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.

Congress Continues Focus on 'Currency Manipulation'

A growing bipartisan coalition in both houses of Congress is preparing to ramp up efforts to stipulate that currency manipulation is an export subsidy subject to U.S. trade enforcement laws that provide for imposing penalizing duties on imports. House Ways and Means ranking member Sander Levin, D-Mich., told reporters this week that a proposed House bill would allow U.S. firms to bring countervailing duty cases based on currency manipulation. A nearly identical bill has been introduced in the Senate.

Factors such as the size of a country's foreign currency reserves, its current account surplus and the degree to which it is intervening in foreign exchange markets would be used to test the claim of currency manipulation. Levin said currency manipulation is the most consequential protectionist measure in the 21st century in terms of the harm is does to U.S. employment and the country's trade deficit. By devaluing their currencies against the dollar, U.S. trading partners seek to make their exports more price-competitive than U.S. goods, Levin pointed out.

Presidential administration, both Democratic and Republican, have for years sought to avoid tagging U.S. trade partners as currently manipulators, and there is little indication that the Obama administration will welcome this latest legislative attempt to force it to act when it may not wish to.

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Senate Bill Would Direct EPA to Publish Health Advisory for Harmful Algae Toxins

Ohio's two senators, Republican Rob Portman and Democrat Sherrod Brown have introduced legislation that would direct the Environmental Protection Agency to publish a drinking water health advisory for potent toxins released by blue-green algae. The advisory would require EPA to recommend a level for microcystins below which drinking water is safe for consumption (which also would set the level above which drinking water is unsafe for consumption).

Harmful algae blooms resulting from excessive nitrogen and phosphorus runoff from farms and municipal sources gained national attention last year after a drinking water ban was imposed in Toledo, Ohio, in August 2014. That followed the discovery of a type of microcystin that was released during an outbreak of blue-green algae in Lake Erie, the city's drinking water source.

The Portman-Brown bill and a companion bill in the House do not address the source of nutrient runoff that causes the algae that cause the toxins to form. But EPA and state governments in the Great Lakes region are looking at steps that can be taken by farmers and others to reduce that runoff.

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Washington Insider: Europe Wrestles with Its Own Complex COOL Regulations

The European Parliament this week approved a resolution calling for mandatory country-of-origin labeling of meat used in processed foods within the European Union as a way to regain consumer confidence following the discovery in recent years that horsemeat had been illegally substituted for beef in a number of processed products.

It is anticipated that the European COOL proposal will provide a better way to trace meat in processed products back to its source. And, labeling processed meat would be in addition to the mandatory COOL rules that will apply to fresh unprocessed meat from swine, sheep, goat and poultry in the EU beginning April 1.

One of the selling points of the resolution, which passed by a more than a two-to-one majority, was that COOL would be important to European consumers if the Transatlantic Trade and Investment Partnership (TTIP) agreement is finalized between the EU and the United States. Members of parliament who argued for this point believe that TTIP could lead to increased imports of processed food from the United States, and that the new imports should be labeled as U.S. origin.

"If TTIP were to come into force, these are the types of rules we would need to ensure citizens that food imports from the United States would not impose a health threat," said one member of parliament.

Opponents of mandatory country-of-origin labeling argued that the rules would drive up the cost of processed food products by as much as 25%. At least that was one of the findings in a report issued by the European Commission in December 2013. That report also found that 90% of EU consumers want meat origin labeled on their processed foods such as lasagnas and sausages, but were not prepared to pay for it. As a consequence, the increased cost likely would need to be absorbed by food processors.

The 2013 commission report also found that as important as consumers considered COOL, country-of-origin labeling for meat in processed food "ranks only in fifth place among consumer interests (after taste, best before date, quality and price)…."

The European trade association FoodDrinkEurope criticized the resolution because it said the mandatory labeling requirement would impose a large burden on the small and medium-sized businesses that make up 99% of the EU food and drink industry.

This is reflected in a statement by FoodDrinkEurope which points out that "Forcing companies to provide the country of origin of meat in processed foods would require production lines and batches to be differentiated according to country This would make supply chains less efficient, make production more costly and create more food waste."

European consumers also indicated they were unwilling to accept a broader "EU/non-EU" COOL regime, even if this would result in lower costs for processors.

The next step in the will involve the European Commission taking up parliament's resolution and introducing it as a legislative initiative.

Currently, live animals move across the national borders of EU member countries almost as easily as cattle and hogs move from one U.S. state to another. A European COOL system that tracks where animals are born, raised and slaughtered is thus likely to prove significantly more complex than anything that has been proposed in the United States. But, then, Europe seems to enjoy creating ever more complex bureaucratic regimes for its citizens and businesses, Washington Insider believes.

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(GH/CZ)

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