Washington Insider--Thursday

By DTN's Washington Insider

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

Mexico to Tighten Truck Emission Rules, Make Them Compatible with U.S.

The battle by U.S. labor and environmental groups to keep Mexican trucks from operating freely throughout the United States has hinged on several allegations. The Teamsters union said that trucks registered in Mexico were not safe enough to operate in this country and that Mexican drivers were not skilled enough. Environmental organizations worried that Mexican trucks did not meet U.S. emissions standards and that allowing them free access to U.S. roads would add to this country's air pollution.

Last week, the U.S. Department of Transportation announced that following a lengthy pilot program, it now believes that Mexican trucks are comparable with their U.S. counterparts when it comes to safety. This week, Mexico said it will revise its emissions standards for heavy-duty trucks (more than 8,500 pounds) to make them comparable to standards in Europe and the United States.

None of this is to say that opponents of Mexican trucks on U.S. roads will go away. But as more evidence is gathered to indicate that earlier objections have been met, those opponents will at least be forced to find new arguments.

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Ryan Wants Trade Promotion Authority for Obama

House Ways and Means Committee Chairman Paul Ryan, R-Wis., is calling on Congress to approve legislation for fast-track trade promotion authority (TPA) for President Obama. Ryan's support is important because it is his committee that oversees the nation's trade and tax policies in the House.

Earlier this week, Ryan held the first committee hearing of his chairmanship, an event at which he said he puts a high priority on passage of TPA legislation. The committee has not yet drafted fast track legislation, so there is no indication of when Ways and Means might be expected to approve a specific proposal. However, Ryan did tell reporters that the timing for the introduction of TPA legislation will be set after a retreat for Republican members of the Ways and Means Committee –– which is scheduled for next week — and following consultations with the Senate Finance Committee, which has many of the same responsibilities as Ways and Means.

On the benefits of trade agreements, Ryan pointed out that U.S. manufacturers have a more than $50 billion surplus with the countries with which it has trade agreements. He contrasted that surplus with the U.S. trade deficit in manufacturing goods with the rest of the world, which he put at more than $500 billion.

As has been widely reported, the main opposition to TPA and to free trade agreements in general will come from congressional Democrats and their supporters. Whether Republicans will follow Ryan's call to approve TPA will depend on the details currently being negotiated by House Ways and Means and the Senate Finance committees.

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Washington Insider: EU Trade Negotiations by Poll

As the United States begins to more actively debate the renewal of fast track authority to allow the president to negotiate trade deals and submit them to Congress for an up or down vote, one of the key issues involved is the question of how much transparency should be provided. Congress typically wants more involvement and more access to the details being considered, while negotiators caution that ambitious agreements probably cannot be worked out if they are subject to the constant glare of publicity. In fact, the situation in the European Union is a case in point.

EU and the U.S. negotiators have now held seven rounds of formal talks on the Transatlantic Trade and Investment Partnership free trade agreement, with the next session due in February, in Brussels. Recently, the EU Commission began to publish the EU's textual proposals, including one on food safety rules, as well as a few other documents in an effort to address concerns over the transparency of the talks.

The public reaction appears to be primarily strong push back to the proposed investor state dispute settlement (ISDS) mechanism that has been routinely included in other agreements for some time. In response, EU Trade Commissioner Cecilia Malmström has begun commenting publicly on the "huge skepticism" towards ISDS. As a result, she is promising more public consultations, once again pushing back the long-awaited decision on ISDS and possibly threatening the timeline of a deal Malmström says she hopes will be nearing completion by the end of the year.

The consultations were intended to gather public opinion and support for ISDS and to cement the EU's negotiating position on investor protection. However, given the fact that around 145,000 of the 150,000 submissions to the consultation came from a handful of non-governmental organizations (NGOs) who strongly oppose the mechanism, Malmström now says that the EU executive needs more time to evaluate the response and come to a position.

In addition, she has begun arguing publicly that the consultation was "not a referendum" and that the EU needs more "open and frank discussion" in a "lot of meetings" in the near future before deciding the future of talks on the ISDS. The NGOs and other groups say they fear U.S. multinational companies could use ISDS to challenge the EU's food and environmental laws, something the European Commission has vehemently denied would happen.

Recently, members of the European Parliament have spoken up on TTIP –– with the rapporteur for the Parliament, Berndt Lange, asserting that any potential deal must "respect and uphold" the sensitivities and fundamental values of the EU's agricultural sector, such as the use of the precautionary principle which allows the rejections of scientific criteria and supports use of politics in the development of food policy regulations. The United States opposes the insertion of such political concerns — a confrontation the TTIP negotiators have yet to address.

It remains to be seen how the United States will handle the "transparency" issue in any proposed fast track legislation introduced on Capitol Hill. So far the approaches being discussed emphasize the difficulty of discussing ambitions alternatives — including those with trade concessions — in the relentless glare of publicity by this or that advocacy group, as is happening in the EU.

As big and important as the EU is, it has a weak central government with 28 member governments, each reacting to literally dozens of advocate groups with many, many missions. This means that the chances of an ambitious free trade deal remain unclear, likely far smaller than the chances of a more ambitious deal in the Pacific region.

So, we'll see. Right now, there are still so many groups interested in scuttling any deal that it would be a mistake to exhibit much optimism. At the same time, there are large numbers of commercial interest on both sides of the Atlantic that really do want a more effective arrangement. The key question is how such a deal can be worked through the counter-interests here and there, Washington Insider believes.

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