Washington Insider - Tuesday

By DTN's Washington Insider

Lucas Upset About USDA's Implementation of 2014 Farm Bill Provisions

House Agriculture Chairman Frank Lucas, R-Okla., continues to complain that USDA is not implementing a provision in the 2014 farm bill that would give drought-stricken Southern Plains farmers a break on their crop insurance. This is important for winter wheat producers in Oklahoma who will begin planting the 2015 crop in earnest in September.

The farm bill, signed into law in February, would allow farmers to boost their actual production history, or APH, by excluding years in which their yields are more than 50 percent below the 10-year average for their county. While USDA officials earlier notified Lucas they will delay implementation due to other pressing matters, Lucas said he has urged them to allow the APH adjustments on a regional basis or for a single crop.

It took Congress over two years to finalize the latest farm bill, legislation that includes some tremendously complex provisions regarding crop insurance. The fact that it is taking USDA months to complete the regulations required to implement the new programs should not be a surprise to anyone.

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Proposed Renewable Fuels Standard Rule Could Move to OMB This Week

The Environmental Protection Agency is eight months past the deadline for issuing its mandate of how much ethanol, biodiesel and other petroleum alternatives must be blended into motor fuels during calendar 2014. However, that may be about to change as contacts say the agency could send its proposal to the White House Office of Management and Budget for final review this week. The next unknown is how long OMB will take to review the rule. That process could take as little as 30 days or as long as several months, perhaps even until after the November elections.

Some observers note a potential election-year angle to the timing, saying the White House is looking to raise the requirements in part to boost the prospects of Democratic Rep. Bruce Braley who is in a tight race in Iowa to replace retiring Democratic Sen. Tom Harkin.

EPA has missed the statutory deadline for issuing the volume requirements in each of the past three years. "The EPA shares the goal of getting back on the statutory timeline," said Ben Hengst, associate director of EPA's transportation and air office. "But doing this on an annual basis is a big challenge," he added, stating the obvious. EPA is scheduled to issue its RFS for 2015 by Nov. 30, or in just under 120 days.

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Washington Insider: TPA Critical to Trade Talks

The presence or absence of fast track authority for the president may not seem like a make or break condition in the minds of most observers, but at a time like the present, when large numbers of politicians and advocacy groups are scapegoating trade and advocating increased protections, trade experts are suggesting that without trade promotion authority — another name for fast track — U.S. leadership in talks in both the Atlantic and Pacific is threatened.

Recently, the Atlantic Council's Global Business and Economics Program published a report titled "Bridging the Pacific: The Americas' New Economic Frontier?" The report argues that securing U.S. economic and strategic leadership across the Pacific depends on effective commercial diplomacy underpinned by a clear twenty-first century geopolitical strategy.

This sounds like mainly a lot of big words. The message is that Congress must be a vital partner in the ongoing American "rebalance" to Asia and that timely passage of trade promotion authority is required for that. The council's report explains why these experts believe TPA is so important.

The Trans-Pacific Partnership (TPP), the council notes, was launched in 2004 as a small but forward-thinking agreement to liberalize trade and investment. Now, however, it has grown to include 12 member countries that represent 40 percent of global GDP, 26 percent of global trade, and 40 percent of U.S. trade. Along with the Transatlantic Trade and Investment Partnership, TPP has become one pillar of a U.S. policy objective to foster international support for new rules of global economic governance.

The council also argues that if the TPP is successful, it could catapult the United States into a new era of partnership with Latin America and countries across the Asia-Pacific. As the fastest-growing U.S. trade partner, Latin America's presence in a successful TPP could lead to a new era of economic integration in the hemisphere and thereby broaden U.S. relationships with economies on the rise and with markets close to U.S. ports. Expanding close trade and investment relationships with Mexico, Canada, Chile, and Peru will provide immediate benefits and job-creating growth in the United States, the group concludes.

The report says that while broadening America's commercial ties in Latin America and Asia is critical, the geostrategic benefits of signing a trade agreement with 11 partners on both sides of the Pacific are perhaps even more significant. It thinks that Congress should be mindful of TPP's major security-policy implications that could reflect increased economic ties — and, that the TPP will reassure U.S. partners across the Pacific Rim and act as a counterbalance to China.

In this process, it is increasingly important that U.S. policymakers accept that the United States is the de facto TPP leader — and, that countries across the Western Hemisphere would suffer major economic and diplomatic setbacks should TPP fail.

The group also argues that the need for TPA is time-sensitive and that by the end of 2014, Congress will need to pass TPA to give U.S. negotiators the necessary backing to complete the talks. This need should be understood by all involved, the Council says, with the Senate Finance Committee working to release a new draft TPA bill that commands bipartisan support as the administration "publicly and convincingly" conveys the benefits of this international trade agenda to the American people and members of Congress.

The council argues that there is broad support for TPP, but that more transparency is needed in the process. With full congressional buy-in the negotiating process can be more transparent without sacrificing the confidentiality that characterizes all international negotiations. It also argues that Congress should regard granting TPA is the best way to defend and even strengthen already high U.S. product safety, environmental, and labor standards in a fast-changing global economy. Multilateral trade agreements are an unmatched vehicle for promoting rules that reflect democratic values. To insure that the process succeeds, the United States needs to be in the driver's seat, the council argues.

Finally, the council notes that TPP's potential benefits for the United States are monumental — and, that the TPP has the unmatched possibility to serve as the foundation for cooperation around the Pacific Rim, a development neither American business nor American national security can afford to miss.

It will be important to see how the council's paper is regarded as it moves through the political shoals in Washington. It appears that most observers believe that TPA is important to trade policy objectives of both parties — but, nobody wants to risk the bitter ire of the anti-trade politicians. This puts the whole process increasingly at risk, as the council notes.

Once again, it is important to remind observers that trade is hugely important to agriculture. The current trade talks, particularly those in the Pacific, are critical to expand sales beyond the long-saturated domestic markets, Washington Insider believes.

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