Washington Insider -- Monday

More Pressure on NAFTA Talks

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

Perdue Might Back Export RINs

President Donald Trump directed USDA Secretary Sonny Perdue and EPA Administrator Scott Pruitt to review an option that would allow exported ethanol to qualify for biofuel credits or Renewable Identification Numbers (RINs).

Perdue said he could support the option if EPA offsets the impact of waivers from the RFS that increasingly have been provided to refiners. “We are fine with that as long as the previously waived gallons that took us down below 14 billion gallons be reallocated” in future mandates to get domestic ethanol usage to the 15 billion gallons required by law, he said. “We think E15 will grow the market, and we believe the export market can grow, which will make our corn farmers have more demand for which we are delighted,” Perdue said.

Even if the export/RIN plan is implemented, it would likely be challenged in court, with opponents noting it is not allowed by the underlying RFS law.

Refiners, meanwhile, could head to the courts to block the vapor pressure waiver necessary to allow year-around sales of E15.

USDA's Perdue on Next Leg of Bus Tour with Farm Bill as Backdrop

On the heels of his April visits to Michigan, Ohio and Kentucky, USDA Secretary Sonny Perdue will hit the road again to hear concerns and questions related to agriculture policy from the public in a four-state swing through New Mexico, Colorado, Nebraska and Wyoming. The bus tour will start May 14 in Santa Fe, New Mexico and conclude May 17 in Alliance, Nebraska.

“This tour is another great chance to escape Washington and meet face-to-face with America’s farmers, ranchers, producers, and foresters,” Perdue said. “We want to take our message directly to the American people and give them an opportunity to express their ideas and concerns. As Congress and the Administration continue their work on important issues like rural infrastructure, trade, and the Farm Bill, USDA stands ready to give the agriculture community a voice."

A subject likely to feature highly during the tour, as it has on previous ones, is trade. Questions that could arise include how USDA intends to respond should trade tensions escalate further with China, and the current outlook for ongoing North American Free Trade Agreement (NAFTA) negotiations.

Washington Insider: More Pressure on NAFTA Talks

Well, there was lots of news on trade this weekend, but not many details. The President met with automakers and generated press attention with a proposal for a 20% tariff on vehicles brought into the United States. He also mentioned imposing “stricter emissions standards for imports than for domestic automobiles,” the Wall Street Journal said.

Bloomberg also reported that House Speaker Paul Ryan, R-Wis., said he needs notice of a NAFTA deal by May 17 if the current Congress is going to be able to vote on proposed changes. Bloomberg concluded that current NAFTA talks are pushing up against the constraints of US trade law—even as the President continues to deride the existing pact.

President Trump repeated his disdain for the North American Free Trade Agreement on Friday, telling auto executives that he’d “never been a NAFTA fan” and calling it “one of the worst trade deals in history” during a meeting at the White House, Bloomberg said.

Ryan had noted last week that U.S. Trade Promotion Authority regulations mean a looming deadline for the Trump administration if it wants to pass a new agreement before the next Congress is sworn in.

Ryan said, “As the author of TPA, I can tell you, we have to have the paper, not just an agreement, we have to have the paper, from USTR by May 17 for us to vote on it this year, in December, in the lame duck,” He noted the date, and shrugged saying “that he would let others draw conclusions about the feasibility of meeting that deadline.”

Ryan was referring to the next step of NAFTA talks, spokeswoman Ashlee Strong said. If a deal is reached, the Trump administration would send a letter to Congress giving 90 days’ notice of its intent to sign a deal and text of a deal must be published 30 days after that. “This is not a statutory deadline, but a timeline and calendar deadline,” Strong said.

Negotiators are working to meet that goal, but they won’t sacrifice quality for timing, Mexican Economy Minister Ildefonso Guajardo told reporters on Friday.

The comments put the firmest deadline yet on NAFTA talks, Bloomberg said, but noted that “it may not actually be that firm.” Many trade observers have said US deadlines are murky, and that a deal reached later in May or even in June could theoretically get passed.

USTR Robert Lighthizer has indicated he needs a deal this month but hasn’t publicly identified a particular date. Congressional staff on committees responsible for trade told Bloomberg on Thursday that they weren’t aware of a hard deadline for the administration to give Congress text of the agreement.

Ryan highlighted unresolved issues, such as investor-state dispute panels that he favors but Lighthizer wants to water down and agriculture, a key sector in the Speaker’s home state of Wisconsin. He appeared to be skeptical a deal could be completed in time.

“I don’t want to make news, but we’ll see if they can get this done by May 17 and get us the paper to Congress, which then we could have this vote in December. If they can’t, then we won’t,” he said, adding, “May 17th, you’ll find out.”

So, the future of NAFTA remains murky. Bloomberg noted that the existing NAFTA remains on the books unless a country withdraws, which would require six months’ notice. No country has given that notice though Trump has threatened to do so. Lighthizer has said the political calculus for passing a new NAFTA would change if it had to be voted on by the next Congress.

Ryan met Thursday with Canadian Foreign Minister Chrystia Freeland in Washington and the two discussed US trade law and the impending timelines. A NAFTA deal “will take as long as it takes,” she said. Freeland was twice asked Thursday by reporters whether Ryan mentioned a deadline of next week and didn’t specifically answer.

“I think the rules are set out quite clearly in the TPA legislation, and it was certainly useful for me to hear directly from some of the people who actually wrote it how they see that process playing out,” she said. When pressed, Freeland added: “We discussed how the TPA legislation could come into play.”

If this all seems obscure to you, you’re not alone. Congressional discussions are often fairly opaque, but this seems unusually so. The Speaker casually noted that it would be clearer on May 17 — but Bloomberg adds a “maybe not,” likely to raise the temperatures of many ag groups who are intensely interested in the future of NAFTA and current ag trade prospects in particular. Certainly, the trade policy debate and the future of NAFTA are issues producers should watch closely as this fight proceeds, Washington Insider believes.

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