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.

House Ag Committee Schedules COOL Hearing Next Week

House Agriculture Committee Chairman Mike Conaway, R-Texas, scheduled a hearing next Wednesday on the continuing contentious issue of U.S. country of origin labeling regulations for meat and meat products. Observers believe that once the World Trade Organization issues a decision on an appeal brought against the United States by Canada and Mexico –– a decision that is widely expected to run against the United States –– the House Ag panel will need to quickly mark up a bill that would repeal the rule but perhaps authorize a voluntary COOL program.

The WTO is expected to issue its decision by May 18.

In addition to a likely discussion about re-jiggering the COOL law, the hearing also could provide additional information about potential retaliatory moves by Canada and Mexico if they win their WTO case. If they do, Canada and Mexico both say they will request that the WTO authorize them to suspend concessions with the United States (aka retaliate). Retaliation would be in the form of raising tariffs on U.S. products.

Canada previously published a list of U.S. products that could be potential targets of retaliation, including food and agricultural goods as well as some manufactured products. Mexico has not yet released a list. Retaliation would not be permitted to exceed the value of the losses suffered by Canada and Mexico as a result of U.S. country of origin labeling requirements. In this case, Canadian and Mexican officials claim damage to livestock producers their countries has been estimated at around $2 billion, a figure that should spur Congress to resolve the problem in short order.

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House Ways and Means Committee to Mark Up Bill to Repeal Estate Tax

The House Ways and Means Committee plans to vote next week on a bill that would repeal the estate tax, an action that is much desired by those who stand to inherit multimillions of dollars' worth of assets, as well as by the American Farm Bureau Federation, which has lobbied for estate tax repeal for years.

The United States currently imposes a top rate of 40% on estates after they take an exemption of $5.43 million per individual or $10.86 million per married couple. Currently, only 0.2% of estates are required to pay the tax, thus leaving the remaining 99.8% untouched.

Some Democrats on the committee are said to be interested in creating an estate-tax exemption for some family-owned small businesses and farms. However, they remain opposed to a full repeal of the tax.

Since President Obama favors increasing, not repealing, the estate tax, he is certain to veto the bill if it gets to his desk, something that is far from certain at this point.

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Washington Insider: New, Unexpected Opposition to Trade Deal

Policies that open markets and increase competition have been central in Republican platforms for as long as anyone can remember, so it seems strange that a bloc of House Republicans is threatening to join in opposition to the trade push now being mounted by the White House. The effort is seen as a serious threat by trade advocates, the Wall Street Journal recently reported. The WSJ worries that the group could imperil an effort long seen as one of the few current prospects for bipartisan cooperation.

Most Democrats in Congress and nearly all unions oppose President Obama's quest to win a major trade deal with 11 other Pacific countries, the Journal notes. That alignment puts pressure on Republican lawmakers and business groups who widely support the deal but are not overjoyed at the prospect of supporting the White House.

The Journal suggests that now some 50 to 60 House Republicans could buck the GOP leadership on trade policy, and could develop the clout to block fast track legislation which is widely seen as critical to approval of a final pact on the Trans-Pacific Partnership with Japan and 10 other countries. Fast track would let Congress approve or reject a trade deal, but not amend it to death in the process.

If 60 House Republicans defect from leadership on trade, the administration would have to win support from at least 32 House Democrats, well over twice the number now thought to support fast track. House Speaker John Boehner, R-Ohio, has asked for 50 Democrats to come out in support of the bill before he moves for a vote.

GOP opponents fall into several groups, the Journal says. Some tea-party disciples and other conservatives oppose fast track because they think it shifts too much trade authority from Congress to the president.

Other conservatives oppose the legislation, also known as trade promotion authority, because it would expedite a Pacific deal they oppose on grounds of U.S. sovereignty or religious freedom abroad. Still others don't want to support a deal that might jeopardize light manufacturing or other jobs in their district.

But the most common sentiment among Republican critics — and one that is gaining momentum — is simply distrust of President Obama. The Republican suspicion took center stage this month in public challenges to the president's nuclear negotiations with Iran.

In response, the president says he will make the case for any Iran nuclear deal to Congress and administration officials say fast track actually helps Congress set the guidelines for trade deals. Passage of the bill, which hasn't yet been introduced, is intended give Japan and other Pacific countries the confidence to offer important concessions and close the TPP agreement. Negotiators worked last week in Hawaii toward a final deal, which is expected in coming months.

Supporters of the TPP agreement argue that any U.S. pullback from global commerce will only hurt the U.S. economy at a time when leading competitors are building relationships. "For some of my colleagues to say, 'Let's just put up walls and disengage from the rest of the world' — that's gobbledygook, that's not real," said Rep. Pat Tiberi, R-Ohio, who is helping lead efforts to drum up more support in his caucus.

In addition, GOP leaders and administration officials both charge that critics of fast track are ignoring new measures expected in the bill that would boost transparency and ensure accountability to Congress.

Fast-track supporters hope to see the legislation introduced and passed in April. That way, the TPP could get a final vote in Congress before presidential politics heats up later this year.

However, the new pessimism followed the circulation among freshman Republicans of a letter that got only 26 signatures of support for fast track. This suggests that nearly half of new members aren't ready to support a bill.

Rep. Tom Emmer, R-Minn., who circulated the letter with the backing of business groups, said that support for the bill would rise as constitutional conservatives in the group learn more about how the measure helps them influence the president's negotiations.

It may be that both parties are simply waiting for political pressure to build on their rank and file so they can push fast track to passage and complete the TPP. However, that is a dangerous game that could backfire on trade advocates from both sides.

The TPP, and therefore fast track are important for both sides — and, especially for agriculture — and a bipartisan push would be timely and is badly needed, Washington Insider believes.

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(GH/CZ)

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