Washington Insider -- Wednesday

TPP and Potential Benefits for Agriculture

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

Court Again Blocks Obama’s Immigration Plan

President Barack Obama's plan to protect from deportation up to 5 million people living in the U.S. illegally suffered another setback on Nov. 9 in a 2-1 ruling from a three-judge panel of the 5th U.S. Circuit Court of Appeals, which upheld a Texas-based federal judge's injunction blocking the administration's immigration initiative. The move was widely expected. Republicans had criticized the plan as illegal executive overreach when Obama announced it last November. Twenty-six states challenged the plan in court.

The Obama administration argued that the executive branch was within its rights in deciding to defer deportation of selected groups of immigrants, including children brought to the U.S. illegally.

The lower court decision was the third time the courts have agreed with the states' argument that the public should have been allowed to review and comment on the policy before the White House rolled it out.

Obama's initiative targets undocumented immigrants who have been in the U.S. for at least five years, can pass a criminal background check, and have a child who is an American citizen. Obama announced the unilateral policy shift in November 2014, after he failed to persuade the Republican-controlled Congress to approve changes he said would bring undocumented immigrants "out of the shadows" into productive society.

The Obama administration strongly disagrees with the decision and is seeking an appeal, according to a White House statement. "The Supreme Court and Congress have made clear that the federal government can set priorities in enforcing our immigration laws," according to the statement. "This lawsuit is preventing people who have been part of our communities for years from working on the books, contributing to our economy by paying taxes on that work, and being held accountable." The Supreme Court will likely be asked to consider the topic.

FDA Sets Limit on Amount of Sugar in Daily Diet

The Food and Drug Administration for the first time is setting a limit on the amount of sugar recommended in a daily diet to 50 grams, about the same amount of sugar found in a can of Coke.

The goal is for Americans to limit added sugar to no more than 10% of daily calories, according to the proposed guidelines. For someone older than 3, that means eating no more than 12.5 teaspoons, or 50 grams, of it a day. That is about the same amount of sugar found in a can of Coke.

"There is a lot of hidden sugar in our food supply, and it's not just in sweets," Dr. Frank Hu, a member of the Dietary Guidelines Advisory Committee and a professor of nutrition and epidemiology at Harvard, told the New York Times.

Currently, nutrition labels on food packaging reveal only the total amount of sugar in a product. The FDA has said it wants to change the labels to help consumers distinguish between the amount of naturally occurring sugar and the amount of added sugar.

Opponents say the new labels will only confuse shoppers. A study published in The Journal of the Academy of Nutrition and Dietetics in June found that people overestimated the amount of sugar in products that listed "added sugars," and were less likely to buy them.

The World Health Organization endorses a 10% cap on sugars, excluding those in fresh fruits, vegetables and milk, and urges people to aim even lower, limiting sugars to 5% of caloric intake to derive greater health benefits.

Nearly half of the added sugar consumed in the U.S. comes from sweetened drinks, much of it in soft drinks, but also in sweetened tea and coffee, fruit drinks and sports drinks, according to analyses from the National Health and Nutrition Examination Surveys.

Sugar makes up about 13.5% of Americans' caloric intake, so public health experts think the goal of 10% is attainable. Children and teenagers get 16% of their calories from sugar, a figure that drops to 14% of calories for adults aged 20 to 39, with further drops as people age, according to data from the Centers for Disease Control and Prevention.


Washington Insider: TPP and Potential Benefits for Agriculture

The traditional measure of effectiveness of trade agreements is the extent to which they improve market access and enhance trade. In the TPP debate, agriculture is widely seen as an economic sector that actually continues to face more trade barriers than other export sectors do, thus the administration is looking to ag groups for support in its approval fight.

In general, political support is fairly solid amoung the larger U.S. ag groups, although traditional trade skeptics like the National Farmers Union are continuing to criticize.

The TPP, the administration argues, has very considerable reach and will affect 40% of the global economy. Bloomberg which watches such things closely, says the deal will slash more than 18,000 overseas taxes on U.S. products like fruits and vegetables, meat, dairy, rice and sugar, as well as machinery and cars. In addition, USDA's Foreign Agricultural Service has published detailed commodity-by-commodity evaluations of expected impacts if the deal is approved, and to some degree if it is not.

Overall, the U.S. ag industry has largely advocated for the deal. For example, the National Pork Producers Council, National Cattlemen's Beef Association and National Chicken Council all quickly announced their support after the text was released Nov. 5.

The NCBA, which has members representing the entire beef supply chain from ranchers to meatpacking companies, said the TPP presents the greatest market access to Japan ever negotiated. If implemented, the 38.5% tariff Japan imposes on U.S. beef would be reduced to 27.7% immediately and continue to decrease over 15 years.

Kent Baucus, director of legislative affairs at NCBA says that while currency manipulation is a concern for NCBA, as it is for all ag exporters, he thinks it can be addressed in another forum. "Our preference was to not have snapbacks on tariffs, but it's something we can live with," Baucus told Bloomberg. "There is a lot of room in there to grow."

Groups representing the more contentious areas of the TPP, such as dairy and rice, are withholding reactions for now, Bloomberg said. It also noted Japan's commitment to a new duty-free quota for U.S. rice at 50,000 tons with growth to 70,000 tons in 13 years. Japan will maintain its 778% tariff on rice imports exceeding quotas.

Rep. Reid Ribble, R-Wis., who advocated for open dairy markets in Canada and Japan, said he is optimistic the TPP is something he can vote for. "I would've preferred a better deal there, but I think it's going to be okay for Wisconsin," he told Bloomberg. Japan has a 40% tariff on cheese, which will be eliminated over 16 years, and established a low-tariff quota for milk powder and butter equivalent to 70,000 tons of raw milk. Canada granted duty-free access to 3.25% of its dairy sector.

USDA's Foreign Ag Service has repeatedly analyzed the expected impacts of the TPP, and notes that Japan, Vietnam, Malaysia, New Zealand, and Brunei have a combined population of 255 million and, in 2014, accounted for more than 11% ($19.1 billion) of all U.S. agricultural and related product exports.

The agency notes that most U.S. farm product exports will receive duty-free treatment immediately once the agreement is implemented. More specifically, it notes that Japan's 38.5% tariff on fresh, chilled, and frozen beef will be cut by 77% over 15 years and it will eliminate almost 60% of its pork and pork product tariffs within 11 years and those on nearly 80% within 16 years. Vietnam's tariffs on beef, pork and poultry meat will be eliminated within 5, 10 and 13 years respectively.

The FAS list of impacts is mind-numbing, but important. For dairy products, Malaysia will immediately eliminate most tariffs, and Vietnam will eliminate all tariffs within five years. Japan will eliminate many of its tariffs on cheese in 16 years and all tariffs on whey in 20 years. Canada will expand access through expanded TRQs for cheese, milk powder, butter, fluid milk, yogurt, concentrated milk, creams and ice cream. The United States will expand access for New Zealand through TRQs for cheese, milk powder, butter and other products.

In its analysis, FAS adds that should the United States fail to implement the TPP agreement, it will likely lose market share to its competitors. Australia, Chile, Mexico, Vietnam and other countries already have preferential market access with Japan through their existing bilateral trade agreements. Additionally, the European Union is negotiating free trade agreements with many of the TPP countries.

So, the administration's argument for TPP approval is powerful in its specificity, especially in the area of agriculture while opponents seem to be comfortable arguing generalities, without details. Certainly, the importance of the deal to agriculture seems clear, along with producers' high stakes in the outcome, Washington Insider believes.

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