Washington Insider-- Friday

The Lighthizer Effect on Trade Policies

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

House Republicans Name Six New Members on Ag Committee

House Republican leadership added six first- and second-term members to the chamber's Agriculture Committee, panel Chairman Mike Conaway, R-Texas, said.

The GOP list includes Reps. Jodey Arrington, Texas, Don Bacon, Neb., James Comer, Ky., Neal Dunn, Fla., John Faso, N.Y., and Roger Marshall, Kan., who will round out the 26 Republicans on the committee.

"Their diverse backgrounds will be integral as the committee goes to work -- from protecting the farm safety net for producers, to ensuring the Supplemental Nutrition Assistance Program (SNAP) works to help lift families out of poverty, to rolling back burdensome regulations that strangle businesses," Conaway said in a statement.

Marshall defeated Rep. Tim Huelskamp in Kansas's Republican primary, saying that he would bring back a Kansas lawmaker to the Agriculture Committee. Huelskamp had served on the panel but was ousted by then-Speaker John Boehner, R., Ohio, in 2012.

Rep. Randy Neugebauer, R-Texas, one of the most senior Republicans on the panel, retired, along with Reps. Chris Gibson, R-N.Y., and Dan Benishek, R-Mich.

Rep. Jackie Walorski, R-Ind., moved to the Ways and Means Committee. Reps. John Moolenaar, R-Mich., and Dan Newhouse, R-Wash., moved to Appropriations.

On the Democratic side, House Minority Leader Nancy Pelosi, D-Calif., announced Agriculture Committee assignments, naming five new Democrats to the panel: Reps. Dwight Evans, Pa., Al Lawson, Fla., Tom O'Halleran, Ariz., Jimmy Panetta, Calif., and Darren Soto, Fla. They will replace Democrats who are no longer in office or have moved to different committees.

Panetta, the son of former CIA Director Leon Panetta, took over the House seat of Rep. Sam Farr, D-Calif., who retired.

USDA Proposes Adding Venison to Mandatory COOL

USDA is proposing to add venison and ground venison to the list of covered commodities subject to mandatory Country of Origin Labeling (COOL) and is still tweaking the rules for the program to reflect that beef and pork are no longer covered commodities.

Citing the 2014 Farm Bill which added muscle cuts of venison and ground venison to the list of covered commodities, USDA outlined its plans in a proposed rule to be published in the January 13 Federal Register. "The proposed rule would impose recordkeeping requirements on venison producers and intermediary firms selling venison destined for retail channels," USDA said. "Individual retailers selling venison would also be subject to point of sale labeling and recordkeeping requirements. Each participant in the venison supply chain would bear recordkeeping costs as well as costs associated with modifications to their business practices."

Interestingly, USDA is also continuing to tweak mandatory COOL rules to reflect the removal of pork and beef from the program, noting that in the proposed rule to add venison. "Additional administrative changes are necessary to reflect the withdrawal of beef and pork commodities from the COOL regulations as published in the Federal Register on March 2, 2016," USDA said. They are now proposing to amend the production step, raised and the United States country of origin provisions in the law to remove references to beef and pork from these definitions.

There is a 60-day comment period starting January 13.

Washington Insider: The Lighthizer Effect on Trade Policies

As the new administration approaches inauguration, concern over what emerging trade policies might look like is unabated, generally, but the Chicago Tribune says it sees an odd development; a little relief and a tiny glimmer of optimism on both sides of the aisle.

The source of this reaction is linked to the appointment of Robert Lighthizer, a former Ronald Reagan administration official, who will be U.S. Trade Representative (USTR). He will join a pair of free trade skeptics, the paper says. Wilbur Ross, a Wall Street corporate raider, will coordinate trade policy as commerce secretary, while Peter Navarro, a China-bashing economist, will run a new National Trade Council.

All three, like Trump, take aim at the free trade regime that has helped reshape the global economy in the last few decades and worry that China's unfairly gamed the system to the detriment of the US economy. But Lighthizer, who will be in charge of prickly negotiations with trading partners, stands out, the Tribune says.

He has offered a "more nuanced diagnosis of what ails America's economy and he has a track record of trying to fix what's broken without starting a trade war," the paper opines.

The Tribune reviews the campaign and notes that candidate Trump campaigned against free trade, slamming big trade pacts like NAFTA and the Trans-Pacific Partnership (TPP) and threatening to impose massive tariffs for imports from China and Mexico. Navarro blames unfair Chinese competition for 25 million Americans not being able to find decent-paying jobs; Ross made a fortune by using steep tariffs on Chinese steel to make his American mills more competitive.

Lighthizer also is tough on free trade, and has criticized Republicans who continue to support free trade pacts. Unlike Navarro and Ross, though, Lighthizer makes a more nuanced critique of the ills of international trade and especially what he sees as China's rule-breaking behavior since it joined the WTO in 2001. And unlike the maverick economist Navarro, at least, he has tried to remedy them from inside the U.S. government.

Lighthizer in the 1980s was in the trade representative's office during another heated U.S. trade competition with Japan. And he spent three decades defending U.S. companies from allegedly unfair competition at DC lobbying shop and powerhouse law firm Skadden, Arps, Slate, Meagher & Flom -- who say his nuts-and-bolts knowledge of how trade really works will set him apart from others in Trump's economic team.

In the 1980s, as deputy USTR focusing on industry, agriculture, investment, and trade policy, Lighthizer convinced Japan, South Korea, Mexico, and the United Kingdom to accept "voluntary restraint agreements" to limit the amount of cheap steel they could dump on the US market, undercutting pricier U.S. steelmakers.

While at Skadden, Lighthizer served as lead counsel on a number of anti-dumping cases, including a 2015 case that found below-cost, cold-rolled steel from Brazil, China, India, Japan, Korea, Russia, and the U.K. harmed American producers.

When it comes to China, Lighthizer shares some of the vitriol common to Trump and Navarro but in a much more measured fashion. He blames Beijing for some U.S. job losses and thinks it hasn't opened its own market to international competition the way it promised it would. He also has been critical of America's willingness to fight Beijing's "systemic" noncompliance with WTO rules.

Part of Lighthizer's appeal has been his unwillingness to call for the kinds of tariffs that enthuse Trump and Navarro and which have alarm bells ringing in Beijing. Rather, he proposes much more vigorous action by the USTR to fight a host of Chinese abuses within the existing structure. Intellectual property theft by Chinese firms, industrial subsidies, and quasi-legal import tariffs disguised as sales taxes are some abuses that Lighthizer says could be addressed with more "aggressive" legal action by U.S. trade officials.

Republicans on the Hill have largely kept quiet since Lighthizer was announced on Jan. 3. Sen. Orrin Hatch, R-Utah, the chair of the Senate Finance Committee and a backer of TPP, said only that he expects a "vigorous discussion" when Lighthizer comes before his panel.

Lighthizer's fight against trade violations doesn't always go his way. His negotiated agreements to limit steel dumping, for instance, were eventually found to violate WTO rules. But he thinks some form of that playbook, combining negotiations with a more aggressive use of existing legal remedies, could be used to push back a lot more against Chinese abuses than the last two U.S. administrations have done.

As Trump's economic team and his trade policies start to take shape, even some Democrats seem appreciative that Lighthizer carries a scalpel, and not a sledgehammer, to fix what are seen as the ills of trade. He has widely regarded "relevant experience and has shown some concerns in a number of important areas, they argue.

Well, trade policy is always tough and the presence of an experienced negotiator likely will be welcome. Still, the fight over future policies likely will be both contentious and extended, and should be watched closely by producers, Washington Insider believes.

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