Washington Insider -- Friday

Trade Pact and Political Opposition

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

GM Crops Help Ensure Global Food Security Through Higher Crop Yields

Farmers who use seeds improved with biotechnology continue to benefit economically while improving the environmental sustainability of their farming operations, according to an updated global impacts study.

The economic benefits for farmers who use genetically modified seeds amounted to an average of more than $100/hectare ($40/acre) in 2014, according to the report "GM Crops: Global Socio-Economic and Environmental Impacts 1996-2014" released by PG Economics.

"Where farmers have been given the choice of growing GM crops, the economic benefits realized are clear," said Graham Brookes, director of PG Economics, co-author of the report. "Two-thirds of these benefits derive from higher yields and extra production, with farmers in developing countries seeing the highest gains. The environment is also benefiting as farmers increasingly adopt conservation tillage practices, build their weed management practices around more benign herbicides and replace insecticide use with insect resistant GM crops."

The PG Economics annual global impacts report quantifies the impact of agricultural biotechnology on the environment and on farmer incomes since biotech's commercialization in 1996.

Among the key findings:

- Between 1996 and 2014, crop biotechnology was responsible for additional global production of 158.4 mmt of soybeans (5.8 billion bushels) and 321.8 mmt (12.7 billion bushels) of corn. The technology has also contributed an extra 24.7 mmt (27.2 million tons) cotton lint and 9.2 mmt (3.37 billion bushels) of canola;

- GM technology has had a significant positive impact on farm income derived from a combination of enhanced productivity and efficiency gains. In 2014, the direct global farm income benefit from GM crops was $17.7 billion. This is equivalent to having added 7.2% to the value of global production of the four main crops of soybeans, corn, canola and cotton. Since 1996, farm incomes have increased by $150.3 billion.

— The insect resistant (IR) technology used in cotton and corn has consistently delivered yield gains from reduced pest damage. The average yield gains over the 1996-2014 period across all users of this technology has been +13.1% for insect resistant corn and +17.3% for insect resistant cotton relative to conventional production systems. 2014 was also the second year IR soybeans were grown commercially in South America, where farmers have seen an average of +9.4% yield improvements;

— The herbicide tolerant technology used has also contributed to increased production; improving weed control and providing higher yields in some countries; and helping farmers in Argentina grow 'second crop' soybeans after wheat in the same growing season;

— The total farm income benefit of $150.3 billion was divided almost equally between farmers in developing (51%) and developed countries (49%);

— The highest yield gains were obtained by farmers in developing countries, many of which are resource-poor and farm small plots of land;

— Crop biotechnology continues to be a good investment for farmers around the world. The cost farmers paid for accessing crop biotechnology in 2014 ($6.9 billion) was equal to 28% of the total gains (a total of $24.6 billion). Globally, farmers received an average of $3.59 for each dollar invested in GM crop seeds;

— GM crops are allowing farmers to grow more without using additional land. If crop biotechnology had not been available to the (18 million) farmers using the technology in 2014, maintaining global production levels at the 2014 levels would have required additional plantings of 7.5 million ha (18.5 million acres) of soybeans, 8.9 million ha (21.9 million acres) of corn, 3.7 million ha (9.1 million acres) of cotton and 0.6 million ha (1.4 million acres) of canola. This total area requirement is equivalent to 12% of the arable land in the US, or 33% of the arable land in Brazil or 14% of the cropping area in China;

— Crop biotechnology has contributed to significantly reducing the release of greenhouse gas emissions from agricultural practices. This results from less fuel use and additional soil carbon storage from reduced tillage with GM crops. In 2014, this was equivalent to removing 22.4 billion kg of carbon dioxide from the atmosphere or equal to removing 10 million cars from the road for one year;

— Crop biotechnology has reduced pesticide spraying (1996-2014) by 581 million kg (1.2 billion pounds). This is equal to the total amount of pesticide active ingredient applied to crops in China for more than a year. As a result, this has decreased the environmental impact associated with herbicide and insecticide use on the area planted to biotech crops by 18.5%.

DOJ: WOTUS Can't Be Argued in Two US Courts Simultaneously

A coalition of states can't challenge the Environmental Protection Agency's waters of the US (WOTUS) rule in two federal courts at the same time, the Department of Justice (DOJ) argued in a brief filed May 31 with the U.S. Eleventh Circuit Court of Appeals.

