Washington Insider -- Monday

By DTN's Washington Insider

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

Finally, Bipartisan Support for Needed Legislation

The House somewhat defied its past performance last week by unanimously approving legislation that would abolish about 50 mandatory agency reports from 17 agencies, including USDA, the Environmental Protection Agency and the Energy Department. The measure already had passed the Senate and is now on its way to President Barack Obama for his expected signature.

House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., said the legislation represented a "good start" toward eliminating the unwanted and unnecessary reports that require valuable federal agency resources. He also said he hoped Congress would continue to eliminate additional reports annually. "We started with a much larger report list, and we believe that this progress under this bill sets a tone for an annual elimination of reports that have become outdated or unnecessary," Issa said.

The 50 reports about to be dropped only scratch the surface of unneeded (because they are unread) reports prepared regularly by federal employees. Eliminating more of these holds the potential to free up more resources for more important work. It also would give members of Congress an opportunity to get together with their colleagues on the other side of the aisle to pass noncontroversial legislation, other than naming post offices.

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Climate Change: Yes (House) or No (Senate)?

Rep. Ed Whitfield, R-Ky., who is a senior member of the House Energy and Commerce Committee, last week said he believes in climate change but disagrees with President Obama's use of executive action to combat it. "We all believe in climate change, but we do have significant disagreements on the priority of dealing with it," Whitfield said at an energy conference hosted by The Hill newspaper. "So from our perspective, we're going to push legislation that we believe is going to rein in some of the extreme views of this administration."

Whitfield's remarks are somewhat at odds with those of Sen. James Inhofe, R-Okla., who will become chairman of the Environment and Public Works Committee next year. In 2012, Inhofe wrote a book whose title tells quite a bit about the senator's opinion of climate change: "The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future."

While Whitfield said Republicans believe in climate change, he didn't say whether he believes human activities are responsible. In this, he appears to be on the same page as Inhofe, meaning that there are points of agreement between the House Energy Committee and the Senate Environment Committee on the subject of global warming. But they may have their hands full convincing the 97.2% of climate scientists who were polled in 2013 and who said they believe human activity plays a major role in climate change.

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Washington Insider: Movement in WTO Trade Talks

Well, it never hurts to hope, they say; but hope for the latest WTO deal has been in short supply in recent months, as stalemates have intensified. Nevertheless, it appears the United States and India have reached agreement on food-stock policies. This is a big deal, observers say, clearing the way for passage of a major agreement, the biggest in nearly two decades.

For now, at least, the two countries agreed that India can extend its huge food subsidy program. Since July, India had blocked what negotiators thought was a strong "trade facilitation" deal because India was impatient that its food program would be cleared to operate under special rules beyond a 2017 deadline.

The announcement gives new life to the talks after repeated setbacks had raised questions about even the WTO's future. Experts say the agreement would stimulate the world economy by $1 trillion.

The U.S.-India agreement reflects "shared understandings" about food security, U.S. Trade Representative Michael Froman said. It will reduce the cost of trade by about 10% for developed countries and 14% for developing countries by removing delays at border crossings, he told reporters.

The agreement paves the way for full implementation of the Bali package, the European Union's Trade Commissioner Cecilia Malmstroem said in a statement. "Now, we are looking forward to take the next steps on the implementation of all the elements of the Bali package, notably the immediate adoption of the Trade Facilitation Protocol due by July 31," she said.

In a practical sense, the Bali agreement will shield India's food stockpiles from legal challenge even when the program distorts trade and exceeds India's agreed subsidy limits, according to the WTO. India last year allocated 1.25 trillion rupees ($20 billion) for its public food distribution system to help more than two-thirds of its 1.2 billion people who eat less than the minimum target set by the government.

The Indian government buys food, including grain, from its farmers and stockpiles it for later sale at government-run stores at subsidized prices. The program, which has often been criticized as ineffective, is available to 75% of India's rural population and 50% of the urban population, observers said.

WTO rules say subsidizing more than 10% of the grain produced for food in a country distorts the market for trade - a cap India argues is far too low. Countries, including the United States and Pakistan, fear India is accumulating too much grain and it could eventually release any surplus on the world market, lowering prices for other producers, as it has in the past.

In Bali, WTO members hammered out a temporary solution that would allow developing countries to avoid penalties for breaching their subsidy levels until a permanent solution is found by 2017. The new agreement is actually based on a "peace clause," which protects member countries from being legally challenged until a permanent solution is found on the stockpiling issue. This clause is intended to keep India safe from accusations that it subsidizes too much grain beyond 2017. The deal also moved up the schedule for negotiations on stockpiling, giving India the assurance that the issue will be dealt with promptly. These assurances seem likely to give Indian politicians enough coverage to ratify the global trade deal.

At least more than a few WTO officials think so. "This breakthrough represents a significant step in efforts to get the Bali package and the multilateral trading system back on track," Roberto Azevedo, the director general of the WTO, said. "It will now be important to consult with all WTO members so that we can collectively resolve the current impasse as quickly as possible," he said. "It is a move ahead both for multilateralism at the WTO and for India, which was being viewed as obstructionist," said Rajrishi Singhal, a senior geo-economics fellow at Gateway House, a foreign policy research group in Mumbai.

The news of the agreement was received positively in much of India's press, who called the WTO an impartial and effective body and said member states voluntarily accept its decisions. One paper called the agreement especially important for India, since it is "essential to keep WTO relevant," and that this "... is the best deal we have going and the brinkmanship the Narendra Modi government displayed in July was ill-advised."

It is true India has been widely seen as obstructionist in these talks and it has a great deal riding on its treatment of this "peace clause." Still, this agreement is quite a ways from ratification. If the government of India uses the current deal as an excuse to take advantage of a future short-term market opportunity, the past view of India as an obstructionist could re-solidify very quickly, Washington Insider believes.

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(GH/CZ)

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