Washington Insider -- Wednesday

Concerns about Imports of Chinese Chicken

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

House Tries to Speed Up WOTUS Rollback, But Senate Hurdles Likely

Speeding up the rollback of the Obama-era Waters of the U.S. (WOTUS) rule by circumventing the normal rulemaking process is the goal of a provision in the energy and water spending bill the House Appropriations Committee will consider Wednesday.

The provision in the energy and water spending bill for Fiscal 2018 would allow the Environmental Protection Agency and the U.S. Army Corps of Engineers to withdraw the 2015 stayed WOTUS rule “without regard to any provision of statute or regulation that establishes a requirement for such withdrawal.” The rule is facing dozens of lawsuits.

The language in essence would shorten the rulemaking process by getting rid of the public-comment process.

But hurdles remain as Senate Democrats are expected to oppose the measure when it reaches that chamber. Also, any such change would likely face court challenges.

EPA and the Corps are under an executive order to withdraw and rewrite the rule, and both have already started the process of rescinding the rule the rule. They released the proposal to reinstate a prior regulation, but have not formally sought public comment.

Also in the spending plan is a provision addressing the so-called “recapture” provision from the Clean Water Act. That provision addresses the dredge-and-fill permits which give companies and others permission to dredge and fill wetlands and streams to excavate mines, or build roads or homes. In the spending plan, lawmakers inserted a provision that observers read as providing relief from the potential threat of farmers, ranchers and foresters being regulated. The provision would allow normally exempt farming and forestry activities from the permits unless the activity results in draining an adjacent wetland.

TPP Poised for a Comeback, Even Without US

Revival of the Trans-Pacific Partnership (TPP), thought dead in January after U.S. President Donald Trump withdrew the U.S. from the agreement, may be ready to make a comeback.

Supporters and detractors of TPP said the deal would not survive after the U.S. withdrawal, but that judgment was premature, according to New Zealand Trade Minister Todd McClay. In remarks to Bloomberg BNA, McClay said momentum is building for the agreement. Meanwhile, the presidents of Peru and Chile July 8 issued a joint statement declaring their "willingness to actively participate in the dialogue for possible alternatives for the application of the TPP-11," a reference to the 11 countries remaining in the agreement after the U.S. exit.

Representatives from the remaining TPP countries will meet in Japan starting July 12 to determine what options exist to move the agreement forward without the U.S. The meeting in Japan will not be about decisions, but a chance for a broad discussion by technical representatives to examine issues and mechanisms for implementation to see what could be changed and how.

TPP was signed in February 2016 by the U.S. and 11 other countries after nearly eight years of negotiations. Trump withdrew the U.S. shortly after taking office, one of his first official acts as president. The countries remaining in the agreement are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Japan and Australia, two of the three largest economies still in the TPP – Canada is also in the top three – are strongly behind efforts to keep the agreement alive. Japan called the meeting after Asia-Pacific Economic Cooperation (APEC) trade ministers met in May in Vietnam, and Australia's government on July 6 said it was "actively engaging with TPP signatories on pathways for giving effect to the TPP."

The plan is to keep any changes "to the bare minimum" necessary to activate the deal, McClay told Bloomberg BNA. The activation mechanism is a key point, as under the original agreement, ratification was necessary by countries representing 85 percent of total gross domestic product of the original TPP for it to come into effect. This would have to be changed given the U.S. withdrawal.

Peruvian Foreign Trade and Tourism Minister Eduardo Ferreyros said he does not expect any breakthroughs at the meeting in Hakone, Japan, but said TPP is not dead. "The original agreement signed in February [2016] has to change, but I think that progress made in many areas remains valid," he told Bloomberg BNA.

Washington Insider: Concerns about Imports of Chinese Chicken

A lot of aggies say they are pleased about the Administration’s recent beef trade deal with China, but some consumer groups are not, according to the Washington Post. It reported this week that the first known shipment of cooked chicken from China—part of the same deal--reached the United States last week. The chicken from China will not be labeled, the Post says and a representative from Qingdao Nine-Alliance Group, the first exporter, did not specify the name brand it’s being sold under.

