Washington Insider-- Tuesday

Local Businesses Uneasy with Campaign Anti-Trade Rhetoric

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

TPP Text Sent to Congress by USTR

The 12-nation Trans-Pacific Partnership (TPP) trade deal cleared another procedural hurdle for congressional consideration, with the Office of the US Trade Representative (USTR) sending a draft legal document to Congress.

Transmitting this draft description of administrative actions needed to implement the TPP is a necessary predicate for submission to Congress of legislation that would effectively ratify the pact.

The move was immediately questioned by the Republican majority in the Senate Finance Committee. Julia Lawless, communications director at the Senate Finance Committee majority staff, said in a statement the transmission of the statement was premature because of outstanding issues in the TPP. Senate Finance Chairman Orrin Hatch, R-Utah, has expressed his opposition to the term of intellectual property rights protections for biologic drugs in the TPP.

Lawless contrasted the current administration's approach with past administrations that worked closely with Congress on both the "substance of the draft SAA as well at its timing" for submission to Congress.

Matt McAlvanah, assistant USTR for public and media affairs, said in a statement the administration "will continue to consult with congressional leaders on the final SAA [statement of administrative action] and on appropriate timing for additional steps laid out in the bipartisan [trade promotion authority] legislation."

Also known as fast track, the trade promotion authority (TPA) law requires the draft statement of administrative action be sent to Congress at least 30 days before it submits implementing legislation for the TPP. This does not mean the bill will be submitted a month from now; expectations are that this move will take place in the lame-duck session of Congress, industry, legislative and administration sources have said.

The document also describes how the implementing legislation and proposed administrative action will change or affect existing law, and the reasons why the bill and proposed action are needed to carry out the TPP.

USTR also sent the legal text of the TPP agreement, which is another procedural requirement that went along with the draft. The legal text has been publicly available since Feb. 3.

FDA Revamps Rules for Food Ingredients Recognized as Safe (GRAS)

The Food and Drug Administration (FDA) issued final rules updating how the agency determines that a substance used in food is "generally recognized as safe" or GRAS. Substances determined to be GRAS can include some pesticides, dietary supplement ingredients and color additives. They are not subject to pre-market approval by regulators, though they must meet the same safety standards as additives.

The 329-page final rules clarify criteria for GRAS classification and formalizes a voluntary GRAS notification procedure. The FDA has had statutory provisions in place since the 1970s for determining GRAS eligibility, but the agency said that stakeholders needed additional information.

The final rules clarify that:

A substance cannot be classified as GRAS if available data doesn't satisfy the safety standard for a food additive under the Federal Food, Drug and Cosmetic Act.

GRAS classification requires "common knowledge" throughout the scientific community that the substance is not harmful.

Scientific recognition that a substance is safe must be concluded using generally accepted scientific data, information and methods.

The final rules also include various clarifications about required documents for the GRAS application process and its time line. The rules will come into effect 60 days after it is published in the Federal Register which is expected Aug. 17.

Next up for FDA? Develop and implement new compliance strategies aimed at improving oversight of pre-market evaluation of food additives.

Washington Insider: Local Businesses Uneasy with Campaign Anti-Trade Rhetoric

It seems that the anti-trade kerfuffle at the top of both campaigns is building some pushback among local businesses in Midwestern farm country. For example, the Minneapolis Star-Tribune ran a story on Monday that says that local businesses are starting to question campaign anti-trade positions, and asking, "How did international trade become such a bad thing in the United States?"

The Star-Trib story says that local Farm Bureau officials "had no good answer" to this question at a recent conference, and agrees that "Minnesota's business community is finding itself increasingly at odds with the top candidate of a political party that once was a reliable supporter of open markets."

In addition, Minnesota's other critical business sectors are increasingly uneasy with the trade policy the GOP candidate is pushing, the Star-Trib said.

For the past half-century it has been "unprecedented for Republicans to be in favor of protectionism," Robert Kudrle, an economist who specializes in trade and international investment at the University of Minnesota told the Tribune. "Almost all the time protectionism has been on the trade-union left within the Democratic Party. Now, it's just very, very different."

Trump has vilified and vows to kill the new 12-country Trans-Pacific Partnership (TPP) free trade agreement that awaits a vote in the U.S. House and Senate. He also wants to undo the 20-year-old North American Free Trade Agreement, Kurdle said.

He is not alone—many Democrats also oppose the proposed agreement. The Star-Trib notes that presidential candidate Hillary Clinton once supported TPP, but now is against it. Still, the article argues that the shift on the GOP side has been the sharpest and seems to be causing some Minnesota Republicans, including Third District Rep. Erik Paulsen, R-Minn., to break ranks with Trump. "We should not step away from the table on agreements such as TPP," Paulsen told the Tribune. "The benefits that thoughtful trade agreements can bring to American businesses, their employees, and their families are too important to ignore."

Kudrle notes that "presidential politics" this year is threatening relationships between Minnesota and its major trading partners, such as Canada, Mexico and Japan. All of them are party to TPP.

Most of Minnesota's big business leaders declined to talk to the Star Tribune about the candidates' stands on trade, but state-based companies were more open, the paper reports. These firms shipped $20 billion worth of goods to 200 countries in 2015 and the top 25 countries receiving those goods included eight TPP participants. Many of the major corporate players in Minnesota have endorsed TPP either individually or through their trade associations.

"Agriculture is highly dependent on trade, and a well-implemented Trans-Pacific Partnership is essential for economic vitality and job security, not only for our state, but for our nation," Land O'Lakes CEO Chris Policinski told the paper.

Cargill and 3M also are part of a coalition of businesses working "to provide an equal playing field," a Cargill spokesman said. "Our company's ability to achieve our goal of nourishing the world by accessing and competing in [trans-Pacific] markets depends directly on whether or not the TPP is ratified."

General Mills has a seat on the board of the US Council for International Business, a leading member of the coalition to pass TPP. Medtronic and St. Jude Medical are members of the Advanced Medical Technology Association, which is pushing the TPP. The Minnesota Chamber of Commerce has encouraged its members to make their feelings about free trade clear to candidates this political season even as international trade has taken a higher campaign profile than usual.

State Chamber President Doug Loon calls trade "a front-burner issue," the Tribune said. "Moving toward a protectionist agenda is not the answer to our economic challenges for the country and certainly not for Minnesota," he said, noting that foreign exports support 800,000 jobs in the state.

Loon thinks Minnesota's business voters will base their election choices on a variety of issues.

"Trade is one of many things that they will consider," he said. They will also look at "how the candidates come down on tax policy, how they view regulations, how they view immigration."

Candidate Trump's plan to deport immigrants does not play well in some corners of the state's agriculture sector, Loon said. Farm Bureau officials also have called immigrants a part of a vital labor force for raising animals and growing crops in Minnesota.

Kudrle commented to the paper that he believes fear of trade protectionism could influence business voters as much or more than proposed corporate tax cuts. "To say to American big business that you're going to cut the tax rate, but you're also going to really start bollixing up international markets. I don't think people would want to trade those off," he said.

The White House says it intends to submit the TPP for ratification in the fall after the election-year frenzy has cooled. Clearly this will be a difficult sell, but one in which the administration is counting heavily on local business support as the campaign gets underway, a fight in which agriculture can be expected to play a significant role, Washington Insider believes.

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