Washington Insider-- Friday

Budget Deal Emerges

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

Canada Optimistic US Budget Accord Will End COOL Dispute

The Canadian government is “cautiously optimistic” that an omnibus bill before Congress will end the ongoing dispute over country of origin labeling (COOL), International Trade Minister Chrystia Freeland said Dec. 16.

While Canada is “very pleased” with the bill, it remains to be seen if the provisions are passed into law, Freeland told reporters during a teleconference from the WTO ministerial meeting in Nairobi, Kenya. “I want to strongly encourage the Senate to get the job done and repeal COOL,” she said. “We are hopeful this dispute will come to a successful conclusion.”

The World Trade Organization (WTO) has ruled that the COOL provisions violate US trade obligations and is expected to authorize $1.01 billion in annual retaliatory tariffs as early as Dec. 18.

Freeland would not comment on whether Canada will wait to see how Congress deals with the bill before making a decision on whether or not to retaliate against US exports, saying only that she is in “hour to hour” contact with Canadian industry, Mexican officials and allies in the US to monitor the situation. “We are not going to deal in hypotheticals here,” she said. “This is a very unpredictable political situation.”

Freeland did not specifically state that the COOL-related provisions in the bill fully satisfy Canada’s demands that the measures be completely withdrawn. “This is language that is very fresh to us. We have only had a couple of hours to study it,” she said. Freeland noted that while the WTO Dispute Settlement Body could approve retaliation by Canada and Mexico as early as Dec. 18, it is possible that the group’s special meeting could be delayed until Dec. 21, depending on the conclusion of the ministerial meeting.

Echoing those sentiments, Canadian Agriculture Minister Lawrence MacAulay said Canada is not backing down yet. “That is the bottom line before anything changes on this end,” he said.

The Canadian ambassador to the United States, Gary Doer, indicated they are not yet ready to celebrate the end of the U.S. COOL rules on pork and beef until the U.S. completes action on the legislation and it is signed into law. “We won’t have a beer to celebrate - a Canadian beer to celebrate - until the President signs the bill,” Doer said.

Speaker Ryan: Congress May Move on TPP as Soon as Possible in 2016

Congress will move as soon as it can in 2016 on considering the Trans-Pacific Partnership (TPP) House Speaker Paul Ryan, R-Wis., said this week. Ryan expressed optimism about the deal, noting that 40% of global gross domestic product (GDP) is covered by the agreement.

Ryan has been described as an “effective partner” by White House Spokesman Josh Earnest, who also said “We continue to be optimistic that this is something that Congress can and should do in a timely fashion.”

However, many on and off Capitol Hill are skeptical that any final action on TPP will be completed by the end of 2016 and perhaps not until a new president takes office.

Senate Majority Leader Mitch McConnell, R-Ky., last week said Obama would be making a “big mistake” if he sought a vote on the 12-nation TPP before the 2016 elections.


Washington Insider: Budget Deal Emerges

By now, almost everyone has heard that a deal has been worked out over the omnibus appropriation bill along with one extending important tax breaks and the Wall Street Journal and others are beginning to report details. In fact, it never was a dollars and cents disagreement as much as it was about “policy riders” that both sides were trying to smuggle into place.

The House and Senate are expected to vote on the spending bill today.

The spending bill has a price tag of around $1.15 trillion for FY 2016 and was wrapped up in the dark of night, around 1:30 a.m. on Wednesday. Late the night before, lawmakers had agreed to extend the dozens of lapsed and expiring tax breaks, amid somewhat frantic horse trading. For example, as part of the year-end budget push, the long-standing ban on U.S. oil exports would be lifted, among other policy shifts, the Journal noted.

As it turned out, Republicans and Democrats need each other to get the final bill passed. So, in a major concession to Democrats, the spending bill won’t cut off federal funding to Planned Parenthood Federation of America, an objective many conservatives had sought.

Democrats also gave on lifting the oil export ban. “I’ll be able to vote for it with that,” Rep. Kevin Cramer R, N.D., said. “I really felt like this was what would be plausible to get to a yes for me."

Also, in exchange for lifting the oil ban, the deal would adopt environmental and renewable measures that Democrats want. These include extending wind and solar tax credits, reauthorizing a conservation fund for three years and excluding any measures that block major administration environmental regulations.

So, the tax measure is poised to pass the House and Senate today, a development that would break Congress’ habit of extending lapsed tax breaks retroactively. To become law, though, the package still must withstand opposition from Democrats concerned that it provides too little for families, Republicans opposed to targeted tax breaks and deficit hawks worried about the impact on the country’s finances.

In addition, the spending bill doesn’t include any restrictions on the resettlement of Syrian and Iraqi refugees into the United States, as some conservatives wanted. However, it will limit certain travel privileges granted to citizens of 38 friendly foreign countries that are allowed to enter the US without visa, Bloomberg said.

Another wished-for item by ag interests, language blocking labels for genetically modified foods didn’t make the cut. And while there was considerable support from biotechnology companies, food and beverage manufacturers and agricultural trade groups, the bill to preempt state biotech labeling laws proved too divisive in the Senate.

A mixed bag of other food policies made their way into the spending measure, Bloomberg says. These would allocate roughly $1 billion in additional funds to agricultural and food safety programs. Also, under the omnibus, biotech salmon couldn’t be marketed until FDA designs labeling guidelines that disclose that the product is genetically modified, even though FDA says the salmon is safe to eat. Alaska’s senators, along with some consumer and environmental advocacy groups pushed for stronger protections.

The bill also includes provisions that would restrict the scope of a 2015 federal dietary guidelines report to nutrition topics rather than follow the path of an earlier draft that touched on environmental factors, Bloomberg said. It also will reinstate commodity certificates to give farmers flexibility in repaying loans and will limiting EPA regulations on greenhouse gas emissions from livestock operations.

In a somewhat surprising move in this budget conscious Congress, provisions for implementing the new food safety law were more than doubled to $104.5 million, significantly closer to the administration’s request for fiscal 2016. The Food Safety Modernization Act requires standards for food manufacturers, produce farmers, importers and other businesses along the food chain and advocates argued that it was severely underfunded.

Speaker Paul Ryan, R-Wis., appears to have moved his members toward cooperation to the point where they seem able to prevent another government shutdown--an accomplishment some thought beyond his reach. While there are plenty of challenges ahead, the budget deal is important and we should give credit where it is due, Washington Insider believes.

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