Washington Insider -- Friday

Major Ag Benefits from TPP

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

Senate Appropriations Approves USDA/FDA FY 2017 Spending Bill

The Senate Appropriations Committee approved 30-0 the $21.25 billion Fiscal 2017 spending bill for USDA and the Food and Drug Administration (FDA), a decline of $250 million compared to the 2016 enacted level. The committee began work on amendments to the bill.

House appropriators sent their $21.3 billion agriculture bill to the full chamber April 19.

The bill would delay implementing an FDA rule that would require nutrition labeling on chain restaurant menus. A manager's amendment agreed to by panel members would also block the USDA from finalizing a rule expanding food stocking requirement for retailers participating in the Supplemental Nutrition Assistance Program (SNAP/food stamps).

The bill would give FDA $2.76 billion in discretionary funding, an increase of $39 million over the FY 2016 enacted level, according to a committee statement. Total funding for the FDA, including revenue from industry-paid user fees, would be $4.78 billion, which would be $103 million above FY 2016. Within this total, medical product safety activities would increase by $11.9 million, and food safety activities would rise by $40.2 million, the committee said. The bill also includes language delaying implementation of rules requiring chain restaurants to provide nutritional information on menus.

Lawmakers adopted an amendment by Sen. Lisa Murkowski, R-Alaska, requiring producers of genetically engineered salmon to label their products. "In a letter sent to Senate Appropriations leadership this week, Biotechnology Innovation Organization President and CEO Jim Greenwood pointed to GMO disclosure and transparency efforts already underway in the Senate Agriculture Committee. "As we understand it, the approach under consideration by that committee would apply to foods produced through biotechnology, such as GE salmon, and would provide information to consumers through a marketing disclosure mechanism, and not via a required label that would be perceived as a safety warning and thus would mislead consumers."

US personnel in Cuba to promote US agricultural exports would be funded by a provision in the bill, providing $1.5 million for a Foreign Agricultural Service (FAS) office in Cuba. FAS is working on collaborative activities that would eventually allow US representation in Cuba to move beyond limited technical activities and into trade promotion within any applicable legal limits, the aide said. The $1.5 million in funds would cover the startup costs for the first year of operations of the new Cuba post.

The panel adopted an amendment from Sen. John Hoeven, R-N.D., regarding a pilot plan to create a new $5 million, nationwide pilot program to improve the fairness of Agriculture Risk Coverage (ARC) county-level payment calculations for the 2016 crop year. The senator has been pushing for greater flexibility in the way yields are calculated with USDA Sec. Tom Vilsack and Farm Service Agency Administrator Val Dolcini.

Food Aid Bill Advances to House Floor

The House Foreign Affairs Committee this week unanimously advanced a Senate bill authorizing billions of dollars in foreign food assistance and other disaster relief, sending the measure to the House floor, where it is expected to be passed and sent to the president.

The legislation (S 1252) would authorize for the first time under the 1961 Foreign Assistance Act (PL 87-195) the US Agency for International Development's (USAID) Emergency Food Security Program. The initiative provides up to $300 million annually in cash transfers and vouchers to local and regional governments for the purchase of emergency food aid. USAID has increasingly relied on cash transfers to meet emergency food needs, as its Food for Peace program sometimes is unable to ship US food commodities to designated areas quickly enough.

The measure authorizes spending of nearly $2.8 billion annually for Fiscal 2017 and Fiscal 2018 in the State-Foreign Operations International Disaster Assistance account, which is equal to current levels. Of that amount, as much as $1.3 billion would be available for Emergency Food Security Program needs. The humanitarian account additionally supports refugees and internally displaced people with things like emergency shelters, medicine and clean water. The account was last authorized 30 years ago.

The measure additionally authorizes $1 billion annually for Fiscal 2017 and 2018 for the State Department and USAID to implement the global food security strategy that the bill requires to be developed. The new whole-of-government strategy is to set out specific and measurable goals for putting food-insecure countries on a path toward self-sufficiency and resiliency in the face of shocks to the system. The plan also focuses on foreign agricultural sector development and improving maternal and child nutrition.

