Washington Insider -Wednesday

NAFTA Popularity in Congress

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

Commerce Releases Reports On Potential Actions under Section 232 Trade Investigation

Details of the Department of Commerce's investigations into the impact on U.S. national security from imports of certain steel products and from imports of aluminum were released February 16, recapping the investigations carried out under Section 232 of the Trade Expansion Act.

On steel, the agency recommended a global tariff of at least 24% on all steel imports from all countries, or a tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or a quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States. On aluminum, the report listed options including a tariff of at least 7.7% on all aluminum exports from all countries, or a tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or a quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

GOP Senators Call On Trump to Rejoin TPP

The US needs to rejoin the Trans-Pacific Partnership (TPP) agreement, signaling they would help get the administration's trade nominees approved quickly if President Donald Trump would get the US back into the pact.

"We recognize that such an endeavor requires the confirmation of your qualified nominees within the Office of the US Trade Representative, Department of Commerce, and other trade-related federal agencies," Sen. Steve Daines, R-Mont., and other Republican senators said. "We are committed to securing their expeditious consideration on the Senate floor." Trump pulled the US out of the pact in one of his first actions after becoming president, but recently signaled he would consider rejoining the pact if it could be improved substantially. The lawmakers said rejoining TPP would help keep the economic improvements they say have come from Trump's actions to scale back regulations and the tax reform effort.

Washington Insider: NAFTA Popularity in Congress

The 2016 presidential race included strong opposition to trade from both candidates, and the three-nation NAFTA agreement came in for especially bitter denunciation. Now, however, The Hill is reporting that national enthusiasm for pulling out of NAFTA may be weakening. The groups says NAFTA is getting a “rousing” defense in Congress “even as the administration moves to renegotiate it or scrap it altogether,” The Hill says this week.

Business advocates of the 24-year-old agreement have become significantly more interested in the pact recently. For example, groups such as the US Chamber of Commerce along with a growing number of lawmakers are strongly urging the White House to finish its “updates” and resist any urge to withdraw from the agreement.

John Murphy, senior vice president for international policy at the Chamber, said he was surprised during this week’s NAFTA lobbying blitz on Capitol Hill at how much lawmakers have ratcheted up their engagement in the past few months. He called it a “sea change” since last October.

He also said that the consensus on Capitol Hill is to update the deal and avoid poison pills that could doom it. “They are strongly supportive of modernizing the agreement and lawmakers are pushing back against unconventional approaches that would reduce trade and push production offshore,” Murphy said.

The Chamber had about 150 business representatives who visited a mix of 280 Republican and Democratic House offices recently.

Last fall, the Chamber warned that several of the U.S. proposals could torpedo the entire deal and they urged the Trump administration to “do no harm” as negotiations continue.

Christine Bliss, president of the Coalition of Services Industries, also said she was pleased with what she heard during her visits to lawmakers’ offices recently. “Members increasingly seem to understand that NAFTA has a positive impact on jobs and growth in their districts. It’s really resonating,” she said.

Bliss said the voices of support are growing louder on the Hill, helping to drown out President Donald Trump’s regular calls to withdraw. “We’ve been trying to drive the message home and it does seem to be getting through,” she said.

As negotiations continue, business groups are insisting that threatening to leave the deal is not the best approach for the administration to reach a revised agreement.

At a White House meeting with Republicans and Democrats last week, USTR Robert Lighthizer insisted that the administration was making progress in the talks. “There was a lot of anxiety at one point as to whether or not we'd be in a position where we would have to withdraw in order to get a good agreement,” he acknowledged, strangely.

Recently, however, the nation’s top trade official built a case for bipartisan support for the agreement instead of leaving the deal. He said he hoped to gain the support of about two dozen Senate Democrats as well as a large number of Democrats in the House.

Still, Lighthizer argued that NAFTA has not served the United States well in all respects. “It has served some people very well, but other people and overall it has not done a good job,” he said.

“I think we're making real headway. We have a number of issues that we still have to work our way through, but I'm hopeful that we'll be in the position — I think that most important — to get a good deal, one that you'll find acceptable."

So, The Hill reports that as the administration “has kept the specter of withdrawal hovering over the NAFTA talks, lawmakers have turned their focus to arguing that abandoning the deal would hurt economic growth, cut into stock market gains and cost jobs.”

In fact, a bipartisan group of lawmakers including Rep. Dave Reichert, R-Wash., chair of the House Ways and Means trade subcommittee, made the trip to the sixth round of NAFTA talks held recently in Montreal, urging the U.S. to remain at the table.

So, we will see. Certainly, the shift to support of NAFTA will be hard for more than a few administration officials, but not for the many ag groups whose main objective has long been to avoid weakening the currently strong U.S. position in important North American ag product markets. For these, the shift in administration attitudes The Hill detects will be good news if it continues to strengthen. Clearly, the NAFTA talks should continue to be watched closely by producers as they proceed, Washington Insider believes.

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