Washington Insider-- Friday

London's Financial Sector on Leaving Britain

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

House Easily Clears GMO Food Labeling Bill

The House on Thursday passed legislation to allow food companies to choose among three options for disclosing that a food product is genetically modified.

The vote on S 764 was 306-117; the Senate passed the bill last week. The White House has said President Barack Obama will sign it into law.

The bill's labeling/disclosure requirements would pre-empt any state standards (including Vermont's just-implemented standard); it explicitly prohibits states and localities from establishing a labeling requirement for bioengineered food in interstate commerce if the food is subject to the measure's national bioengineered food disclosure requirements.

Under the measure, USDA, within two years of enactment, must establish a national bioengineered food disclosure standard under which the department would determine the amount of a bioengineered substance that may be present in food in order for the food to be considered bioengineered.

Possible labeling would apply only to foods subject to federal food safety laws (the Federal Food, Drug and Cosmetic Act, the Federal Meat Inspection Act, the Poultry Products Inspection Act or the Egg Products Inspection Act), and generally only if the food's most predominant ingredient would on its own be subject to existing labeling requirements of the principal food safety law (the Federal Food, Drug and Cosmetic Act). (If the predominant ingredient is broth, this requirement would apply to the second most predominant ingredient.)

The bill requires USDA, within a year of enactment, to conduct a study to identify potential technological challenges that may affect whether consumers can access bioengineering disclosures through electronic or digital disclosure methods. In conducting the study, the department must solicit public comment.

The study must consider the availability of wireless internet or cellular networks, the availability of landline telephones in stores, challenges facing small or rural retailers, efforts that retailers have taken to address potential technology and infrastructure challenges, and the costs and benefits of installing in retail stores electronic or digital link scanners to provide bioengineering disclosure information.

If USDA determines that consumers would not have sufficient access to the bioengineering disclosures while shopping, it must, after consultation with food retailers and manufacturers, provide additional and comparable options to access the bioengineering disclosure.

Biofuel Producers Urge EPA to Increase RFS Volumes

Producers of ethanol and other biofuels urged the Environmental Protection Agency (EPA) to boost its Renewable Fuel Standard (RFS) volume requirements for 2017, according to comments submitted on the proposed 2017 RFS rule.

The proposed 2017 RFS volumes would require 18.8 billion gallons of ethanol and other biofuels in the nation's motor fuel supply in 2017, an increase of 700 million gallons from the 2016 standard, but still far below a 24 billion gallon biofuel target required in 2007 energy legislation.

"By adopting the narrative of the oil industry with regard to how much ethanol can be blended into gasoline, EPA has incomprehensibly and illegally curtailed the continued evolution occurring in the transportation fuels market that is delivering technology innovation, carbon reduction and consumer savings," the Renewable Fuels Association (RFA) said in its comments. "The agency continues to justify reducing required volumes of conventional renewable fuel by suggesting that certain 'marketplace realities' preclude refiners from meeting the higher statutory volumes," the group added.

EPA's proposal, unveiled in May, requires 14.8 billion gallons of ethanol, slightly below the 15 billion gallons required by the Energy Independence and Security Act (EISA) of 2007 increased the biofuels targets established under the RFS.

Producers of other biofuels also urged EPA to increase proposed RFS volumes for 2017. "The RFS program has been seriously impeded by EPA's unwarranted and unlawful expansion of its general waiver authority," said the Biotechnology Innovation Organization (BIO), which represents biofuel makers. "EPA's approach to setting biofuel volumes violates the law and has undermined certainty and predictability for investors and other market participants, with negative environmental and economic consequences."

Washington Insider: London's Financial Sector on Leaving Britain

By now, some of the Brexit angst has calmed and new British leadership has emerged. Still, there is very considerable interest in what will happen to London’s massive financial services activities.

Recently the New York Times ran a long article on potential shifts of “businesses, entrepreneurs and investment from London.” It says “there will be painful negotiations on matters including trade and whether people from European Union nations will have the freedom to work in Britain, as they do now.” But the tough fight for Britain’s financial sector is already underway.

“Across the Continent, officials are already vocally trying to entice financial services firms, technology start-ups and others to forgo the British capital for cities like Paris, Luxembourg, Frankfurt and even the relatively tiny Lithuanian capital, Vilnius. They warn that businesses will suffer if they stay in a Britain that no longer has unfettered access to the European Union and its hundreds of millions of potential customers.”

Frankfort has been among the most aggressive competitors. “We didn’t want the vote to turn out that way,” Tarek Al-Wazir, economics minister for the German state of Hesse told the Times, but “we prepared just in case.” Its website was up within hours after the results of the referendum were in, extolling the charms of the region surrounding Frankfurt. London investment bankers who logged into the social networking sites LinkedIn and Twitter were greeted with ads with the headline, “Welcome to Frankfurt; what can we do for you?” A telephone hotline was set up to answer questions about finding office space or navigating red tape.

The city has a “strong claim as a regional banking center with a major stock market.” NYT says, although its local financial services industry is only about a tenth the size of London’s. As with its rivals, even if it could attract a sliver of the investment currently in London, the gains in terms of jobs and tax revenue would be large.

Other cities are also in the hunt, including Paris which held an event in Paris ahead of the vote called “Welcome to Europe!”

While cities are fiercely competing to steal companies from London, others are hoping to profit by helping companies sort through their options. Major law firms in the British capital are gearing up for a surge in business—one told the Times that before the results of the referendum, 500 clients registered to take part in a conference call discussing the fallout from the so-called Brexit. After the results, 1,200 more signed up.

The Times also handicapped the outcome, based on the assumption that while it may take some time “a new London would almost certainly emerge in one of the other prominent cities of the European Union. It will take time, but eventually one big hub will develop.”

Who might win this high-stakes financial sweepstakes? Based on English-language facility; a favorable regulatory environment, especially regarding employment; excellent transportation and communications infrastructure; availability of prime office space and luxury housing; good schools; good restaurants and cultural offerings; and finally, an intangible quality that includes a certain energy level and openness to an influx of highly paid, competitive City of London-Wall Street types, several EU cities were scored on a 60-point scale: five points for office space and housing, five points for restaurants and cultural offerings and 10 points for each of the other main criteria. London earns a near-perfect 58 points, with the only black mark its very high costs.

Out of all this, the Times identified the top options, including Paris (43 points); Dublin (50 points); and Vienna (51 points). The top pair, NYT says are Frankfurt (54 points), the obvious choice, but “simply too boring,” and Amsterdam, the winner—sort of. It gets a high of 55 points, partly because 90% of the Dutch speak English, many “better than the English themselves.”

There is a problem, though, and it may disqualify the choice. “Badly hurt by the financial crisis, the Dutch have capped bankers’ bonuses at just 20% of their annual salaries—a far more drastic curb than was imposed by the European Union.” As a result, one observer told the Times he would love to go to Amsterdam, but “doubts that they are wanted there.”

As a result, given its likely non-winning winner, the actual choice seems as difficult as ever even given the extensive research by the Times.

Bloomberg, by contrast, in its view of the options, used only a chart that showed the number of rainy days per month to show where the advantage lay—it is Paris, with far better weather, at least compared to London.

Well, this seems likely to be a sweepstakes worth careful watching, and possibly one that will play a role in the post-Brexit Britain. Clearly, the impacts of that vote are still developing and will reach far into the future, Washington Insider believes.

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