Washington Insider -- Tuesday

Farm Bill Conference Tensions

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

China Hits Back at USMCA Provision Aimed at Them

A provision in the U.S.-Mexico-Canada Agreement (USMCA) is drawing the ire of China. Commerce Secretary Wilbur Ross described article 32.10 of the USMCA as a "poison pill."

According to the text of the USMCA agreement, "For purposes of this article, a non-market country is a country that on the date of signature of this agreement at least one party has determined to be a non-market economy for purposes of its trade remedy laws and is a country with which no party has a free trade agreement."

If a party to USMCA enters into an free-trade deal with a non-market economy, other parties to USMCA could then terminate the trilateral agreement on six-month notice. That party and the other remaining USMCA member would then revert to a bilateral trade deal "comprised of all the provisions of this agreement, except those provisions the relevant parties decide are not applicable as between them," per the agreement text.

Inclusion of the provision was as "another move to try to close loopholes," Ross said in an interview with Reuters. He added China was trying to "legitimize" its unfair practices on issues like intellectual properties (IP) and subsidies – which the US has taken action against – by protecting them in new trade agreements with other nations. The USMCA provision, in turn, is meant to constrain China's ability to do that – at least with Canada and Mexico.

China sees the provision, favored by the U.S., as a means to muscle it out of any potential future FTAs with Canada or Mexico. Spokesperson for the Chinese Embassy in Canada, Yang Yundong, was sharply critical of article 32.10. He accused the provision of "fabricating the concepts of 'market country' and 'non-market country' outside the World Trade Organization framework."

Further, in words aimed squarely at the U.S., Yang remarked, "We condemn the hegemonic acts by related countries of publicly interfering with the sovereignty of other countries, and we feel sorry for the damaged economic sovereignty of the countries concerned."

Perdue Says USDA Should Oversee Cell-Based Meat, But FDA Has Early Role to Play

Before an upcoming meeting this month by USDA and FDA delving into the regulatory and labeling policy questions on cell-based meat, USDA Secretary Sonny Perdue said he believes FDA has a role to play early on, but that USDA should have oversight of the products once they reach the commercial stage, which cell-based meat developers predict could be as early as 2020.

Perdue said he is not aware of any timeline by which the agencies would like to have a regulatory decision made on cell-based products.

“They just asked us to work together and help define as this new technology comes about, and we look forward to working with FDA,” Perdue said referring to the upcoming October 23-24 meeting. “We believe that FDA has some equity at the beginning of this process in the laboratory in making sure they’re safe products that could be commercialized. When they come to the commercial stage, we think that’s USDA’s responsibility to regulate and to inspect those products, and that’s what we will work towards.”

Perdue said his thinking is in line with an August 23 letter penned by cell-based meat developer Memphis Meats and the North American Meat Institute (NAMI), which asked USDA and FDA to “coordinate and collaborate in their efforts, consistent with established policy.”

Washington Insider: Farm Bill Conference Tensions

Amid recent deep political tensions over a Supreme Court nomination, efforts to reauthorize the expiring 2014 Farm Bill have been largely pushed off the front page of many ag focused publications. However, POLITICO is reporting this week that this fight, too, is tough and may be getting tougher.

The report says House and Senate agriculture leaders “emerged from an hour-long meeting in the basement of the Capitol on Thursday trying to send a signal of unity by posing for a photo with locked arms. “Behind the scenes, however, talks have been slow and tense.”

The expectation had long been that House insistence on implementing new work requirements for the Supplemental Nutrition Assistance Program would sink the whole bill, “at least politically,” POLITICO says. But deep differences between the two chambers on farm subsidies and other spending priorities have stymied progress as lawmakers have met over the past several weeks — so much so that SNAP has barely been a focus. The report lists several “flashpoints.”

The first is the Conaway-Stabenow dynamic. Politico says that amid “the slow rolling talks” a public standoff has emerged between House Agriculture Chairman Mike Conaway, R-Texas, and Senate Agriculture ranking member Debbie Stabenow, D-Mich., even as Senate Agriculture Chairman Pat Roberts, R-Kan., has raised similar objections to House proposals during closed-door meetings. The Conaway-Stabenow friction has been driven by a combination of personality, policy and party politics, POLITICO thinks.

The next issue is a very old fight re-kindled – the current impasse regarding how the farm subsidy pie is to be divvied up among regions of the country. Stabenow and Roberts oppose House provisions that the Congressional Budget Office (CBO) says would send more cash to farmers in the Southern Plains, including $577 million to cotton growers, a top constituency in Conaway’s West Texas district.

Politico also says that House ag chair Conaway isn’t thrilled, either, about how the Senate bill would eliminate a $2 billion perk for rural utilities that borrow from the federal government – a tradeoff that opens up funding for a number of Stabenow’s priorities, including initiatives promoting renewable energy development and local and regional food, research funding for urban and indoor farming, and assistance for beginning farmers and ranchers.

In a somewhat odd note, POLITICO reports that disputes between Conaway and Stabenow over commodity policy have taken up much of the oxygen in talks among the so called Big Four and cites House Agriculture ranking member Collin Peterson, D-Minn., who says “[Conaway] and Stabenow are fighting over this stuff and Pat and I just sit and look at each other and roll our eyes,” the Minnesota Democrat told POLITICO last week.

In addition to noting frictions among farm bill conferees, POLITICO thought it newsworthy that USDA Secretary Sonny Perdue “hailed the new North American trade pact as a big win for U.S. agriculture” – although he joined “other ag groups” by noting that he thinks “the negative impact of retaliatory tariffs on U.S. producers is stepping all over the good NAFTA news.”

“We do know that it has some dampening effect on the benefits for agriculture in this agreement, so we look forward to that being resolved very soon,” Perdue said. He observes that major trading partners like China, Canada and Mexico have stuck tariffs on U.S. agricultural goods in retaliation for President Trump’s duties on steel and aluminum. Other observers are suggesting that administration objectives for the trade fight suggest that a “quick resolution” is increasingly unlikely and could continue to be a headache for the Secretary for some time into the future.

So, we will see what the outcome for the farm bill reauthorization fight turns out to be. However, it is not unusual for farm bills to be late, sometimes very late. And this year budget hawks are deeply dug in over plans to toughen work requirements for the nutrition programs – and to reduce overall spending for numerous sections of the proposed bill; issues that seem very likely to be sources of conference fights at some future point, even if they are not at the top of the “tensions” list now – issues producers should watch closely as the conference continues, Washington Insider believes.

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