Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.South Korea Latest To Challenge US Antidumping, CVD Practices At WTO
Consultations at the World Trade Organization (WTO) with the U.S. concerning the Department of Commerce's use of "facts available" in antidumping and countervailing duty (CVD) investigations were requested by South Korea. The request was circulated to WTO members on February 20, according to a Geneva trade official.
The challenge revolves around WTO's Anti-Dumping Agreement. That agreement says if a firm targeted in an antidumping investigation refuses access to, or otherwise does not provide, necessary information within a reasonable period, or significantly impedes the investigation, a dumping determination may be made on the basis of the "facts available."
According to the request, besides challenging provisions of U.S. laws and regulations allowing Commerce to use facts available in antidumping and CVD investigations, it also takes issue with the department's practice of using adverse facts with regard to producers or exporters deemed to have failed to cooperate in the investigation. Specifically, Korea cites six antidumping and CVD determinations on certain products from Korea in which Commerce relied on adverse facts available when making its determination.
Rural Bankers Less Concerned Over Farmland Values
Rural bankers have grown less negative on farmland values, but remain bearish overall, according to the latest reading on banker attitudes conducted by Dr. Ernie Goss, Creighton University and the Rural Mainstreet Index survey of rural bankers in 10 Midwestern states from Colorado to Illinois.
The monthly farmland index rose to 46.3 from 42.2 for January, the report found, the highest reading since July 2014, but it is the 51st straight month the index has fallen below growth neutral 50.0. The monthly survey found banker attitudes toward their general economy shifted into positive territory. The overall index soared to 54.8 from 46.8 in January, the highest reading for the overall index since May 2014. The index ranges between 0 and 100 with 50.0 representing growth neutral.
Washington Insider: NAFTA Important to Rural Areas, Iowa Senator Says
Iowa Republican Senator Chuck Grassley has been a strong supporter of the president in many areas from his position as chair of the Senate Judiciary Committee. Bloomberg notes, however, that the senator recently worried publicly that the president risks triggering a “depression” in rural areas if he withdraws from NAFTA. He also urged the president to rejoin the Trans-Pacific Partnership trade agreement to counter China.
“Pulling out of NAFTA would be catastrophic for farmers, based on the fact that Mexico is our number one export market for corn,” Grassley told Bloomberg. “That could signal a real agricultural, at least Midwestern, agricultural depression.”
Grassley was part of a group of lawmakers who went to the White House recently to urge the president to stay in the North American Free Trade Agreement among the U.S. and Canada and Mexico, which are the second- and third-biggest destinations for U.S. farm goods after China.
Trump has denounced the accord as a “bad deal” for the U.S. and frequently threatened to scuttle it unless the three nations can agree to revisions. The talks have been contentious so far, and the next round will begin Feb. 25 in Mexico.
Residents of rural areas supported Trump strongly in the presidential campaign, but many farmers and farm groups also are strong supporters of NAFTA, as well. A disruption in trade flows with Canada and Mexico would be a financial hit in farming communities already struggling with low prices for corn, wheat, soybeans and other commodities. USDA says that farm returns this year could reach their lowest since 2006.
“I think he heard us,” Grassley said of Trump. “But he didn’t give one inch on the leverage that the threat of pulling out has to accomplishing his goals.”
The president has come under increasing pressure on trade policy from his fellow Republicans in Congress in recent weeks. In addition to warnings about pulling out of NAFTA, Republican lawmakers in a separate meeting this week challenged him on his vow to impose tariffs on steel and aluminum imports.
Treasury Secretary Steven Mnuchin said during testimony before the House Ways and Means Committee last week that he has had weekly meetings with U.S. Trade Representative Bob Lighthizer and was optimistic about getting a new deal on NAFTA.
Bloomberg said Grassley also sounded hopeful Trump will reconsider the Trans-Pacific Partnership, the 12-nation Obama-era trade pact the president trashed on the campaign trail and withdrew from early in his presidency. Trump told the press in a recent interview in Switzerland, that he might consider rejoining TPP if he could get a better deal for the U.S.
“I’m encouraged that the president said in Switzerland he might think about getting back in TPP,” Grassley said. “I would hope he would see that as very necessary, not only for the economic benefits for it, but because, since he has pulled out, it’s emphasized how nervous the other 11 countries are about China’s hegemony in that area, and that they will use it.”
The other 11 nations that were part of the pact reached a deal to press ahead with a revised agreement without the U.S. The original TPP, which would have covered 40 percent of the global economy, was seen as a guarantee of U.S. involvement in Asia and a counterweight to Chinese clout.
“If he’s really concerned about China, and I know he is concerned about China, then I think TPP would send a very clear signal that not only militarily, but we’re backing it up with our economic muscle," Grassley said.
Mnuchin said in his testimony that while Trump prefers bilateral trade deals, he has expressed an openness to rejoining the Pacific Rim trade agreement.
So, we will see. Rural support for this administration has seemed unshakable throughout the president’s tenure--but some of his policies, including those proposed in the recent White House budget, signal that ag may be much lower priority than supporters had hoped.
Senator Grassley would like to change that, of course, and Congress traditionally goes its own way in spite of presidential budgets. Certainly, Senator Grassley wants to rebuild a strong North American trade deal—and, he may achieve that--although many in the administration rely heavily on a narrow definition of “trade balance” to evaluate trade policies and decide which to dump and which to support.
As a result, it will be important to watch how the recent growth of NAFTA support in Congress plays out, especially amid the beginning debate on the reauthorization of the farm bill, Washington Insider believes.
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