Washington Insider -- Thursday

Maybe Trans-Pacific Partnership Not Dead

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

Environmental Group Urges EPA to Review All Pesticide Ingredients

Assessment of environmental and health effects for all pesticide ingredients – not just the active ingredients that kill pests – should be undertaken by the Environmental Protection Agency (EPA), the Center for Food Safety (CFS) argued in a July 10 petition to the agency.

The petition is the latest attempt by environmental groups to bring more attention to "inert" ingredients, compounds combined with active ingredients to improve a product's consistency, fragrance or volatility. Many of these ingredients are listed as hazardous under federal laws, including the Emergency Planning and Community Right-to-Know Act and the Federal Insecticide, Fungicide and Rodenticide Act.

EPA should revise pesticide regulations to take into account all pesticide chemicals, CFS argued in the petition. The organization also asks that the agency do more to address possible "synergistic" effects of pesticides, i.e., the compounded potency of chemicals when mixed.

"While the old toxicology adage states that the ‘dose makes the poison,’ it is increasingly clear that instead the ‘formulation makes the poison,’" the petition said. Pesticide ingredient registrations and reviews take many years to complete. Considering the impacts of inert ingredients would likely add time and cost to the process.

CFS' petition also presses EPA to consider potential repercussions for endangered and threatened species based on the whole formulation of the pesticide, instead of only the active ingredients. EPA's Inspector General told the agency in June that it was falling behind in collecting information on interactions between pesticides and needed to do more to track the effects of mixing chemicals.

EPA is reviewing the petition, an agency spokesman said. The agency removed 72 inert ingredients from a list of approved chemicals for pesticides last December. A federal judge ruled last year that the agency is not legally required to disclose the chemicals.

ITC Sets Hearing on Canada Softwood Lumber

September 12 will be the date for a hearing on imports of softwood lumber from Canada, according to the U.S. International Trade Commission (ITC).

The agency is investigating U.S. industry claims Canada is dumping softwood lumber in the U.S. market and providing subsidies to its producers/exporters. If ITC finds material injury to the U.S. industry or that it is threatened with injury by the imports, softwood lumber imports from Canada would be hit with duties.

So far, the U.S. Commerce Department has imposed preliminary antidumping duties of up to 7.7% and preliminary anti-subsidy duties of up to 24.1% on imports of Canadian softwood. Those interested in appearing have until September 6 to make a request.

Washington Insider: Maybe Trans-Pacific Partnership Not Dead

Bloomberg is reporting today that the Trans-Pacific Partnership, thought to be dead in January after the U.S. withdrew, “may be ready to make a comeback.”

Supporters and detractors of TPP said the deal would not survive the U.S. withdrawal, but that judgment was premature, New Zealand Trade Minister Todd McClay told Bloomberg. He said, “momentum is building for the agreement.”

The report also notes that the presidents of Peru and Chile issued a joint statement earlier this month 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 this week to determine what options exist to move the agreement forward without the U.S. The Japan meeting in Japan is being billed as 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. President Trump withdrew the U.S. shortly after taking office, one of his first official acts as president.

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 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 changes "to the bare minimum" necessary to activate the deal, McClay told Bloomberg. The activation mechanism is a key point, since under the original agreement, ratification was necessary by countries representing 85% 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 argued that the 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.

While it seems unlikely that the U.S. administration will change its position on the TPP, it does seem that there is interest among some key ag groups, Informa Economics reported recently. The report noted that some U.S. commodity groups are “fretting about the growing number of trade agreements that do not include the U.S.”

For example, Jaime Castaneda, senior vice president at the National Milk Producers Federation, said U.S. producers "…have been falling behind for too many years, and our farmers and exporters are finding themselves having to compete with higher tariffs in key markets."

"Japan is just the latest example of additional benefits that Australia and the EU will have over the U.S.," he said. For example, in the new EU-Japan trade accord, Japan committed to eliminate a 4.3% tariff on high-quality cuts of pork over a 10-year period. Over the same period, the duty on low-quality cuts would drop from $4.33 per kilogram to roughly $0.45 per kilogram.

That deal nearly matches what U.S. pork producers would have had under the Trans-Pacific Partnership agreement. “Regarding beef, the EU-Japan deal will eventually reduce Japan's import tariff on beef from 38.5% to 9%. Australia and Japan reached a deal in 2015 that now gives Australian beef a 12% tariff advantage, which is growing by the year,” he said.

U.S. ag groups generally did not support the administration’s move toward isolation, and were hopeful that new Secretary Sonny Perdue would find a way to change at least some key hearts and minds across the administration. Perdue was given credit for softening the administration’s view of NAFTA several weeks ago, regarding its re-negotiation. However, the President and several of his key people continue to view U.S. trade deficits as fatal shortcomings while talks about restructuring NAFTA get underway.

Still, the administration has often seemed to be quite sensitive to ag interests, and access to foreign markets has long been a key area for the sector. So, any evolution in U.S. trade policy under either NAFTA or the TPP could be highly significant, a debate should be watched carefully as it proceeds, Washington Insider believes.

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