Washington Insider - Friday

Agriculture and Politics

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

NAFTA 2.0 Update

Top Trump administration officials have reportedly told Canada and Mexico there is "no give" on the part of the U.S. when it comes to negotiations, but veteran trade policy observers say this is yet another of the Trump team's negotiating tactics.

Meanwhile, USDA Secretary Sonny Perdue in Indianapolis yesterday revealed he met this week with President Donald Trump, U.S. Trade Representative (USTR) Robert Lighthizer, Commerce Secretary Wilbur Ross and others for an update on NAFTA 2.0. Perdue said they believe "all three countries really want a deal at the end of the day." Like others, including Ross, Perdue said negotiations are still in the early stages and that most of the hard lifts in decisions will come in the waning days of talks.

Brazil Ag Ministry Seeking Duty-Free Quota for 750,000 Tonnes Of Wheat

A downturn in wheat production due to a combination of lower acreage and unfavorable weather is prompting Brazil's agriculture ministry to seek approval from the country's foreign trade chamber Camex for a duty-free import quota of 750,000 metric tons of wheat from outside the Mercosur trade bloc.

One of the exporters eyeing the market is Russia, and the head of Brazil's food safety agency told Reuters a big hurdle is that the issue of a bilateral phytosanitary agreement between the two countries had been resolved. As for U.S. wheat, Brazil has ranked anywhere from fifteenth (2012/13) to second (2013/14) in terms of importers of U.S. wheat. They were the seventh largest buyer in 2016/17 with 1.207 million metric tons. Currently, export commitments to Brazil total 94,900 metric tons for 2017/18 (all shipped) compared to nearly 1 million metric tons at this point one-year ago which were mostly shipped.

Washington Insider: Agriculture and Politics

From the earliest days of this administration, the strong political support it received from rural voters has been emphasized by the media. Now, however, a number of reports focus on a somewhat different theme — rural disaffection. For example, Politico reported that “there is growing evidence that the U.S. withdrawal from the TPP is taking a sharp toll on rural America.”

In addition, Politico notes that both Vice President Mike Pence and Agriculture Secretary Sonny Perdue were widely known as free traders before joining the administration but now are hard pressed, and even directly critical, as they defend the president’s desire for “beautiful” new trade deals to replace the TransPacific Partnership and his continued pressure on NAFTA.

Bloomberg also reported this week that an intra-agency fight is forcing USDA to backtrack on its plan to move the Codex agency, which develops science-based international food safety standards, to a new trade and foreign affairs office.

Agriculture Secretary Sonny Perdue notified Congress of the delay earlier this month in a letter to Senate Agriculture Committee Chairman Pat Roberts, R-Kan., The Secretary said the Codex move merits “further discussion given issues raised by stakeholders,” including 94 public comments in response to a Federal Register notice, feedback during meetings, and discussions with the administration.

Why the administration, and USDA, decided the Codex move was a good idea is hard to fathom, a number of former administrators argued. The office, an interagency partnership that engages stakeholders in creating food standards, is currently housed in USDA's Food Safety and Inspection Service. The plan was to move it from FSIS to the newly created Trade and Foreign Agricultural Affairs office.

The proposals received significant support from a variety of stakeholders, according to Perdue's letter, but some also “expressed concerns,” he said. The USDA realignment was a part of the plan to “improve coordination on trade and international activities.”

The Food and Drug Administration opposed the move in a strongly worded letter that warned that “folding U.S. Codex under trade leadership could undermine the scientific credibility of U.S. delegations and U.S. positions at Codex.”

The letter added that transfer of the U.S. Codex Office under a trade umbrella would build a perception that the United States “places a stronger priority on advancing trade over public health.”

“The strength of the U.S. Codex efforts rests on its scientific efforts,” the letter said. “FDA is highly concerned that this would compromise the effectiveness of U.S. delegates who participate in Codex, a majority of whom are from FDA.”

The letter lays out the strong relationship the FDA and the Codex office have had since the 1960s. It also said that a panel of the National Academy of Public Administration was assigned by Congress in fiscal 2015 to assess USDA reorganization, and it opposed moving the office. Perdue criticized the FDA letter during a public forum earlier this month, saying if the FDA made an intra-agency move he wouldn't “write the press and complain about it.” He said that, it's unfortunate that we didn't have the opportunity to discuss this with my [FDA] counterparts.”

Well, it is unlikely that many of the rank-and-file ag supporters care much about exactly where the U.S. Codex office is located, but they certainly do care a lot about access to foreign markets, including Mexico and Canada and elsewhere—so the notice being given to the U.S. NAFTA discussions can be expected to have much more direct impacts on USDA’s day to day operations.

Thus, the Secretary is widely expected to build administration support for global market access for U.S. products, and work against efforts that undercut access already gained—even though this may be difficult given the anti-trade inclinations of many current officials, Washington Insider believes.

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