Washington Insider - Monday

Political Winds and Trade Support

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

Trade Officials Optimistic South Africa Will Meet AGOA Terms

Progress towards resolving outstanding issues around poultry, beef and pork imports which have threatened South Africa’s eligibility for trade benefits under the African Growth and Opportunity Act (AGOA) has been made and the U.S. is optimistic they will be resolved ahead of a March 15 deadline, Assistant U.S. Trade Representative for Agricultural Affairs and Commodity Policy Sharon Bomer Lauritsen said.

“We are optimistic that everything is on track to be successful,” Lauritsen said following a panel discussion hosted by the South African Institute of International Affairs in Johannesburg. President Barack Obama announced on Jan. 11 that the issues must be resolved by March 15 to prevent the suspension of benefits for South Africa under AGOA.

Also, a U.S.-Africa free trade agreement will likely be submitted to the US Congress by June 29, Assistant U.S. Trade Representative for Africa Florizelle Liser said, noting “In the past week we had a dialogue around the issue with U.S. business, academics, civil society and interested parties around the future beyond AGOA.”

“No other country comes that close to having that amount of duty-free access to the US market. So one would assume that South Africa has a major stake in trying to see how it could continue to have duty free access to U.S. markets once AGOA ends in 2025. It would behoove us to not wait for 2024 to start talking about where we go next,” Liser added.


House Ag Chairman Conaway Rejects USDA Legal Analysis

A written reply to USDA Secretary of Agriculture Tom Vilsack’s Feb. 3 letter in which the Secretary denied the request of 100 members of Congress who sent a bicameral, bipartisan letter urging the Secretary to take urgent action to stave off a farm financial crisis in the cotton belt was sent on Feb. 5 by House Ag Chairman Mike Conaway, R-Texas.

The members of Congress urged the Secretary to use his legal authority to designate cottonseed as an eligible oilseed for purposes of the Farm Bill.

Upon sending a written reply to the Secretary, Conaway issued the following statement:

“I am deeply disappointed in the Secretary’s decision because it jeopardizes the livelihoods of thousands of hard-working farm families and the countless communities that depend on them. These farm families and communities are left alone to face the predatory foreign trade practices of China, India, and other countries that are, according to the analysis of our own government, wreaking havoc on global cotton markets through heavy subsidies, tariffs, and non-tariff trade barriers. Given the increasingly dire conditions farm families face in the cotton belt and the grave consequences of failing to act, I have little choice but to continue to press for the same kind of responsible, urgent, and meaningful response that has always been taken to address emergencies impacting producers of other commodities.”


Washington Insider: Political Winds and Trade Support

Clearly, approval for the Trans-Pacific Partnership (TPP) is likely to face a rocky path on Capitol Hill, although it became a little clearer last week. It will involve hearings followed by informal markups, but the timing for each of those steps continues to be uncertain according to a report by Bloomberg BNA late last week.

U.S. Trade Representative Michael Froman is expected face members of the Senate Finance and House Ways and Means Committee when he presents the 12-nation TPP deal at the initial Trade Policy Agenda hearing.

The Trade Policy Agenda hearings are held annually, usually in February or March. Froman told the press that committee hearings on the trade agenda and the outcomes of TPP will be at the top of his list of areas of focus for congressional engagement. In addition, House Ways and Means Committee Chairman Kevin Brady, R-Texas, said that an announcement on hearings in his committee would be coming soon.

Then, last week Senate Finance Committee Chairman Orrin Hatch, R-Utah, went to the Senate floor to outline the legislative process, saying that Congress, in consultation with the administration, will develop a draft implementing bill and that the committees of jurisdiction will examine both the agreement and the draft legislation. These drafts will go through informal markups in the Senate Finance and House Ways and Means Committees, Hatch said.

Hatch defended the complex process saying it is “the best way for Congress to provide direct input to the president to demonstrate whether the implementing bill meets the criteria set out in the trade promotion authority statute and whether there is enough support in Congress for the agreement to pass.” Typically, the administration makes adjustments to the implementing legislation based on the outcome of the markups.

The TPP represents nearly 40% of global gross domestic product worth $30 trillion. However, the deal is still controversial in several areas, including intellectual property rights protections for biologic drugs—especially whether “market protections” for brand-name manufacturers are for five or eight years. And, there are questions whether the “carve-out” protections from the investor-state dispute settlement mechanism cover tobacco products and whether rules of origin for auto parts could make China a “nonsignatory beneficiary,” relative to cars assembled in TPP countries.

In addition, a development last week demonstrated how political trade politics have become these days. The Hill reported that a Republican trade policy stalwart, former U.S. trade ambassador Rob Portman, R-Ohio, announced that he opposes the TPP. He is facing a difficult re-election campaign against an anti-trade former Democratic governor of Ohio, a state that has seen a steep decline in manufacturing.

Portman’s announcement was called a significant but not necessarily fatal blow to the TPP deal. Portman, who was the top U.S. trade official under President George W. Bush, was seen as a potential ally for the administration, especially since he voted last year for fast-track trade negotiating authority.

Portman still seems a little uncomfortable with his new position and told the press that he could change and support the deal if it is modified to provide “better protections” for U.S. workers. He was especially critical of the deal for failing to prevent trading partners from manipulating their currencies, but drew criticism from Republican colleagues for his change of position.

The Obama administration has hailed the TPP as the most extensive trade expansion in a generation. Supporters of the agreement originally hoped the bipartisan vote on the fast track bill was a signal that the trade deal would have an easy path in Congress despite election year politics.

However, Senate Majority Leader, Mitch McConnell, R-Ky., recently told the press that he thinks it would be a mistake for the President to try to pass the deal in an election year. He noted that nearly every presidential candidate in both parties opposes the deal, as do many House Democrats.

Both McConnell and House Speaker Paul Ryan, R-Wisc., favor expanding U.S. trade and Ryan is credited with carefully persuading House Republicans to back fast track while he was chairman of the House Ways and Means Committee. In general, it seems that while the anti-trade pressures are real and intense, the prospect of the United States walking away from a deal that has the chance of sharply boosting the U.S. geopolitical position in Asia relative to China, as well as opening new markets across the region will be one that has the prospect of attracting bi-partisan support in spite of strong anti-trade political winds, Washington Insider believes.

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