Washington Insider -- Thursday

NAFTA and the Debate Over Labels

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

Trump Administration Requests TPA

The formal request for a three-year extension of Trade Promotion Authority (TPA) has formally been made by the Trump administration, as was expected. "I hope my administration can continue to work with the Congress to pursue new and better trade deals for America's workers, farmers, ranchers, and businesses," Trump said in a message to Congress. "Extension of trade authorities' procedures is essential to fulfill that task and to demonstrate to our trading partners that my administration and the Congress share a common goal when it comes to trade." But the process in Congress will not be an easy one despite Republicans controlling both chambers of Congress.

The prior TPA approval in 2015 was a difficult process, and that is expected to potentially be repeated given the administration's trade actions taken to-date. Congress will seek to "emphasize that the administration must adhere to the TPA negotiating objectives and to encourage the president to seek new agreements with our trading partners" as they move through the TPA process, Senate Finance Committee Chairman Orrin Hatch (R-Utah) said at a Washington meeting held by the Business Roundtable and Farmers for Free Trade.

House Farm Bill Process Remains Stalled

House Agriculture Committee Democrats remain opposed to suggested changes to the Supplemental Nutrition Assistance Program (SNAP), according to a brief statement released by the panel's Ranking Member Collin Peterson (D-Minn). "The Democratic members of the Agriculture Committee are unanimous in their opposition to the extreme, partisan policies being advocated by the Majority. This opposition will not change," Peterson said.

Meanwhile, House Ag Committee Chairman Mike Conaway (R-Texas) told reporters getting the Fiscal Year (FY) 2018 omnibus spending package cleared would free up time for the farm bill. "Getting that big piece of legislation off the table will free up a whole lot of bandwidth," Conaway said. As for the division on SNAP/food stamps, Conaway said, "The plan has always been that once the ranking member and the chairman sign off on language, then it's released. And I can't get my ranking member to sign off on the language."

Washington Insider: NAFTA and the Debate Over Labels

There is widespread concern about the outcome of the NAFTA discussions, especially among ag groups. However, the New York Times is reporting this week that these talks have "veered" into one of the world's most pressing health issues: fighting obesity.

The Times said that "urged on by big American food and soft-drink companies, the Trump administration is using the trade talks with Mexico and Canada to try to limit the ability of the pact's three members to warn consumers about the dangers of junk food.

The administration's position, NYT said, could help insulate American manufacturers from pressure to include more explicit labels on their products, both abroad and in the United States. At the same time, health officials worry that it would also impede international efforts to contain a growing health crisis.

Officials in Mexico and Canada -- along with governments in Brazil, Peru, Uruguay, Argentina and Colombia -- are discussing options like the use of colors, shapes and other easy-to-understand symbols that warn consumers of health risks. They were inspired in large part by Chile's introduction of stringent regulations in 2016 that include requirements for black stop-sign warnings on the front of some packages.

But the Office of the United States Trade Representative, which is leading the NAFTA talks on the American side, is trying to head off the momentum. It is pushing to limit the ability of any NAFTA member to require consumer warnings on the front of sugary drinks and fatty packaged foods, the Times said. The American provision seeks to prevent any warning symbol, shape or color that "inappropriately denotes that a hazard exists from consumption of the food or nonalcoholic beverages."

The Trump administration's position on food labeling reflects the desires of a broad coalition of soft-drink and packaged-foods manufacturers in the United States, NYT said.

The Grocery Manufacturers Association said it favors voluntary labeling programs, and it is fighting to keep Chile's model from being adopted more widely. Roger Lowe, a spokesman for the group -- whose board members include executives from Coca-Cola, PepsiCo and Mondelez International, which owns brands like Oreos, Chips Ahoy and Ritz crackers -- said it was concerned about the "evidence and impact" of Chile's laws.

Proponents of more explicit labels said the Trump administration's proposal and the corporate pressure behind it hold the potential to handcuff public health interests for decades.

"It is one of the most invasive forms of industrial interference we have seen," said Alejandro Calvillo, the founder of El Poder del Consumidor, or Consumer Power, a health advocacy group in Mexico that was illegally targeted with government spyware when it fought for a soda tax in Mexico. "The collusion between the industry and the government is not only at the level of spying -- it reaches the level of the renegotiation of NAFTA and the nation's own policy against obesity."

The American proposal conflicts with the guidance from Mexico's national health institute and from the World Health Organization. Both have recommended that Mexico pass regulations to help combat diabetes, which claims 80,000 lives a year there -- more than double the record number of homicides in the nation in 2017.

Public health experts have hailed Chile's rules as a new standard and food companies have been forced to take note. Over the past two years, more than 1,500 products have been reformulated to make them healthier and to avoid having to carry a warning logo, according to AB Chile, a food industry association. Today, Chile's success has inspired nutrition advocates around the world, including those in Mexico.

Heading off pressure for more explicit warnings through the NAFTA negotiation is especially appealing to the food and beverage industry because it could help limit domestic regulation in the United States as well as avert a broad global move to adopt mandatory health-labeling standards.

In most cases, trade law allows governments to retain the right to make rules in the interest of public health, experts say, but the proposal by the United States appears to be aimed at curbing that.

Ms. Jones of the George Institute said research found that trade policy had also been used to try to block efforts to adopt warnings in Ecuador, Peru, Thailand, Chile and Indonesia. Chile has moved forward as has Ecuador, but with a less aggressive labeling system, Ms. Jones said.

Thailand and Indonesia "appear to have been deterred," she said, adding, "We call this 'regulatory chill.'"

Mexicans drink on average more than 44 gallons of soda a year per person, eclipsing what are considered high consumption rates in the United States. In some remote areas of the country, soda is more readily available than clean drinking water.

So, it is not clear what the impact of adding another controversial issue to the fight over NAFTA rules, but it is clear that tacking controversial rules to trade talks often damage U.S. producers -- as has been the case with the long-standing Cuban trade embargo.

Regardless of the importance of the obesity fight, it would be damaging to U.S. producers -- likely needlessly so -- if NAFTA were weakened over an unrelated issue, a possibility producers should examine closely as the talks continue, Washington Insider believes.

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