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.

Future of Tax Extenders Bill Uncertain

The House last week approved the so-called "tax extenders" bill by an overwhelming vote of 378-46. Many observers had predicted similar smooth sailing for the measure when it got to the Senate floor, but that view now looks to have been premature.

Senate Majority Leader Harry Reid, D-Nev., reportedly had been close to an agreement with Republicans on the bill following weeks of negotiations. However, at least some of the progress that Reid had achieved was undone when the White House issued a Statement of Administration Policy that threatened a presidential veto.

Washington policy observers have floated a number of hypotheses as to why the White House would take such an action. These have ranged from the personal (payback against Reid's chief of staff who criticized the administration after Democrats were thrashed in the midterm elections) to the strategic (killing off the extenders bill would give the administration greater leverage with Democrats for a broader tax reform plan next year).

The questions facing Reid and the Senate this week is whether the tax extenders bill will make it to the floor, and if so, will it pass, and if so, will the White House follow through on the veto threat. Congress is scheduled to adjourn for the year at the close of business Friday.

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Congress Expected to Approve Omnibus Appropriations Bill This Week

Congressional leaders say both chambers are expected to approve an 11-bill "omnibus" spending measure this week that will fund most federal government activities through next September. As it is, federal spending during the current fiscal year is authorized through a continuing resolution that runs through Thursday, Dec. 11. Unless Congress approves either another continuing resolution or a longer-term spending measure, the federal government will begin shutting down on Friday.

In what has become something of a tradition of not acting until the last possible moment, lawmakers said plans now call for the House to take up the omnibus appropriations package on Wednesday, Dec. 10, and the Senate on Thursday, Dec. 11, after which the measure is expected to be sent to President Obama's desk for his signature before the current funding measure expires at midnight.

Enactment of the 11-bill omnibus would ensure funding for most federal government programs through next October. But an accompanying continuing resolution to fund programs at the Department of Homeland Security will only run into next February to allow Republicans to soon revisit Obama's immigration policies, lawmakers said.

There likely will be a great deal of vituperative debate among members in the run-up to votes in both chambers, some of which may be real. In the end, however, it appears likely that Republicans will vote for the government funding bill, therefore avoiding a repeat of last year's partial shutdown.

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Washington Insider: European Anti-US Rhetoric

Modern trade theory and policy holds that trade benefits all parties by allowing them to concentrate on things they do best — although, it also recognizes that this includes competition that requires formerly protected sectors to adjust.

Modern trade policy is, in fact, relatively recent and replaces the "mercantile system" that Adam Smith identified and criticized. This held that the interests of states were to strengthen their economy and weaken foreign adversaries. These were largely abandoned centuries ago because they inevitably led to war.

Now, some critics say that neo-mercantilism is on the rise, especially in Europe, except that the war is cultural as well as and economic. The most recent battlefield is the negotiations over the U.S.-European Union free trade agreement.

Such a deal could create a megamarket of 800 million consumers. Not only could the agreement reduce tariffs, but also finally tackle nontariff barriers, including differing data-protection and food-safety standards that have long stood in the way of transatlantic commerce.

No one thought these would be easy negotiations but now more than a few observers say they are surprised by the increasingly hostile reception in Europe which could threaten the deal.

There is dissent in the United States, too, over the potential loss of protections. But in Europe, the debate is taking on a cultural “tinge.” "With these talks, we are seeing the European fear of globalization turning into something more specific: a fear of America," said Thomas Snégaroff, a French radio commentator and U.S. expert at the Paris-based Institute for Strategic and International Relations.

In a way, these controversies are a little odd. Even leading European food safety authorities agree that the U.S. food production practices in contention are safe. Increasingly, it seems, the debate is about what European critics call "less natural" methods deployed by food producers in the United States. In fact, they likely are about the clout of many of the groups who have chosen to protest.

The fact is, the vaunted European food culture is already under home-grown threats, press reports indicate. For example, in Paris bistros are apparently serving flash-frozen meals to unsuspecting diners, and the scandal of mislabeled horse meat still lingers. Still, culture warriors argue, letting in artificially treated U.S. foods could water down French cuisine even more, leading to “pool-scented chicken chunks served with flavorless sides of bionic broccoli.” Whatever that is.

"If this happens, if these U.S. foods come into Europe, we are talking about more than safety risks," said gourmand and food writer Camille Labro. "You are afraid of food in the United States. You have to blast it with chemicals to kill all the bacteria. Don't you know what that does to flavor? If we allow that kind of food here, we are talking about the death of taste."

So, the culture debate now features activists dressed as chickens handing out fliers at grocery stores to "educate" society on the dangers of free trade. That image seems a little tricky, but probably the French can manage it.

French President François Hollande openly backs the trade deal but Matthias Fekl, France's new secretary of state for foreign trade, told the Washington Post recently he could not envision any deal that opens the door to controversial U.S. foods.

U.S. officials and food producers call European fears misguided and describe American standards of food safety as among the highest in the world. They also point to studies showing American standard practices, including chlorine washing of chickens, as unquestionably safe.

Critics note that it was the European Union, a region mired in stagnant growth and a crisis of un-employment that approached the Obama administration about a prospective trade deal. The administration agreed and made the proposed European free trade agreement, along with an ambitious agreement with Asia, the cornerstone of its trade policy. Leading European leaders, including British Prime Minister David Cameron and German Chancellor Angela Merkel, remain firmly behind the FTA concept.

In recent months, chances of any major breakthrough have been hindered by election-year politics on both sides of the Atlantic but an eighth round of talks is set for February. In some EU countries, including Poland and Sweden, there appears to be solid support. But in other nations, the opposition increasingly seems to be less about food than outright Americaphobia.

So, it certainly is not unreasonable to suggest that protectionist instincts may be leading Europeans to once again act against their own interests, as well as those of the United States. The fact is that the EU has always been inward looking with regard to non-EU competitors — particularly in the long stagnant World Trade Organization’s Doha Round talks.

Throughout the rather brief life of these free-trade talks, the EU has continued to thunder about all the issues it will not allow on the table, so the new anti-America campaign may be mostly talk. But it certainly is not doing anything to strengthen chances for a new transatlantic free trade agreement, Washington Insider believes.

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(GH/CZ)

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