An April report by the Chicago Council on Global Affairs found that Asia and Africa have become more dependent on food imports to feed their populations, particularly Africa, where the 20 most populous nations all import more grain than they export, making them more vulnerable to global food price volatility. Roughly 1 in 9 people does not have enough food to eat and 1 in 6 children in developing countries is underweight, according to the UN World Food Program.

Washington Insider: Major Ag Benefits from TPP

The Washington Post, along with a number of other urban dailies, is reporting this week on the new International Trade Commission report on expected benefits from the Trans-Pacific Partnership. In general, the report was seen as good news, leading Agriculture Secretary Tom Vilsack to trumpet that "Today's ITC report echoes what every major reputable study on TPP has now found, from the Petersen Institute to the American Farm Bureau Foundation, which is that TPP will provide strong benefits for the US agriculture sector, with agricultural output set to be $10 billion higher per year by 2032 than it would without the agreement."

Vilsack went on to note that ag exports drive 20% of U.S. farm income and are critical, not only to the continued sector growth, but to rural communities at large.

While the actual report was a boost for agriculture, it was somewhat more measured in its expectations than Vilsack had been. It said that "The world's largest regional trade pact, between the United States and 11 Pacific Rim nations, would marginally boost the US economy and jobs over the next 15 years, but it also would erode employment in manufacturing sectors."

Still, the overall deal was seen as having, "positive effects, albeit small as a percentage of the overall size of the US economy," the commission wrote in its report.

Congress mandated the study as part of the "fast-track" trade powers granted to President Obama last summer and publication of its findings is required before lawmakers schedule any votes on the accord, the Washington Post noted.

The Obama administration is hoping to get the TPP agreement ratified by lawmakers before the president leaves office in January. However, the proposal is still highly controversial and opposed by groups in both parties; presumptive Republican nominee Donald Trump and contenders for the Democratic nomination, Hillary Clinton and Sen. Bernie Sanders.

Sen. Orrin G. Hatch, R-Utah, chairman of the Senate Finance Committee, said while the TPP "has the potential to yield significant economic benefits," the details of the trade commission report "must be studied closely so that we have a clear understanding of what TPP will mean for the American economy."

The ITC study actually contained few surprises, analysts note. The trade commission found that US exports would grow by an additional $27 billion by 2030 under the terms of the TPP while imports would grow as well. U.S. incomes would grow in the United States by an extra $57 billion.

"While the ITC understandably adopts a conservative approach to these reports, the historical record has shown that export growth under past trade agreements has exceeded projections by a considerable margin," the US Chamber of Commerce said in a statement. However, Ilana Solomon, director of the Sierra Club's responsible trade program, said the commission report offered "further evidence" against the TPP.

As Secretary Vilsack noted, among the various employment sectors, agriculture and food would have the highest relative gains of an additional 0.5% growth. The service sector would grow by an additional 0.1%, while manufacturing would be 0.1% lower under the TPP than if the deal is not enacted, the study found.

The study also said that the TPP deal aims to enact new regulatory provisions to maintain the open flow of information across international borders and address intellectual property rights, and address competition from state-owned businesses.

In spite of Secretary Vilsack's enthusiasm, the relatively modest benefits seen for the U.S. economy as a whole likely will make the deal a difficult sell for lawmakers. Still, in addition to its expectation that agriculture as a sector would receive the greatest benefits it also notes that the politically sensitive auto sector would also see significant gains.

Analysts also note that many of the most important potential benefits from the deal are among the hardest to quantify and include better mechanisms to resolve disputes. They also include even more subtle areas that have become some of the biggest trade headaches for agriculture such as the sanitary/phytosanitary rules and so-called technical barriers to trade like labeling and testing requirements, among many others. These have been found very difficult to improve by the WTO, but are to be addressed more directly in the TPP.

So, while the economics of trade and the TPP have become increasingly clear, the politics continue to be bitter and murky, and future battles over approval promise to be at least as controversial and should be watched closely by producers as they proceed, Washington Insider believes.

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