Washington Insider -- Thursday

Republican Opposition to Carbon Tax

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

ASA: EU Should Approve Soybean Traits Promptly

European Union (EU) regulators need to quickly approve three new soybean traits as the process has been too slow and is causing confusion for US farmers, the American Soybean Association (ASA) told EU officials in a letter.

The traits are a critical part of the industry's ongoing quest to meet sustainability and consumer demand goals, ASA said, emphasizing that continued delays pose serious issues both for farmers and industry. The delayed EU authorization affects three new soybean traits: Monsanto's dicamba-tolerant RR2Xtend and Vistive Gold high oleic traits, and Bayer CropScience's isoxaflutole-resistant Balance Bean trait.

All three traits received positive opinions from the European Food Safety Authority (EFSA) in May and June of last year, ASA said, adding they have awaited approval for five months following an Appeals Committee ruling in January.

"Immediate authorization by the European Commission (EC) is needed to avoid substantial additional unnecessary costs and possible disruption to the essential supply of feedstocks needed by the EU's livestock, poultry and feed industries, which are more than 70% dependent on imports of vegetable protein," the letter stated.

ASA cited repeated assurances by EU officials over several months which indicated the approval of the three traits was imminent. Those assurances provided a false sense of security for US farmers looking to utilize the traits to meet sustainability goals and comply with the food industry's ongoing move away from trans fats in the American marketplace, ASA said.

"As the threat of resistant weeds continues to move across soybean country, and the specter of increased input costs coupled with a down farm economy looms over so many soybean farmers, we need more options in the marketplace," the letter read.

"We are not benefited by new products that are stuck in a malfunctioning approvals pipeline," said ASA President Richard Wilkins. "Add to that the ability of high-oleic soy to help answer the growing market for cooking oils free of trans fats, and you see the real value in these three traits."

Mexico Drops Import Duties on US Apples

Mexican import duties on U.S. apples that ranged from 2.44% to 20.82% have been lifted, effective immediately, according to Mexico's Economy Ministry.

An antidumping investigation by the ministry showed that U.S. apple imports had not hurt the Mexican apple market, according to a summary of the investigation published June 7 in the daily official register, Mexico's equivalent to the US Federal Register.

Duties were levied in January on all U.S. apple producers except Monson Fruit, CPC International and Washington Fruit and Produce. The duties were put in place after an investigation based on a complaint from the Regional Fruit Producers Association from the State of Chihuahua. The group alleged US apples were entering the Mexican market in 2013 at below fair market value.

The ministry reported preliminary conclusions in Jan., finding that imports of US apples were subject duties of up to 20.82%.

Washington Insider: Republican Opposition to Carbon Tax

It is not much of a surprise that the House Republicans are moving to vote to condemn any effort to tax carbon dioxide emissions. Still, The Hill is reporting that House leadership felt such a step was necessary to end a "flirtation" by some members with just such an idea and that was a little surprising.

The nonbinding resolution will be sponsored by Majority Whip Steve Scalise, R-La., and lists what he sees as "numerous problems with a carbon tax. It also will assert that it is the sense of Congress that a carbon tax would be detrimental to American families and businesses, and is not in the best interest of the United States," The Hill says.

The Hill says that the Scalise resolution was in response to pressure not only from Democrats but also economists and others across the political spectrum who have endorsed the idea. What's new now is that a carbon tax has backing from some conservatives, "who argue it would be a simple way to reduce greenhouse gases without new regulations or more government."

Numerous think tanks, including the R Street Institute, the American Action Forum and the Niskanen Center, have been pressing GOP lawmakers to endorse such a tax. The American Enterprise Institute even held closed-door meetings in 2012 to get additional groups on board with little success, The Hill says.

However, the GOP's broad skepticism of climate change science and new taxes appears to have won out. "The House's resolution is meant to make clear where they stand," The Hill says.

"There are a few people out there who are trying to make the case that there's growing support among conservatives or Republicans for a carbon tax," Tom Pyle, president of the American Energy Alliance, a fossil-fuel-backed advocacy group and an arm of the Institute for Energy Research, told The Hill. "I think that the vote will answer that question. I don't think there is," he said. "There aren't many issues around here that unite the Republicans more than energy issues."

Scalise argues that a carbon tax would be regressive, hitting the poor the hardest. He told colleagues recently that the vote is also timed to respond to President Obama's budget proposal this year for a $10.25 per barrel tax on crude oil to pay for transportation, something Republicans have blasted as a carbon tax in disguise.

"This resolution spells out the harmful impacts that a carbon tax would have on American families by making the energy we all rely on every day more expensive," Scalise wrote to colleagues. "A carbon tax would intentionally increase the price of gasoline, natural gas, home heating oil, and electricity, driving up energy costs for families, reducing our nation's GDP, and destroying American jobs."

Actually, President Obama has not proposed a carbon tax, as such. He campaigned in 2008 on a promise to push for cap-and-trade, which would institute a price on carbon but limit the amount and let polluters trade emissions credits—an approach rejected by the Congress. More recently, the administration has shifted to a regulatory agenda to combat climate change, including emissions limits for cars, trucks, power plants and the oil industry, The Hill says.

Barry Rabe, a public policy professor at the University of Michigan, told The Hill that it has long been obvious the Republicans weren't itching to institute a carbon tax but added that the new resolution "further underscores how difficult it is to build a consensus on this issue."

"This could be read as a Republican effort going into the election to circle the wagons and maybe say, not only, 'We don't do a carbon tax,' but, 'We don't do anything related to climate change,' " Rabe said.

Catrina Rorke, director of the energy program at R Street Institute which supports a tax that would return revenues to taxpayers told The Hill that if Republicans want to eventually repeal the Clean Power Plan and get any Democratic support, they will need an alternative. She argues that the status quo now is the Clean Power Plan, which is very unfavorable," she said and has almost no Republican support.

Rep. Don Beyer, D-Va., a freshman who campaigned largely on a carbon tax platform in the 2014 election sees the resolution as a way to clamp down on what the GOP sees as growing support for putting a price on carbon emissions. And, it is possible at some point that the tax could become the lesser of several regulatory evils but for now, there is nothing close to agreement on carbon taxes. It also seems clear that any changes in energy policies will continue to be extremely controversial, especially as greenhouse gas emissions issues continue to wind through the courts, and perhaps beyond, Washington Insider believes.

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