Washington Insider--Tuesday

More Brexit

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


Lawmakers to EPA: Follow 2007 Energy Law in 2017 RFS Rule

Biofuel blending targets under the Renewable Fuel Standard should be set at levels dictated by the 2007 energy law and not the lower levels seen in recent years and proposed again for 2017, according to a letter from a bipartisan group of 39 senators to Environmental Protection Agency Administrator Gina McCarthy.

"We are writing regarding the Environmental Protection Agency's proposed rule setting blending targets under the Renewable Fuel Standard (RFS) for 2017," the letter said. "We urge you to ensure that the final rule promote growth in the U.S. biofuel sector and capture economic opportunity rather than drive investment overseas."

Congressional intent when crafting the RFS was cited, the letter characterizing the law as a "forward-looking policy to drive innovation and investments in biorefining capacity and distribution infrastructure to bring biofuels to American consumers."

The 2007 energy law provisions led to "hundreds of millions of dollars of investment in the biofuels sector," the letter said. "America's production capacity has expanded more than threefold since 2005 with fuels such as biodiesel, cellulosic, recycled-waste, algal and other advanced biofuels."

The benefits of biofuels were also noted by lawmakers. "The biofuel industry supports hundreds of thousands of jobs throughout the country, reduces the environmental impact of our transportation and energy sectors, and cuts our reliance on foreign oil," the letter said.

EPA actions now, however, have held back the U.S. biofuels industry. "As a result of the Agency's consideration of distribution infrastructure when setting the Renewable Volume Obligation (RVO) for 2014, 2015, and 2016, contrary to the clearly defined waiver authority provided by Congress, biofuel investment has fallen and projects are moving overseas," the lawmakers observed.

EPA should use the 2017 RFS standards process to "take the opportunity to get the program back on track by setting blending targets where Congress intended and by removing the distribution waiver," the letter concluded.

European Commission Delays Glyphosate Decision

In yet another "Brexit" impact, the European Commission postponed voting on the extension of the license in the EU for glyphosate.

The Tuesday meeting of the European Council will be focused on Brexit, and Commission spokesperson Enrico Brivio said the agenda of Monday's Commission meeting had to change and the discussion on glyphosate would not take place.

The commission apparently, though, will use written procedures to make the decision, a decision that is expected to be a temporary extension of the license. That extension is expected to be for 12 to 18 months.

If so, that duration of an extension would be in place until the European Chemicals Agency completes its own assessment of whether glyphosate is carcinogenic to humans, something deemed "unlikely" by the EU food safety body.

Washington Insider: More Brexit

Truly, the UK's Brexit vote has shaken the globe and nobody is sure what it will mean -- except that it was a mainly unexpected outbreak of British populism, with impacts as negative as they were unanticipated.

Now, much of the discussion is focusing on examples of voter remorse and what might be done -- even as the financial hammering continues.

Informa Economics reported on Monday that more than three million people have already signed a petition calling for a second referendum, while others think the verdict should be rejected by Parliament, which opposed the Brexit. The New York Times noted that confusion about how Britain could proceed was fueled by Scotland's first minister, Nicola Sturgeon, who called for the Scottish Parliament to move to try to block the British EU exit by "withholding legislative consent."

Still, it is not clear that the Scottish Parliament has the power to veto a British exit, according to constitutional scholars -- in a country which famously lacks a formal constitution.

The formal process of unwinding Britain's membership in the European Union begins only when the British government invokes Article 50 of the EU treaty. Prime Minister David Cameron has declined to do so, and Boris Johnson and other leaders of the Leave campaign have avoided being pinned down on the issue.

Andrew Moravcsik, a professor of politics at Princeton University, called the Brexit "theater," arguing that "under no circumstances will Britain leave Europe, regardless of the result of the referendum." It will follow the strategy of others and "negotiate a new agreement, nearly identical to the old one, disguise it in opaque language and ratify it," with the agreement of a public that knows little about the European Union.

Whatever the mechanics of unwinding EU membership may be, there is an odor of mendacity arising now from the process, the Times says. "Some supporters of Brexit are backpedaling on bold pronouncements they made just a few days earlier."

Perhaps no promise was more audacious "than the £350-million-a-week claim," the Times says. Boris Johnson, the former mayor of London who was the front-man of the Brexit campaign, toured Britain in a bus emblazoned with the slogan: "We send the EU £350 million a week, let's fund our NHS instead," a reference to the country's widely revered National Health Service.

However, only hours after proclaiming "independence day" for Britain, Nigel Farage, the leader of the fiercely anti-European UK Independence Party, conceded that the £350 million figure was a "mistake." Asked by the BBC on Sunday about the spending pledge, Iain Duncan Smith, a former Conservative Party leader who campaigned for Brexit, said the Leave side had merely promised "to spend the lion's share of that money" on the health service.

The shift was perhaps unsurprising, the Times concludes, since the £350 million "independence dividend" never stood up to scrutiny. It excluded money returned to Britain through rebates and money that Britain spent to subsidize its farmers and poorer regions, according to the respected Institute for Fiscal Studies.

Promises to quickly reduce immigration levels also are being played down now, as experts "explain" that it would be very hard to pull off. The European Union has demanded from nonmember states -- Norway, for example -- free movement of workers in exchange for access to the bloc's single market even after they are not members.

On Friday, the day after the referendum, Daniel Hannan, a member of the European Parliament and one of the most knowledgeable advocates of Brexit, stunned some viewers of the BBC by saying: "Frankly, if people watching think that they have voted and there is now going to be zero immigration from the EU, they are going to be disappointed."

Hannan wrote on Twitter, "I was for more control, not for minimal immigration." Facing a backlash, he observed that a lot of Remain voters "are now raging at me because I don't want to cut immigration sharply," adding, "There really is no pleasing some people." He then announced that he would "take a month off Twitter." That may not be long enough, critics suggest.

So, it appears that no one is coming out of this fiasco with much credit, and for many politicians, it has been and will be personal disasters. If the UK follows through on its vote, as it seems likely to do, it surely will end up with more restrictive trade opportunities and perhaps very few of the advantages expected -- and, with new political problems at home and stronger populist opponents abroad.

So, we will have to wait and see what happens next. Over all, it is hard to be optimistic amid toxic politics and skepticism about nearly everything, especially about a much-weakened Britain as well as a diminished Europe and a weaker global economy, Washington Insider believes.

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