Washington Insider -- Wednesday

Trade Sanctions and Complications

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

House Farm Bill Vote Late June Still In Focus

House farm bill proponents are actively meeting with individual members to press their case for the controversial bill, while a House vote on another controversial measure dealing with immigration reform must take place before some conservative GOP holdouts decide whether or not to change their prior no vote for the farm bill to yes.

The House now has until June 22 to reconsider the bill (HR 2) in its present form. Some congressional sources say another vote will likely take place before June 22.

Meanwhile, Senate Majority Leader Mitch McConnell, R-Ky., in an interview with the Wall Street Journal noted what was already very likely – the Senate's version of a new farm bill does not have to include expanded food stamp work requirements to pass that chamber, even though McConnell said he is personally in favor of such rules.

“We need to have a farm bill with or without the food-stamp work requirements,” McConnell told the WSJ.

Meanwhile, Senate Ag Chairman Pat Roberts, R-Kan., continues to negotiate with the panel's ranking Democrat, Debbie Stabenow of Michigan.

Also, the White House remains optimistic about getting a farm bill done. White House legislative affairs chief Marc Short said Friday the White House would likely need to play a role in helping the House and Senate iron out differences. Short also said that work requirements, which were opposed by House Democrats, were a “critical issue” to many Republicans — and one that they believed was popular with voters.

US To Push China Its Ban on Imports Of US Poultry: Reuters

Getting China to lift its ban on imports of U.S. poultry will be one of the focal points for USDA Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney when he leads a trade team to China this week, according to Reuters.

China imposed a ban on imports of U.S. poultry in the wake of the U.S. bird flu outbreak, but the U.S. maintains the ban is no longer justified as there have been no new cases of bird flu in the U.S. for more than a year.

China removed some restrictions on imports of U.S. poultry earlier this year, but has maintained the ban linked to the U.S. bird flu outbreak.

Washington Insider: Trade Sanctions and Complications

The Trump administration on Tuesday announced that it is going ahead with actions to crack down on Chinese trade practices by June 30. President Donald Trump is planning further export controls against China to counter Chinese intellectual property theft, including tariffs on Chinese tech exports believed to contain stolen American intellectual property.

"To protect our national security, the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology," an article in The Hill said.

A 25% tariff will be levied on $50 billion of tech goods imported from China, and the U.S. pledges in the statement to continue litigating the issue in the World Trade Organization. The list of affected goods will be released by June 15.

“Discussions with China will continue on these topics, and the United States looks forward to resolving long-standing structural issues and expanding our exports by eliminating China’s severe import restrictions.”

The move comes just days after Trump's trade representatives presented Chinese officials with a list of trade demands including a document asking China's government to slash its trade deficit with the U.S. by $200 billion by the end of 2020.

Just more than a week ago, Treasury Secretary Steven Mnuchin said that the trade war with China was “on hold,” with Chinese state media also reporting that Washington and Beijing had agreed to back off on tariffs.

The move to announce the tariffs comes ahead of Commerce Secretary Wilbur Ross's visit China this week for trade negotiations—an effort some question as Ross is seen as “increasingly marginalized, with his agency widely seen in the White House as a mess,” Politico says.

Despite being one of the administration’s leading protectionist voices early on, Ross was initially left off a May trade delegation to China led by Mnuchin.

But now Ross is heading back to China in early June in hope of cutting some type of trade deal that delivers on Trump’s campaign promises to extract concessions from Beijing on behalf of American workers.

Fans of Trump’s protectionist stance have been heartened — Ross “is one of the Trump trade champions, and he gets the issues,” said former Nucor steel CEO and Trump campaign adviser Dan DiMicco — but others say Ross taking the lead this time around is a dim sign for the talks.

“The fact that he is going over to China is a signal that the president has some confidence in him, said one former administration official. “But it’s also a signal that they are not expecting a whole lot. You would not send him if you were expecting real progress.”

Although Ross still plays a large public-facing role — just last week the president instructed him to examine potential tariffs on foreign cars — his stature internally on delicate trade negotiations has diminished amid perpetual jockeying between advocates of free trade and those, like Ross, who want to take a harder, more protectionist stance, Politico said.

Originally, Ross had hoped to play the alpha dog on trade policy. He tried to establish his dominance early on by launching a Commerce Department investigation into the effects of steel and aluminum imports on national security. He even maintained an office in the Eisenhower Executive Office building on the White House grounds, keeping him in close proximity to Trump.

But he apparently has been outmaneuvered by U.S. Trade Representative Robert Lighthizer, who quickly morphed into a power player and launched his own investigations into cybertheft and Chinese trade demands.

Ross also hurt himself politically when he brought back to the president two potential deals with China last year. One would have cut China’s production of steel, though some policy experts say China was already planning to so by closing some plants. The other deal would have allowed imported cooked chicken from China into the U.S. in exchange for opening up the Chinese market to U.S. beef.

In a meeting in the Oval Office, Ross tried to cast the beef deal as a big win, but the president viewed it as too small and a bad agreement. Now, Politico says that Ross remains invaluable to Trump because of his deep familiarity to China, but his political clout seems to be waning for a number of reasons.

Still, the President’s focus on trade — including announcing $50 billion in tariffs on Tuesday and negotiating over the Chinese electronics company ZTE — has put Ross in the middle of the biggest fights dividing Trump’s economic advisers.

Few administration officials, current and former, or close advisers to the White House believe Ross’ tenure at Commerce is in jeopardy, even if some White House officials believe Commerce could be doing more given its broad portfolio and mandate.

Now, Politico says a former administration official characterized the commerce secretary’s role as fluid, typical in a White House where the president likes to assemble a team of rivals and hear different viewpoints.

“At particular points in time, the president will look to one of the principals more than the other. That changes day to day, and week to week, month to month,” said the official. “The campaign was the same way. That is how the president utilizes the best talent for the best time.”

So, we will see. Clearly, evaluating the U.S. trade policy is not for the faint of heart—and political concerns are deepening as the administration seems to have difficulty sorting out its goals and approach. While support for a “get tough” policy on China certainly has supporters, it also has critics—and, many worriers. This is a fight producers should watch closely as it emerges, Washington Insider believes.

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