Washington Insider-- Friday

Belgium Shifts on Canada-EU Trade Pact

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

Conservative Republicans Step Up Opposition to Extending Energy Tax Credits

A coalition of conservative groups has again called for lawmakers to reject a package of renewable energy tax credits that supporters claim was mistakenly left off last year’s Fiscal 2016 omnibus spending bill negotiations.

The group of 47 conservative organizations wrote to congressional leadership to prevent consideration of a provision to extend tax credits for certain wind energy facilities, geothermal heat pumps and fuel cell projects, all of which expire at the end of this year. The effort is being led by the Heritage Foundation and the Koch brothers-backed Americans for Prosperity.

Majority Leader Mitch McConnell, R-Ky., said during a Sept. 29 news conference that the Senate could “take a look at” the tax extenders during the lame duck session while Minority Leader Harry Reid, D-Nev., has been pushing an extension of the credits for most of 2016.

As part of the tax extender deal, as well as the Fiscal 2016 omnibus spending bill, Congress agreed to a separate five-year extension of major wind production and solar investment tax credits. The measure, however, did not address credits for investments in geothermal, combined heat and power properties, fuel cell facilities and smaller wind projects. Both sides of the aisle have acknowledged that those credits were mistakenly left out, but Congress has yet to find an appropriate place to attach the extension.

The conservative groups have pushed back against the need for any of the renewable energy tax credits, arguing for an open market approach to energy, rather than allowing the federal government to choose “winners and losers” through favorable policies. “Government subsidies, loans, mandates, and tax policies regarding renewables have consistently failed to deliver on their promises of long-term job creation and economic viability,” the groups wrote. “Americans deserve access to energy solutions that are affordable and reliable — ones that should be able to stand on their own in the marketplace.”

The White House has made extending the left-out subsidies a priority in the lame-duck session of Congress, coordinating with the Democratic leadership for what one senior White House adviser called a clean energy "end game."

Obama Officials Given More Time to Defend WOTUS in Appeals Court

A federal appeals court gave the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers nearly an extra month to file their defense of the Waters of the US (WOTUS) rule.

The U.S. Court of Appeals for the Sixth Circuit on Oct. 25 gave the government a new deadline of Jan. 18, 2017, to file its response in defense of the rule; the deadline had been Dec. 23, 2016.

The Justice Department, which will file a consolidated brief on behalf of EPA and the corps, sought the extra time after states, business and municipal groups challenging the rule got extra time, until Nov. 1, to file their briefs.

The appeals court is considering nearly two dozen challenges mounted against the WOTUS/Clean Water Rule, which would clarify which waters and wetlands fall under the jurisdiction of the Clean Water Act. The rule, which the Obama administration published in June 2015, is being contested by 32 states and dozens of business, industrial and commercial groups.

The Sixth Circuit stayed the rule a year ago pending its decision on its constitutionality.

The court set a Feb. 19, 2017, deadline for intervenors to file briefs either in support or in opposition to the rule.

Washington Insider: Belgium Shifts on Canada-EU Trade Pact

Not quite a week ago, the New York Times reported that globalization had been “halted” by a vote in a tiny region in Belgium. However, after the approval process for a Canadian-EU deal was halted, European Union trade officials scrambled to walk back the obstruction. The Associated Press reported Thursday that the “landmark free trade agreement between the European Union and Canada could be signed within days.” It noted that the Belgian government had overcome “an impasse with its regional authorities on Thursday.”

Belgian Prime Minister Charles Michel told AP that his government had reached a deal with the holdout region of Wallonia, after it “held a veto over the country's ability to back the trans-Atlantic agreement.” In addition, the EU needed unanimity among all its members, he said.

AP says the deal will go through regional legislatures by Friday night and then will need to be vetted again by the other 27 EU states.

That means a delay in the approval process, AP says, since it is “effectively impossible to sign the deal in Brussels with Canadian Prime Minister Justin Trudeau on Thursday, as had been scheduled for weeks.” Still, the belated agreement was a huge relief for EU leaders, who had started negotiating the pact with Canada seven years ago and were embarrassed by the last-minute stumble.

"This is good news," Michel said, adding that the new text of the deal provides guarantees for farmers and on a corporate dispute settlement system that "will allow us to sign the deal." EU President Donald Tusk said he would contact Trudeau "only once all procedures are finalized for EU signing CETA," as the trade deal is called.

Alex Lawrence, the spokesman for Canada's trade ministry, earlier said that the country was prepared to sign the deal whenever Europe is ready. And Trudeau had told Parliament he's prepared to wait.

Politicians in Wallonia, which has a population of 3.6 million compared with over 500 million for the whole EU, argued earlier that the proposed accord would undermine labor, environment and consumer standards.

Giving a voice to millions of Europeans who oppose the deal for myriad reasons, Wallonia President Paul Magnette said his resistance yielded huge results.

"We always fought for treaties that reinforced the social and environmental standards, protect the public services and that there is no private arbitration" in dispute settlements, he said. "All this is achieved as of now."

"I am sorry for all the other Europeans we made wait and for our Canadian partners. But if we took a bit of time, what we achieved here is important, not only for Wallonia but for all Europeans," Magnette said. He did not detail how the pact had been changed, if at all, over the past week.

Proponents say it would yield billions in added trade through customs and tariff cuts and other measures to lower barriers to commerce. At the same time, the EU says it will keep in place the region's strong safeguards on social, environmental and labor issues.

Magnette said Wallonia's insistence on a better deal would bolster EU standards and set a precedent for other trade talks between Europe and trading partners like the United States or Japan.

So, perhaps globalization is not as dead as the Times thought, after all. In fact, most observers do not seem much surprised by the current turn of events, or even by the “Wallonia turnaround.” However, globalization and the advance of global access has clearly been wounded by the Brexit movement in the UK and by the anti-trade campaign debate in the United States. Clearly, approval prospects for the Trans Pacific Partnership remain gloomy, in spite of strong efforts by the administration. These are crucial issues for U.S. producers so the fight over trade agreement approvals should be watched closely by producer as it proceeds, Washington Insider believes.

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