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.

Changing Times, Changing Demographics Could Support New U.S. Cuba Policy

President Obama's recent proposal to alter the U.S. economic embargo against Cuba may fall on more fertile ground than previous attempts if trends identified in a recent Pew Research Center survey continue.

Among other things, the Pew survey found that the view of U.S.-Cuba relations differs greatly among Cuban Americans depending on their age and when and if they emigrated from Cuba. Older Cuban Americans who came to this country before 1990 tend to be far more opposed to normalizing relation between the two countries than do younger, more recent arrivals.

At the same time, political party affiliation also varies among Cuban immigrants. Some 57% of recent Cuban immigrant arrivals (those arriving since 1990) say they identify with or lean towards the Democratic Party and 19% say the same about the Republican Party. However, among Cuban immigrants who arrived before 1990, 48% say they are Republican while 35% say they are Democrats, according to the Pew analysis.

The changing demographics of the Cuban American population appears to hold out the possibility that it may soon become politically feasible to carry out at least some of the president's proposals for a new relationship with the island nation.

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Senate Republicans Vow to Waste No Time in Moving Keystone XL Legislation

The now-Republican-controlled Senate Energy Committee will get a jump on the legislative year by holding a hearing this week on a bill to approve TransCanada Corp.'s Keystone XL pipeline. By doing so, Republicans will be able to bypass the current Keystone review by the Obama administration.

The committee hearing is scheduled for Wednesday, just a day after Congress reconvenes. A spokesman for the panel says the intention is to get a Keystone measure "to the floor as soon as possible."

If approved, the pipeline would carry oil sands from Alberta, Canada to U.S. refineries along the Gulf of Mexico coast. Backers say it will create jobs and reduce U.S. reliance on imported oil (although oil shipped from Alberta is, technically, imported). Environmentalists say the pipeline would worsen climate change by encouraging development of oil sands, which are more carbon intensive than other forms of oil.

Last November, pipeline supporters in the Senate came within one vote of passing a similar measure that would let TransCanada build the cross-border project. This year, it is likely that a pipeline approval bill will sail through both houses.

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Washington Insider: Outlook for the Trans-Pacific Partnership

In a somewhat odd report on prospects for new trade deals, the New York Times has painted U.S. Trade Representative Michael Froman as a somewhat misplaced optimist. He has, the Times notes, met with Congress more than 1,500 times to promote the Trans-Pacific Partnership free trade agreement, president's biggest potential trade deal. But in spite of his efforts, TPP prospects still seems glum.

Part of the problem, the Times thinks, is that many critics still see the president and the White House as "reluctant traders," so Froman first had to convince White House staff that the TPP deal was worth pursuing. The original concept, inherited from the Bush administration, was seen as too small, with only four Asian country members. And in the chaotic days of 2009, when Froman was deputy national security adviser for international economic affairs, a campaign to advance a new trade agenda seemed less important than averting global financial collapse.

Now, Froman seems to have won over his White House colleagues and has the backing of the president. And, he seems convinced that he can complete negotiations on a complex deal that has grown to include 12 countries on both sides of the Pacific and sell it to a hostile Congress, the Times concludes.

The deal he envisions would stretch from Peru and Chile to Japan and Vietnam, accounting for 40% of the world's economic activity. It would not just lower tariffs: the pact would require rigorous regulations on labor and environmental standards, as well as the first rules for state-owned enterprises like those run by the governments of Vietnam and Malaysia.

And the TPP has become the linchpin of the administration's strategic shift to Asia, since it provides the United States a way to counter the economic inroads made in the region by China. There also is a Transatlantic Trade and Investment Partnership with Europe on the table, although those talks have much farther to go, observers note.

Still, Congress still seems to see the administration as lukewarm on trade, and its efforts to push for the fast track authority widely seen as critical to major trade deals have gone nowhere. Still, Froman argues that Republican control of the Senate has elevated pro-trade lawmakers to key positions in leadership and committee control, and the international negotiations themselves have progressed.

At the same time, tensions over the president's administrative actions on immigration, regulation of greenhouse gas emissions, normalization of relations with Cuba, among others could take a toll. And, in spite of strong personal opposition from congressional Republicans, Democrats may be the bigger problem, the Times says.

Froman has met dozens of times with Rep. Sander Levin of Michigan, the ranking Democrat on the Ways and Means Committee, which has jurisdiction on trade, but Levin still insists on control of details, rather than to simply approve or deny an administration-negotiated package.

And, the details Levin is watching are numerous. For example, he reflects the suspicion of environmental groups who doubt the administration is really pressing for binding, enforceable standards — as well as trade union worries about administration emphasis on protecting intellectual property, a boon to pharmaceutical companies and Hollywood, but seen as less important by many unions and their members.

In addition, politicians from both parties are pressing Froman to demand enforceable limits on currency manipulation, an area that has traditionally been the focus of international negotiations but not part of agreements enforced by the World Trade Organization.

Now, some 230 House members and 60 senators have signed letters demanding enforceable sanctions on currencies — an aspect of the deal that now gives the White House significant heartburn since U.S. government officials recognize that any enforceable currency regime could cut both ways — and even infringe on the authorities of the Federal Reserve, making it subject to an international tribunal.

On the broader concerns of reluctant Democratic senators, Froman points to the 18 cases of alleged unfair trade practices the administration has brought before the WTO, half of them against China, as proof that the president is working in behalf of American workers.

Now, the president has mobilized virtually his entire administration and is directing Cabinet secretaries to press members of Congress individually; but, antagonism from the Democratic base continues to weaken these efforts. The fact that the president will depend heavily on Republicans to pass fast track and push the TPP deal to completion is leading to demands for stronger personal involvement by the president.

More than ever, trade looks likely to play a central political role in the new political wars about to resume in Washington. This should be watched carefully by producers since the outcome is not only important to U.S. agriculture, but remains seriously in doubt, Washington Insider believes.

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(GH/CZ)

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