Washington Insider--Wednesday

US Trading Partner Agreements

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

Vilsack: GMO Labeling Rules Making Progress

The rules to implement a nationwide, mandatory system for labeling foods made with genetically modified organisms (GMOs) is progressing, but it is unclear how much USDA can accomplish before the next administration takes office, USDA Secretary Tom Vilsack said today. Most observers of the topic previously thought the incoming administration's would be implementing recent GMO food labeling legislation.

"It's a little early to say how much we'll get done," Vilsack said following a keynote speech on veterans in agriculture at the U.S. Chamber of Commerce.

Vilsack wants to "establish a very strong foundation and framework" in the rulemaking process so that the next administration will not have to deal with the more intricate and difficult decisions in implementing the law, signed by President Barack Obama July 29.

USDA issued guidance related to the GMO law Aug. 19 which eased rules on labeling meat and eggs made using animal feed and ingredients that have not been genetically modified (as covered in Monday's WI).

Vilsack revealed that USDA also is examining how to conduct a study -- mandated by the labeling law-- on the effectiveness of using internet links and QR codes scanned by a consumer's smartphone to convey GMO information, and perhaps adding QR scanners in grocery stores for people who do not have smartphones.

If scanners are provided in grocery stores, Vilsack said that would be a budget issue.

Peterson Lauds USDA Plans to Purchase Surplus Cheese

House Agriculture Committee Ranking Member Collin Peterson, D-Minn., praised USDA's announcement of plans to purchase surplus cheese for donation to food banks and extend the deadline for farmers to enroll in the dairy Margin Protection Program (MPP).

The announcement follows letters from Peterson urging USDA to extend the MPP enrollment date and use their purchasing authority to address instability in the dairy industry.

Statement from Peterson:

"Today's announcement is welcome news. The combination of declining milk prices and record high cheese stocks has left many dairy farmers struggling. Through this cheese purchase, both farmers and those using USDA nutrition programs, will get some relief. Additionally, dairy farmers will have more time to enroll in MPP and protect themselves against potential future volatility.

"MPP is an improvement over the past dairy safety net but as we look ahead to the next farm bill, I will be working closely with my colleagues and dairy farmers across the country to improve upon the program."

USDA announced they would purchase 11 million pounds of cheese from private inventories, valued at $20 million, to assist food banks and pantries across the country. Plus, USDA said it would monitor the situation and take additional actions, if needed, later this fall.

USDA also announced it is extending the deadline for dairy producers to enroll in the Margin Protection Program (MPP) for Dairy to Dec. 16, 2016, from the previous deadline of Sept. 30.

Washington Insider If Not Trade, What?

Little by little, the large urban dailies seem to be rethinking their earlier fascination with anti-trade politics, especially since the Brexit vote in Britain. And, there's something new. A recent Washington Post editorial not only expressed concerns that political toxicity may have ruined chances for the administration's Trans-Pacific Partnership (TPP) but it raised the question of how the United States can avoid U.S. isolationism if the TPP approval vote does fail.

The Post notes that the administration's new push for congressional approval of the TPP as soon as practicable is based mostly on hope. The next chance will come after the election and just before the end of the President's term. What will happen then?

The Post says it hopes for approval, but "candor and realism require us to acknowledge that the prospect is increasingly remote." The far likelier outcome, it says, is that the 12-nation, tariff-slashing pact will languish indefinitely. Over the course of this turbulent political year, the American political center has shifted, not only against the TPP but also against trade-expanding multilateral agreements generally.

The challenge to critics of the existing free-trade paradigm: What is your alternative?

The Post says that is an easy question for America Firsters who believe, simplistically, that global economics is a zero-sum business and that the task is to snatch back, through various protectionist measures, the jobs China, Mexico and other trading partners "stole." The Post thinks that is unrealistic.

However, for Democrat Hillary Clinton, the paper thinks the issue is, or should be, much more difficult, especially since her earlier rationale was rooted not only in a perception of the US national economic interest but also in an assessment of the U.S. national security interest.

The latter point is important, the Post thinks, but has been largely left out of the debate. Since the early years after World War II, when the United States helped launch the General Agreement on Tariffs and Trade, expanding global commerce has played a strong supporting role in U.S. strategy. Ever-freer trade and the ever thickening web of rules-based relationships that it creates, was thought, correctly, as a "soft power" complement to American military and political clout. This strategy also had the goal of pushing trading partners to limit government interventions and make trade fairer.

Though mutually advantageous economically, the TPP was most important strategically, the paper argues, as an instrument of the Obama administration's "pivot" to Asia. It was intended to firm up ties among the United States, Japan and, eventually, a bloc of smaller nations, all of which shared the goal of peacefully curbing Chinese plans to dominate the region according to its authoritarian, mercantilist norms.

If the TPP is out, some other institution will have to serve this function, the Post asserts, if the United States is not to suffer significant geopolitical losses. This concept was not prominent in the earlier trade negotiations, according to the Post. While China's membership in the WTO has not changed its ambitions as much as many hoped, few would assert that it has not affected Chinese behavior at all.

Still, the Post argues that the past failure to fully confront China's geopolitical ambitions is "all the more reason to maintain a robust U.S. commitment to a vital region of the world, where threats to democracy and prosperity include not only Chinese provocations but also North Korean bellicosity and the errant leadership of Philippine President Rodrigo Duterte."

The TPP was to be the anchor, symbolic and substantive, of a reinvigorated U.S. presence. The next president "cannot simply leave a strategic vacuum" in its place.

It seems that this is the new, more forceful argument the administration plans to use to push the Congress into approving the pact later this fall. It likely will resonate with businesses and with voters who see the need to build stronger economic leadership in the Pacific, especially as Britain struggles to accommodate its Brexit. Still, the trade debate is extremely political and increasingly toxic and will be important for producers to watch closely as it evolves, Washington Insider believes.

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