the role of Congress at the expense of the executive and an impediment to tough negotiations. "We need a TPA upgrade to reflect a modern trade agreement," Wyden said. "As we walk through these issues, these issues of the future, some of which I now call smart track — we're going to be fleshing that out in the future — I just want it to be understood that we are going to be working closely in partnership with you."

Wyden also suggested that the Office of the U.S. Trade Representative appoint a transparency officer — and stressed the need for the public to be able to review trade agreements before the president signs them into law, a role traditionally reserved to the Congress. This suggestion seems strange to many observers since the president is empowered to negotiate and sign trade deals and Congress already is required to approve them and provide implementing legislation to complete the deal. What the benefits from an additional "public review" would be were not discussed.

In general, ag observers are appalled by this new level of protectionism that is emerging through "politics as usual," but specifically in the new committee leaders and which will limit growth of important global markets for their industry. Whether they can marshal the necessary strong support for their interests will be a severe test, and the outcome remains to be seen, Washington Insider believes.

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