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.

Boehner Pessimistic About Proposals to Raise Federal Gas Tax

Speaking with reporters this week, House Speaker John Boehner, R-Ohio, said he remains "doubtful" that there are enough votes to raise the current 18.4 cents per gallon federal excise tax on gasoline and 24.4 cents per gallon for diesel. There have been numerous suggestions to do just that as a way to raise funds needed for road and bridge building, maintenance and repair. And many are pointing out that today's significantly lower retail prices for price for gasoline would be an ideal time to increase the excise tax rate.

Until recently, the current transportation funding mechanism worked relatively well. However, today's more efficient vehicles as well as a recession-induced drop-off in driving has lowered gas-tax revenues to the federal Highway Trust Fund, leading to tough debates in Congress and among transportation advocates over how best to keep the needed revenues flowing. Without an agreement on a reliable funding mechanism, Congress has periodically extended transportation authorization and shifted money from the general fund to the highway fund. Since 2008, lawmakers have transferred $53.6 billion in this manner.

Emergency cash infusions will continue to be needed unless Congress agrees on a long-term funding formula for the trust fund. And as with virtually all major issues on Capitol Hill these days, it remains to be seen whether Congress will be able to rally around and pass a transportation funding bill that the country so clearly needs.

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Calls for Reform of WTO's Consensus Rule Growing Louder

There is general agreement that the Consensus Rule employed by the World Trade Organization needs some tweaking. Under this provision, all 160 WTO members must agree to major actions, meaning that one country, acting alone, can derail an agreement.

That happened last summer when India declined to approve an agreement supported by every other WTO member unless it was given special consideration regarding an unrelated manner. Thus, the Consensus Rule is even more draconian than the U.S. Senate's filibuster in that a filibuster can be overcome by a vote by senators, but the WTO rule cannot.

Reform of the WTO's current system may prove difficult. It will take a consensus (unanimous agreement) to alter the Consensus Rule, something not every member may want. However, if the organization continues to be hamstrung on some major issues due to the need for 100% approval, it is likely that more agreements will be conducted and concluded outside the auspices of the WTO.

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Washington Insider: Politics Continue to Plague Fast Track Discussions

There is fairly wide agreement among trade experts that fast track negotiating authority, or Trade Promotion Authority (TPA) is essential to prevent trade opponents who lack the votes to kill the deal from endlessly amending it to death. Still, there are a number of groups who would like to see just that.

The approach is a compromise developed long ago, following trade policy failures of the 1930s. Under TPA, U.S. trade negotiators agree to follow negotiating objectives set by lawmakers and to consult frequently with Congress. For the past several years, trade advocates have wanted to renew TPA for the current negotiations in the Pacific and Atlantic regions. Trade opponents are once again using a variety of arguments to oppose renewal, including that it is unconstitutional, among many others.

The previous fast track authority was enacted in 2002 and lapsed in 2007, but past and current U.S. trade representatives have said they are still adhering to the notification and consultation requirements as well as meeting the previous negotiating objectives.

After years of negotiation among the staffs of the Senate Finance and House Ways and Means committees the Bipartisan Congressional Trade Priorities Act of 2014 was introduced by former Senate Finance Chairman Max Baucus, D-Mont., together with Sen. Orrin Hatch, R-Utah, and then-Ways and Means Chairman Dave Camp, R-Mich. However, the Senate Democratic leadership did not support consideration of the measure during the 2014 elections, and when Baucus retired early to become the U.S. ambassador to China, the bill lost its most powerful supporter.

Now Sen. Hatch is moving into Baucus' former role, and for some time has been hammering the administration to seek TPA more forcefully. As the Republican majority moves to control the Congress, President Obama has become more visible on trade issues in general and last month he specifically placed TPA high on his congressional agenda.

Nevertheless, the politics of fast track have become increasingly complex. The Republican leadership is well aware that it will need Democratic support to get TPA over the 60-vote hump to passage on the Senate floor. "I also think the leadership will try to lock it up early on in the committee with a vote that reflects bipartisan support," William Reinsch, president of the National Foreign Trade Council, told the press. At the same time, Democrats are continuing their attempts to change the procedures to increase consultation requirements and broaden the scope of the negotiating objectives.

Analysts suggest that while Republicans may be willing to incorporate suggestions for limited increases in transparency, they likely will oppose calls by some Democrats and civil society groups to alter the customary confidentiality of trade negotiations through the mandatory publishing of draft negotiating texts.

The reasons are clear, observers suggest. For example, the new leadership is unlikely to want U.S. negotiating tactics to be undermined by public opposition to positions that may not be final. In addition, such publicity would be such a radical departure from past practice that it is "unlikely to be a requirement for mainstream Democratic support," experts say. Finally, the leadership knows the current five-year duration of the proposed measure means it could be a Republican administration that would be bound by the same transparency requirements beginning in 2017.

TPA is widely supported by industry. For example, the National Association of Manufacturers is part of the steering committee of the Trade Benefits America Coalition, a group of associations and companies advocating for the pursuit of U.S. international trade agreements and passage of TPA legislation. Christopher Moore, senior director of international business policy with NAM, said manufacturers strongly support renewal of trade promotion authority.

Moore, who is a former official with the Office of the U.S. Trade Representative recently told the press, "Having trade promotion authority really strengthens the hand of our negotiators and gives them the leverage they need to bring home the best deal they can for American business and workers."

Lori Wallach, director of Public Citizen's Global Trade Watch, questions the constitutionality of TPA and notes that the "real fight" will be in the House where vocal opposition comes from House Democrats, such as Reps. Rosa DeLauro, D-Conn., Alan Grayson, D-Fla., and others. Along with Public Citizen, numerous others are lining up to oppose TPA, including the Sierra Club environmental group and a number of labor groups.

The president says he will discuss TPA with congressional leaders of both parties, "making a strong case on the merits as to why this has to get done." The president stressed the need to publicly engage with the agreement's critics, such as labor and environmental groups, and argued that the pact would improve labor rights in Vietnam, where they are now nonexistent, and improve environmental regulations in Malaysia. "Those who oppose these trade deals, ironically, are accepting a status quo that is more damaging to American workers."

Trade and increased access to the growing developing country markets, especially in Asia are extremely important to U.S. producers. Thus, the TPA fight, in spite of its complicated politics, should be followed carefully by producers as it develops, Washington Insider believes.

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(GH/CZ)

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