Washington Insider -- Friday

By DTN's Washington Insider

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

Senators Urge Administration to Step Up Trade Enforcement Actions

The Obama administration came into office promising to do a better job of monitoring U.S. trade agreements and, when necessary, to take steps against countries thought to be violating provisions of those agreements. Some in Congress do not think the White House has done nearly enough in this area and earlier this week, the leaders of the Senate Finance Committee took the administration to task for what they said was a lack of attention to agreements already in force. (The Senate Finance Committee oversees the nation's trade and tax policies.)

During a committee hearing, Chairman Ron Wyden, D-Ore., and ranking member Orrin Hatch, R-Utah, called for an increased focus on the enforcement of trade agreements and laws. The two Finance Committee leaders have co-sponsored a bill that they say enjoys the unanimous bipartisan support of the committee and that would create a standardized process for investigations into violations of trade laws and provide better communication between federal agencies on trade issues.

If Wyden and Hatch are correct in their assessments, the legislation should move smoothly through the committee's eventual markup. Whether the administration will want the new trade enforcement tools provided by the bill remains to be seen.

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EPA Maintains Desultory Pace on Announcement of This Year's Renewable Fuels Standard

The Environmental Protection Agency again is taking its time as it decides how many gallons of renewable fuels it will mandate to be included in the nation's vehicles this year. The Energy Independence and Security Act sets Nov. 30 as the deadline for EPA to announce the Renewable Fuels Standard (that is, Nov. 30, 2013), but the agency has not had a good record when it comes to meeting that deadline.

EPA Administrator Gina McCarthy this week told reporters she hopes to issue the 2014 RFS "soon." However, she didn't provide any specific timeline when she was asked if the rule would be completed by the end of summer.

The nation's petroleum refiners, who are charged with blending renewable fuels into their gasoline and diesel fuel, say that the delay in issuing new rules will make it difficult for them to comply when the final RFS numbers are released. And renewable fuel producers say the delay is adding to uncertainty in the industry and harming new investments.

The EPA's final renewable fuel standard, already seven months overdue, hasn't yet been sent to the White House Office of Management and Budget for interagency review, a process that could push the final announcement into late summer.

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Washington Insider: The Ex-Im Surprise, and Beyond

The surge of opposition to the modest programs under the Ex-Im Bank has attracted considerable attention across the Washington agriculture establishment. The strong likelihood that the bank will not be reauthorized this fall in spite of widespread support from business interests is sinking in quickly across the "establishment," much as did the defeat of former House Majority Leader Eric Cantor, R-Va. In the wake of the new opposition to Ex-Im, the official export credit agency of the United States, questions are being asked regarding what this pull-back by traditional supporters might mean for the future.

The bank reauthorization itself is not hugely important to agriculture which has its own trade support financial operations, but it calls attention to how much low-hanging fruit there is for budget hawks who want to really do the unthinkable — including take a look at USDA operations. For example, Rep. Mike Conaway, a fifth term U.S. member of Congress representing Midland, Odessa and San Angelo, Texas, is suggesting that the farm lending systems have strayed from their original mandate and should be reexamined. U.S. agriculture has become so used to broad access to credit that few can imagine such a thing.

Conaway is no wet-behind-the ears newcomer, and his ideas are attracting attention. His congressional history and his certified public accountant background are seen as giving him a solid perspective on fiscal responsibility especially since he is a member of the House Agriculture, Armed Services and Intelligence committees. He also is in a House leadership position as a deputy Republican whip.

Conaway also notes that, if it is fair game to reevaluate Ex-Im and the farm credit system, why not look broadly at the USDA credit guarantee programs along with other government guarantees? There are, you remember, many of those across rural America supporting not just farming, but rural telephone systems, rural water and sewer systems, and rural housing among others.

The original role for many of these was to meet needs the private sector could not, or would not. Now, however, many of these government-underwritten enterprises compete broadly and even fill cooperative rolls, such as private crop insurance companies do. As conditions have changed in modern agriculture, private firms have frequently become quite willing to provide credit and other services, but may find themselves hindered, perhaps even blocked out, Conaway says.

To an important extent, these budget hawks seem to be striking a nerve — or maybe several nerves. Is it possible that many government institutions have become so deeply entrenched that they are limiting competition in farm services, rather than providing essential support that is unavailable from the private sector?

The new idea this time around, observers say, is that these questions are coming not from the usual "ag enemies" but pragmatists who are asking if today's changed times and conditions are not making this an opportune time to reexamine the role and need for some time honored institutions — and, that at least some that have been around for a long time may simply no longer be needed.

Of course, this would means a hue and cry that may be especially bitter because there is a lot at stake, and such subsidies are unlikely to go quietly. And, a deep examination may find them filling real needs in efficient ways. Still, it is not just the social programs that need examination. If the probes of farm and community support programs are fair and well managed, they could benefit the broader system, Washington Insider believes.

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