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.

Energy Chairman Murkowski Proposes to Lift U.S. Oil Export Ban

Senate Energy and Natural Resources Committee Chairman Lisa Murkowski, R-Alaska, and Democratic Sen. Heidi Heitkamp of North Dakota (along with 11 other Republican senators) this week introduced legislation that would repeal the 40-year-old ban on U.S. crude oil exports.

Murkowski and other proponents of lifting the ban –– which was put in place in the wake of the Arab oil embargo in the 1970s –– say the ban no longer is relevant given surging domestic oil production. Most of the major U.S. oil companies support Murkowski's bill, which could be the subject of a committee hearing as early as June 4.

However, a number of smaller oil refiners and U.S. airline companies are concerned that lifting the export ban would raise domestic oil price, thus making them less able to meet foreign competition. Indeed, the possibility that allowing U.S. oil to be exported could drive up the cost of gasoline appears likely to drive some members of Congress away from the proposal.

Still others question whether the United States, as the world's second-largest oil importer, should be getting into the oil exporting business in the first place.

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Organic Trade Association Proposes New Checkoff Program

The Organic Trade Association is calling on USDA's Agricultural Marketing Service (AMS) to move forward on the association's proposed checkoff program that focuses on research and promotion of organic food and products. The organization claims that its proposed program, called the GRO Organic (Generic Research and Promotion Order for Organic), could raise more than $30 million annually for the promotion of organic products.

Under the OTA proposal, checkoff funds would be collected all along the supply chain, including growers, processors, certifiers, distributors, importers, exporters and retailers. Most assessments would be calculated based on net organic sales, with businesses making $250,000 or less given the opportunity to opt out of the program. Under a new provision of the 2014 farm bill, organic producers have the option of contributing either to an organic checkoff program or to an already-established checkoff for their particular crop.

AMS currently oversees more than 20 checkoff programs. The process for approving the new checkoff program requires the agency to review OTA's proposal and publish the checkoff program in the Federal Register, followed by a public comment period, before organic stakeholders would vote on its adoption. If enough qualified organic producers approve of the new checkoff, AMS then would take the necessary steps to establish it. If nothing else, an organic checkoff will give the industry the funds necessary for an educational program to explain to consumers just what is, and what is not, "organic."

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Washington Insider: Ag Technology and Spies

The case of Chinese nationals who were discovered pilfering seeds and other plant material from Midwestern farms is continuing to attract the attention of the urban press who see the story as quaint and a little strange. They especially focus on the idea of sophisticated foreign agents tramping through rural communities in search of high tech products. However, it seems that the FBI not only thinks the threats are serious, but that they are part of a broad based threat to U.S. technology.

As a result, the Des Moines Register reported recently, the FBI is invoking the Foreign Intelligence Surveillance Act to surreptitiously gather evidence in a corn tech case in which two Chinese siblings are accused of plotting to steal patented hybrid seeds enhanced with traits such as drought resistance.

Mo Hailong and Mo Yun are accused plotting to steal the seeds and smuggle them back to China where they would be counterfeited by a major Chinese agriculture company, the Beijing Dabeinong Technology Group, according to U.S. prosecutors. If convicted, the two Chinese citizens could face a maximum 10-year prison sentence.

Defense attorneys are complaining to the press that the government is overreaching in its use of anti-terrorist laws. These allow the FBI to bypass the use of traditional search warrants. Agents seeking evidence instead need only get approval from a secret Washington, D.C.-based court designed to hear complex national security cases.

The Beijing Dabeinong Technology Group, also known as DBN Group, is a private business that is not owned or controlled by the Chinese government, defense attorneys assert. "For the first time in the statute's history (as far as our research reveals), the government used FISA to investigate a trade secret dispute between two privately owned companies."

The FBI counters that it is more than that and that the theft of trade secrets has broad security repercussions. Chinese companies are leading thieves of U.S. firm's intellectual property and cost U.S. businesses an estimated $48.2 billion in 2009 by intellectual property infringement and trade secret theft, according to the U.S. International Trade Commission.

Defining DBN Group's relationship to the Chinese government is a key factor in the case since FISA allows intelligence-gathering specifically on people spying for foreign governments or government-connected groups. The defense argues that the Chinese government owns only a small stake in the company, perhaps 1.08 percent of its stock. However, it includes a 1,500-person research and development team and prosecutors claim the alleged seed-stealing plot was under the umbrella of one of 180 subsidiary companies named Kings Nower Seed.

USDA China expert and economist Fred Gale says that claims that DBN Group is completely free from Chinese government influence are misleading. He points to the company website's support for the Communist Party of China's goals to boost the country's seed industry. In 2012, the party made strengthening Chinese seed companies a top priority for the country's rural economy, he said.

"The company is a model of the Chinese regime's strategy of making a bargain with private companies to help them make money, with the expectation that they will help accomplish national goals," Gale said. Like all major Chinese companies, the DBN Group has its own communist party organization that works to promote policy initiatives, he added.

The Register notes that the murky intermingling between the agriculture giant and the Chinese government likely means that the defense attorneys will have an uphill battle to stop prosecutors from using FISA evidence.

Still, the case highlights concerns about whether FISA is being stretched beyond its original intent. At the same time, the fact that intellectual property theft is running almost $50 billion annually is breathtaking to consider. Certainly, U.S. agricultural technology is extremely valuable and should be protected to the full extent of the FBI's authority.

Over time, China has proved to be an extremely aggressive competitor that uses its state-sponsored enterprises as key tools in the fight for international markets. Clearly, the United States is well advised to be on guard against trade secret theft in agriculture, as in other high-tech industries, Washington Insider believes.

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(GH/CZ)

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