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.

Transportation Secretary Pans Plan to Use USPS Savings to Finance Highway Trust Fund

A plan by House Republicans to use savings achieved by switching to a five-days-per-week delivery schedule for the U.S. Postal Service (USPS) to repair highways and bridges is a "gimmick," says Transportation Secretary Anthony Foxx. "You've got to get past gimmicks in transportation and try to get serious about getting a long-term strategy done," Foxx told reporters.

The Highway Trust Fund may be unable to meet financial obligations as early as July because the gasoline and diesel fuel taxes that finance the program haven't kept up with the pace of new projects. House Republican leaders last month outlined a plan to shorten USPS's mail delivery as the main source of short-term funding to keep the highway trust fund solvent until May 2015. The plan, which would stop delivery of most postal items on Saturday except packages, is estimated to save $10.7 billion over 10 years.

Congressional leaders in both the House and Senate say there is bipartisan agreement that a short-term patch for the highway trust fund is needed in coming weeks. Whether that patch will come from a reduced USPS delivery schedule remains to be seen. And that is assuming that Congress approves no-Saturday deliveries, something that is not a foregone conclusion

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Legislation Would Block EPA's Carbon Emission Rules

Two coal-state members of Congress this week introduced legislation that would block the Environmental Protection Agency's proposed regulations to curb carbon pollution from existing and new power plants.

The bill, introduced by West Virginia Reps. Nick Rahall, a Democrat and David McKinley, a Republican, also would bar the EPA from issuing similar carbon limits for five years unless the agency first receives permission to do so from Congress. Senate Minority Leader Mitch McConnell, R-Ky., last week introduced a bill that would block the EPA emission rules until the Obama administration certifies that they won't hurt job growth or raise energy prices.

The effort to roll back the carbon emission regulations is not given good odds of success at this time. But efforts to do so are expected to continue for the foreseeable future.

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Washington Insider: TPP Talks and Objectives

One of the persistent criticisms of the administration's Trans-Pacific Partnership negotiations, or any trade talks, is the secrecy involved. This is a somewhat curious complaint, since such negotiations always involve back and forth concessions which are difficult enough in private and nearly impossible in public.

The basic political strategy in recent years has involved working with the Congress and the stakeholders to spell out "negotiating objectives" ahead of time, and then turning to Congress for up or down vote on implementation after a deal is worked out. This is hard to take for trade opponents, but has been used successfully to increase market access for many years.

So, the Office of the U.S. Trade Representative was following that strategy recently when it spelled out the primary negotiating objectives for sections of the Trans-Pacific Partnership talks. The documents are the first comprehensive, detailed statement of what is hoped to achieve in the talks among 12 Pacific Rim countries.

While the statements are edited and abbreviated, they still are quite extensive and cover some 16 chapters. The number of social goals involved is daunting and continues to raise questions of practicality, but there are numerous "bread and butter" objectives, as well.

A key objective, for example, is the expansion and facilitation of trade in goods, USTR says. The United States wants "comprehensive and preferential access" across an expansive duty-free trading region for the industrial goods, food and agriculture products and textiles," a very substantial goal with important implications for agriculture.

In that regard, USTR notes that 20% of U.S. farm income comes from agricultural exports, including sales of more than $58 billion in TPP countries. The agency expects this figure would grow significantly it the TPP eliminates tariffs. For example, U.S. poultry currently faces a 40-percent tariff in Malaysia and would become much more affordable under a TPP agreement that reduces these duties to zero. There are many other examples where sharp increases of access are anticipated.

In addition, the negotiations focus on 15 other objectives that include trade regulation, as well as social issues such as worker rights and the environment that are extremely sensitive. USTR says the talks will build on "the strong labor provisions in the most recent U.S. trade agreements" with enforceable rules that protect the rights of freedom of association and collective bargaining; discouraging trade in goods produced by forced labor, including forced child labor; and establish mechanisms to monitor and address labor concerns. These are highly controversial areas, both in the United States and among trading partners.

Environmental issues also are controversial, and USTR notes that the United States seeks "strong and enforceable environment obligations, subject to the same dispute settlement mechanism as other obligations in TPP, including commitments to effectively enforce domestic environmental laws, including laws that implement multilateral environmental agreements, and commitments not to waive the protections afforded in environmental laws for the purpose of encouraging trade or investment." Critics note that agreement in this area would involve a highly significant area of enforcement.

One of the most controversial components of the proposed TPP concerns its rules for state-owned enterprises and anti-competitive behavior. USTR is fairly vague about these objectives, suggesting that it wants rules to prohibit anticompetitive business conduct, including fraudulent and deceptive commercial activities that harm consumers and talks about rules to ensure that private sector businesses and workers are able to compete on fair terms with SOEs, "especially when such SOEs receive significant government backing to engage in commercial activity." It is far from clear what that language could mean in practice, or how it could be implemented, observers note.

Other objectives concern technical barriers and sanitary and phytosanitary measures and coherent regulatory systems; trade facilitation and rules of origin; and orderly dispute settlement.

In the event of a dispute, countries are to first seek to address the issue "cooperatively," but will have recourse to independent tribunals to determine whether a party has failed to meet its obligations, and ultimately to allow suspension of benefits if a party fails to come into compliance. USTR adds, "through the TPP dispute settlement mechanism, we are seeking to give the American public the confidence that the U.S. has the means to enforce the strong, high-standard obligations we are negotiating in this agreement."

At this time, much work remains to be done before any of the key objectives are met — for example, Japan is pushing back hard against proposals to give ag products free access to tightly constrained markets for a number of meat and grain products, especially rice. And, progress toward provision of Trade Promotion Authority to the U.S. President to allow fast track treatment, assuming that a deal can be completed in the near future appears to be moving very slowly in the current political environment, as well.

Certainly, TPP trade objectives are well worth while, especially given the low levels of protection U.S. products have now in contrast to the much higher levels of intervention in many Pacific countries. And, while the ambitious time line the administration is pushing seems entirely unrealistic, the negotiations do have promise and deserve strong support as they proceed, Washington Insider believes.

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