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 Democrats Call for Hearing on Long-Term Transportation Funding

House Democrats continue to search for a source of long-term funding for federal surface transportation programs that are set to expire at the end of this month. For the past six years, these programs have been funded through a series of short-term "patches" that keep projects moving forward, but fail to provide the states with the financial assurances they need for long-term infrastructure planning.

Rep. Peter DeFazio, D-Ore., and Delegate Eleanor Holmes Norton, D-D.C., have called on House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., and House Ways and Means Committee Chairman Paul Ryan, R-Wis., to schedule a joint committee hearing on revenue options for a long-term surface transportation bill.

Both the House Ways and Means and Senate Finance committees are working on a $10 billion short-term patch through Dec. 31 that is given good odds of passing. This is not the best way of providing for investments in America's future, but it does allow Congress to claim that it is doing something.

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Senate Bill Would Create Infrastructure Bank

Sen. Deb Fischer, R-Neb., has introduced legislation that would create the American Infrastructure Bank (AIB) partially funded by a one-time voluntary tax repatriation. The goal of Fischer's bill is to offer states new financing and funding tools to generate transportation projects. AIB would be sustained through interest collections and money returned to the bank by states through remittance agreements.

Under her proposal, AIB would initially be funded by a 6.5% tax rate applied to voluntarily repatriated earnings over three years. U.S. companies reportedly are harboring as much as $2 trillion in profits overseas and would not pay the 35% corporate tax rate on those profits until the companies bring the money into the United States.

Under a proposed repatriation plan, companies that voluntarily bring their profits back to this country would be granted a one-time tax rate of just 6.5%. Lowering the rate from 35% to 6.5% would cost the Treasury $118 billion in lost revenue over a decade; just how much revenue would be raised by the proposal is difficult to know since the program would be voluntary.

Members of Congress have been suggesting many uses for the revenue raised by tax repatriation, meaning there will be a significant political battle among various spending proposals if the tax plan is approved.

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Washington Insider: EU GE Proposals Seen as Threats to Trade Deal

Agriculture Secretary Tom Vilsack has seemed to be one of the least trade-focused USDA officials throughout much of his tenure. This is in part because his main industry supporters have shown themselves highly skeptical of policies to expand overseas markets. For example, he claims to have no idea how to correct his department's country of origin labeling policies that trade partners tend to find offensive.

Now, however, he has taken to criticizing the European Union and its views about the cultivation and import of genetically engineered foods and crops. He argues these positions are making negotiations of a Transatlantic Trade and Investment Partnership (TTIP) "very, very difficult," press reports indicate.

He also warned that the European Commission's proposal giving EU member states, or each individual country, the ability to restrict or prohibit the import of EU-authorized GE crops for food and feed, as well as the already in-force rules on cultivation, undermines efforts to improve global food security.

The recent charges were made in last week's meeting of G20 agriculture ministers in Istanbul and culminated in a warning to the EU not to bar imports of GE products. Vilsack told the press, "You can't use and create a system of open or free trade if you are creating ways in which countries can develop barriers to products for political or cultural reasons. You ought to give people the choice, then let the market decide."

The secretary also said the policies raise "serious issues" about the future of TTIP talks and questioned whether it was the correct message to send ahead of the G20 meeting, at which the discussions would be aimed at improving global food security. "If we are serious about global food security then we have to be very serious about the science that will allow us to be as productive as possible in the most sustainable way possible," Vilsack said.

"The EU's decision potentially ... creates a serious obstacle to meeting the challenge of global food security," he said. "It is, in our view, inconsistent with the notion that we would have a science-based, rules-based [global] system."

U.S. Trade Representative and TTIP lead negotiator Michael Froman expressed his "disappointment" at the EU's proposals, while officials in Washington reportedly have also raised the possibility of bringing the EU to the World Trade Organization if the proposal becomes law.

But EU officials such as Trade Commissioner Cecilia Malmström responded by saying they are confident the GE proposals complied with both WTO rules and the EU's internal market regulations -- a strange view since the proposed approach -- giving each country the right to decide on GE products -- clearly violates a central principle of the EU's Common Agricultural Policy.

A group of EU food and feed producers also issued a statement slamming the proposal. "It will seriously threaten the internal market for food and feed products, causing substantial job losses and lower investment in the agri-food chain in 'opt-out' countries. This would cause serious distortions of competition for all EU agri-food chain partners," said EU umbrella farm lobby Copa-Cogeca Secretary General Pekka Pesonen, on behalf of the group.

Observers say it is difficult to determine whether the EU is seriously interested in negotiating a U.S.-EU free trade agreement at all, since Europe has continued to define and expand the issues and areas which it decrees "are not on the table." Unfortunately, this defense includes the "precautionary principle" which allows the EU to disregard scientific determinations of safety at will, and which have deeply politicized EU agricultural policies.

In this case, Secretary Vilsack is absolutely correct in his claim that the EU's anti-technology stance threatens global food security. This view, among others, suggests the TTIP talks are not just difficult, but possibly a lost cause, Washington Insider believes.

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(GH/CZ)

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