President Trump has tweeted his enthusiasm about the deal, calling it “REAL news!” Agriculture Secretary Sonny Perdue has championed it as a win for American industry, even as he promises that inspectors will stop contaminated meat from reaching U.S. consumers.

“Well the good thing about it is our food safety inspection agency in the USDA does a marvelous job,” Perdue said on CNBC last month. “They’ve looked for years over the equivalence of the inspection.”

However, critics are accusing the Trump administration of risking public health to open up foreign markets. “Taking that processed chicken was a quid pro quo to get China to accept U.S. beef,” said Rep. Rosa DeLauro. D-Conn., an outspoken critic of the agreement. “Trade always trumps public health in the U.S. … It’s outrageous. It says we don’t care about the health and safety of consumers.”

Under current regulations, China may only export cooked chicken products to the United States. And while those products can be processed and packaged in China, the birds must be raised and slaughtered in Canada, Chile or the United States--rules are based on long-standing concerns about China’s poultry farming and slaughter operations, particularly in regards to avian influenza.

Because cooking kills bacteria and viruses, including the one that causes bird flu, processed poultry is considered “tremendously safer” than raw chicken, said Richard Raymond, who served as undersecretary of agriculture for food safety from 2005 to 2008.

The most significant risk in a cooked poultry product is an environmental contaminant, such as listeria, the Post says, or a residue or intentional adulterant, such as the melamine that surfaced in Chinese infant formula. Birds sourced from a USDA-approved country, like Canada or Chile, are guaranteed to undergo the same safety checks during slaughter that they would in the United States.

But Chinese trade negotiators have consistently pushed for better access to the nearly $30 billion U.S. broiler chicken market, particularly for Chinese-raised and Chinese-slaughtered birds. As part of joint economic talks earlier this year, the United States agreed to begin receiving Chinese-raised, processed chicken “as soon as possible.” A representative of Qingdao Nine-Alliance said the company sent its first shipment in order to “study the procedure and documentation for export to [the] U.S.” ahead of that anticipated liberalization.

In exchange, and as part of the same economic talks, China agreed to lift its 14-year ban on most beef from the U.S., a historic pain point in bilateral negotiations. The ban, which originated after a U.S. outbreak of mad cow disease in 2003, has cut American beef producers out of an exploding $2.5 billion Chinese import market.

But many food-safety experts are less sure that the deal represents a step forward, the Washington Post says, particularly if it results in a surge of Chinese chicken exports to the United States. China has experienced repeated episodes of both avian influenza and food contamination. The risk of bird flu is what prevents China from exporting raw chicken, the Washington Post says.

Four in 10 of the several thousand Chinese facilities AsiaInspection audited last year failed their safety checks, WaPo noted. Separately, China’s food safety chief, Bi Jingquan, reported that his agency found 500,000 instances of illegal food safety violations in the first three quarters of 2016.

But USDA officials say they’re confident that the facilities approved for export to the United States are safe, even if there have been problems elsewhere. USDA spokeswoman Nina Anand said the department has determined that China’s food-safety standards for poultry processing are equivalent to those used in the United States. The agency will also continue to audit Chinese facilities annually, Anand said, and Chinese chicken will face greater scrutiny upon entry into the U.S. — including laboratory testing, if warranted.

For the time being, such entry inspections will be infrequent. Even under the proposed rule, which would expand Chinese exports, USDA expects China to ship only 324 million pounds of poultry per year over the next five years — roughly 2.6% of total U.S. production.

Last month, DeLauro, the Connecticut congresswoman, added a rider to the draft USDA appropriations bill that banned imported Chinese chicken from being served in schools. (It was unanimously approved.) Other restriction are planned, especially from federal nutrition programs, particularly those for low-income children and seniors.

Clearly, this is a development that producers should watch closely. China is a huge market, and it needs meats. However, the U.S. needs to be sure it handles its food safety problems effectively as trade deals are evaluated, Washington Insider believes.

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