Since the Sixth Circuit court found it has jurisdiction to review the multiple lawsuits challenging the legality of WOTUS, DOJ said the Eleventh Circuit should dismiss its own proceedings as the cases before it were consolidated with 21 others and will be heard before the Sixth Circuit.

The government also agreed with the U.S. District Court for the Southern District of Georgia which ruled it lacks jurisdiction to block WOTUS. Eleven states, led by Georgia, appealed the ruling in the Eleventh Circuit.

States have no basis for asking the Eleventh Circuit to address which court should review WOTUS when the own challenges are being consolidated with 21 other petitions before the Sixth Circuit, DOJ asserted. The Sixth Circuit reaffirmed its jurisdiction to hear challenges to WOTUS, after denying an enbanc rehearing request in April.

The states challenging WOTUS are urging the Eleventh Circuit to proceed with its own review, saying the appeals it isn't bound by the Sixth Circuit's jurisdiction. The states also are requesting a preliminary injunction on implementation of the rule, which DOJ opposes.

"Neither this court nor any other court can stay the rule any more than it is already," the DOJ brief said of the state's injunction request, noting that the rule is already stayed nationwide.

Trade Pact and Political Opposition

One thing is clear about trade politics now -- a very large number of politicians see protectionism as popular. Still, the administration sees the proposed Trans-Pacific Partnership (TPP) as important and is pushing deeper into the debate over Congressional approval. The Hill is reporting that President Obama on Wednesday argued for passage of a sweeping Asia-Pacific trade deal and criticized political use of "myths about expanding trade."

As a result, the New York Times reported on Thursday that while "the cause of free and open trade has not faced such political toxicity in decades," it concluded that the fact that President Obama's successor will oppose the agreement "gives new impetus for advocates to begin maneuvering for a vote before 2017."

This dynamic, the Times says, is assuaging some fence sitters' concerns on Japanese pork subsidies, Mexican labor rights and financial companies' data and is "keeping hopes alive for advocates from the White House to the Republican-controlled Congress, and in pro-trade and agricultural groups."

This came following the President's trip to Elkhart, Ind., where he argued that the 12-nation trade deal will grow jobs and wages for U.S. workers and will put the nation ahead of China in the Pacific Rim. He favors trade rather than protectionist policies, he said.

"The way to make the new economy work for everybody is actually to make sure trade works for us and not against us," Obama said during remarks on the economy in Elkhart, Ind. "Walling ourselves off from other countries, that's not going to do it," he said. "A lot of tough talk that doesn't mean anything is not going to do it. He specifically opposed promises to slap tariffs on imports from other countries. "That won't help the nation's middle-class families to thrive," the President said.

"If you don't want China to set the rules for the 21st century -- and they're trying -- then TPP makes sure that we set the rules," he said. "So the choice is simple: If you want to help China, then you shouldn't pass this trade deal that we negotiated. If you want to help America, you need to pass it." Pretty tough talk.

He also tried to stifle the notion that "other countries are killing us on trade" and argued strongly that trade has benefited most sectors of the economy, from agriculture to technology across the country. "If you don't like NAFTA, this TPP trade deal overhauls NAFTA with enforceable, much stronger labor and environmental standards, which means that they won't undercut us as easily," he told the crowd.

Obama blamed most of the losses in manufacturing and other U.S.jobs over the past decade on technology and automation, which now requires fewer workers. "So we can't put technology back in a box any more than we can cut ourselves off from the global supply chain," he said.

The Times noted there is broad agreement now that the fight over TPP approval will be tough, contentious and depend on timing. It points out that the "president, majority leader and speaker are all pro-trade" It cites U.S. Trade Representative Michael Froman as suggesting that this reflects "a seize-the-moment recognition of the changed lineup ahead."

These include, not least, the fact that in addition to a new president, the Senate could have a new majority leader next year, Senator Charles Schumer of New York, if Democrats win control "and he is unlikely to promote an issue that so divides the union-friendly party."

"There is a pathway forward here," Froman said. "And what we're trying to do right now is just maximize the likelihood that we'll be able to walk down that path successfully."

The Times argues that it is unclear whether Ambassador Froman's outlook is wishful thinking or a real prospect and all that will have to come into focus well before November "because supporters would likely need to begin congressional hearings in September to clear the path for a vote in the lame-duck session of Congress after Election Day."

Right now, it seems that the administration is bolstering its case for the TPP and engaging more actively in the political debate. At the same time, the overall political scene is so complex and uncertain that the line-up for trade, like many other things, is uncertain at best -- and should be watched closely by producers as the season advances, Washington Insider believes.

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