Washington Insider-- Thursday

Trump's Tough Trade Talk

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

Currency Manipulation Under Scrutiny by Federal Agencies

President Barack Obama directed the Treasury Department to consult with the Office of the U.S. Trade Rep. (USTR) before "undertaking enhanced analysis" of a country engaged in currency manipulation. Under an executive order filed in the July 27 Federal Register, the president clarified agency responsibilities under the 2015 Trade Facilitation and Trade Enforcement Act, known as the customs bill.

The law contains a number of provisions aimed at combatting currency manipulation, including enhanced reporting and consultation requirements. The executive order (No. 13,733), delegates a number of functions under the law, and states that treasury is to consult with the secretary of state in making any determination that starting enhanced bilateral engagement with a country engaged in currency manipulation would cause serious harm to U.S. national security.

Also, the assistant to the president for economic policy will consult with the treasury, state and commerce secretaries as well as the USTR in making a recommendation to the president on how to respond if treasury finds that a country failed to adopt appropriate policies to correct currency undervaluation and its trade surplus

Federal Court in Minnesota to Rule on Motion to Dismiss WOTUS Suit

A motion to dismiss the lawsuit over the Environmental Protection Agency's (EPA) Waters of the U.S. (WOTUS) rule will be based on the briefs already filed rather than holding arguments on Aug. 5 according to an order from the U.S. District Court for the District of Minnesota.

In a text-only order issued late July 25 to the attorneys involved in the litigation, the court said it would rely on the "papers" to rule on the Justice Department motion to dismiss the lawsuit in light of a decision by the U.S. Court of Appeals for the Sixth Circuit establishing itself as the proper venue to hear complaints against the rule.

The court's order responds to a joint request made July 15 by attorneys representing the Justice Department and a coalition of cattle ranchers, led by the Washington Cattlemen's Association. The rule remains stayed nationwide as the result of a Sixth Circuit order in October 2015.

Washington Insider: Trump's Tough Trade Talk

POLITICO is reporting this week that the fight about trade now has a new tone. It used to be a reliable Republican Party plank that generated solid business support. In more recent times, labor unions have become strident trade critics and have focused on pushing back against big, multilateral trade deals. Democratic politicians have followed suit, in many cases. Donald Trump, especially, has used anti-trade sentiment to bolster his isolationist credentials, not only against new trade deals but against trade regulations in general.

How that fits into the over struggle is not easy to figure out.

One thing is clear, and that is that trade supporters and institutions will not disappear quietly. Over the weekend, Trump declared war on the WTO and said he will withdraw if it tries to hinder him as he rallies support in Rust Belt states that Mitt Romney lost four years ago. At the same time, the Trump anti-trade talk is triggering a political scramble among Republicans in an effort to defend the WTO.

For example, House Speaker Paul Ryan, R-Wis., told POLITICO he “believes the WTO plays an important role of ensuring other countries meet their obligations and don’t violate agreed upon rules,” a spokeswoman for the Wisconsin Republican said.

There’s more, “Through the WTO, we have established the economic rules of the road based on our system, and other countries must follow them or face our retaliation,” House Ways and Means Committee Chairman Kevin Brady, R-Texas, added in a statement. “While the WTO isn’t perfect, our membership in this organization is essential to making American products more competitive and attractive around the world.”

Trump's Sunday comments came in response to a question from "Meet the Press'" Chuck Todd about the presidential candidate's proposal to punish companies, such as air conditioner manufacturer Carrier, that move jobs to other countries. He would tax their exports back to the United States.

“If they're going to fire all their people, move their plant to Mexico, build air conditioners, and think they're going to sell those air conditioners to the United States, there's going to be a tax,” Trump said. “It could be 25%. It could be 35%. It could be 15%. I haven't determined. And it could be different for different companies.”

Tough rhetoric like that helped Trump clench the Republican nomination, especially among older white male voters, even though the party has long been a supporter of free trade and at least some Trump threats would violate rules the U.S. formally agreed to support. Asked by Todd whether his punitive tariff plan might be struck down by the WTO, Trump took an aggressive tone: “It doesn't matter. Then we're going to renegotiate or we're going to pull out. These trade deals are a disaster, Chuck. World Trade Organization is a disaster.”

This is shocking talk from a Republican, observers say, especially since he also has threatened to abandon the Trans-Pacific Partnership (TPP) that the Obama administration still hopes Congress will approve this year. He suggests he might withdraw from the North American Free Trade Agreement unless Canada and Mexico agree to renegotiate the 22-year-old pact.

The attacks on trade liberalization, which is credited by the Peterson Institute for International Economics with raising household purchasing power by about $13,000 on average since 1950, have left longtime supporters dumbfounded, POLITICO says.

Claude Barfield, a senior fellow at the American Enterprise Institute, a conservative think tank that advocates for free trade says Trump “popped off without knowing anything about the WTO.” Other Republican lawmakers, however, continue to express a patient attitude and willingness to work with Trump.

Ed Gerwin, a senior fellow at the Progressive Policy Institute, a centrist Democratic think tank, called Trump’s punitive tariff proposal perplexing since it seems to suggest the creation of new government bureaucracy charged with determining duties on American companies, based on “some magic formula” having to do with job losses.

Still unclear, Gerwin said, is whether the duties would also apply to foreign competitors who ship similar products to the United States or if only American companies would be the victims of Trump’s ire. “It’s so incredibly poorly thought out,” he said.

Trump’s critique of U.S. trade policy borrows heavily from union groups, who say they are working in battleground states to persuade members not to fall sway to the former reality TV star’s rhetoric. “The idea that somehow this man is a champion for fair trade and pro-worker trade policies is absurd,” Thea Lee, deputy chief of staff at the AFL-CIO, told POLITICO.

“The labor movement does believe in the rules-based system, we just want different rules. Trump doesn’t seem to believe in a rules-based system. He believes in a Trump-based system," Lee said.

So, in this double and triple ante system of how isolationist to be, some of the players seem surprised at how bitter the fight has become, especially as has resonated clearly with increasingly numbers of voters. The new leadership pushback could turn out to be welcome even though it has been somewhat half-hearted. Still, the trade fight is very important to producers and should be watched carefully as it proceeds, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com