Washington Insider -- Monday

Presidential Shift on China Trade?

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

EPA Chief Says New WOTUS Definition Nearly Complete

The Trump administration has nearly finalized a much-awaited revised definition of which waterways are subject to the agency's jurisdiction under the Clean Water Act (CWA), Acting EPA Administrator Andrew Wheeler said this week.

The White House Office of Management and Budget (OMB) is currently reviewing the proposal and EPA hopes to publish it for public comment by the end of November, Wheeler told attendees of the National Chicken Council's annual conference in Washington, D.C.

Wheeler said the new definition of "navigable waters" will be consistent with the views of the late Supreme Court Justice Antonin Scalia and will make clear that federal jurisdiction under the law "only includes relatively permanent waters and wetlands with a continuous surface connection to relatively permanent waters."

The new definition is likely to draw support from farmers and developers who have long been frustrated with the EPA's effort to define which waters may be subject to federal permitting requirements under the CWA.

Agricultural interests, pesticide manufacturers, homebuilders and other industry groups say the Obama-era WOTUS rule illegally expanded federal authority. The National Association of Manufacturers filed suit to block the rule, as did attorneys general from 30 states.

"The previous administration's 2015 rule wasn’t about water quality, it was about power," he told attendees of the NCC conference. "Power in the hands of the federal government, power over all of you."

The new definition will clarify the question of jurisdiction, he said, adding that critics fail to realize the reach of state oversight of U.S. waters.

Perdue Lauds Work At WTO to Facilitate Biotech Regulation

Several countries are banding together to address emerging biotechnology efforts via the World Trade Organization (WTO) as they seek to preserve these new tools that hold promise for the future for global agriculture.

An October 26 joint communique circulated at the WTO Committee on Sanitary and Phytosanitary Measures by the U.S., Argentina, Australia, Brazil, Canada, Guatemala, Honduras and Paraguay is being hailed by USDA Secretary Sonny Perdue.

There are expected to be benefits for farmers around the world, Perdue observed. “Precision biotechnologies such as genome editing hold great promise for both farmers and consumers around the world," he said in a statement. "These tools can play a critical role in helping farmers address many of the production challenges they face while improving the quality and nutritional value of foods available to consumers worldwide."

Countries call for collaborative, science, risk-based regulatory approach Precision biotechnology techniques are "an essential tool for agricultural innovation," the group wrote, adding new discoveries hold the promise of providing "farmers with access to products that increase productivity while preserving environmental sustainability." The nations pledged to "coordinate efforts to ensure that the regulatory approaches for these techniques, which include gene editing, are scientifically based and internationally harmonized."

Regulators should use science- and risk-based approaches "consistent with the protection of human, animal and plant health and the environment" when crafting a regulatory framework to assess new biotechnologies, the group said. "Cooperative work by governments to minimize unnecessary barriers to trade related to the regulatory oversight of products of precision biotechnology, including the exploring of opportunities for regulatory and policy alignment, should be pursued where possible," they argued.

Washington Insider: Presidential Shift on China Trade?

There is a great deal of talk about trade policy these days, and mostly no one knows what to make of it. The “get tough” policies are seen as baggage in some tight political races, especially in the Midwest — although pundits still see the President as strong.

In addition, some criticize what they call a “newfound zeal to resolve his trade war with China,” that could risk “hitting some familiar obstacles, including himself.” Bloomberg says.

The context is that the President set up a call with Chinese President Xi Jinping on Thursday, the first between the leaders in six months. Afterward, he directed his Cabinet to draft potential terms for a trade deal he could agree to with Xi at the G20 conference in Argentina at the end of the month,” Bloomberg says.

The President then Twittered that “those discussions are moving along nicely.” At a campaign rally in Columbia, Missouri, he added: “They want to make a deal.”

However, Bloomberg says it sees plenty of reasons for pessimism. This includes discord among Trump’s trade team with U.S. Trade Representative Robert Lighthizer opposed to a push for a deal at the G20 as White House economic adviser Larry Kudlow also downplayed the potential for a quick deal.

“We’re doing a normal, routine run-through of things we already put together and normal preparation,” Kudlow said on CNBC Friday. “OK, there’s no mass movement, there’s no huge thing, we’re not on the cusp of a deal.”

Peter Navarro, director of the National Trade Council within the White House, struck a similar wait-and-see note on Saturday about the coming meeting. “We’re going to be fine regardless of what happens in Argentina,” Navarro said, adding that trade talks with China are “more difficult” than those with other countries.

Then, Bloomberg raises questions of its own. It notes that Trump has a history of agreeing in principle to deals before backing out. Also the president “has previously made concessions to U.S. adversaries that have drawn backlash from both Democrats and Republicans.”

For example, last May, after his last phone call with Xi, Trump agreed to ease up on sanctions imposed on Chinese telecom equipment maker ZTE Corp that was roundly lambasted in Congress.

“If this does turn out to be ZTE round 2, the president will be attacked by Democrats, and some Republicans, for talking a huge game on China but instead being played,” said Derek Scissors, a China expert at the American Enterprise Institute.

His critics say Trump also gave away too much to North Korean leader Kim Jong Un in negotiations over Pyongyang’s nuclear weapons program, with little to show in exchange – and also was too conciliatory toward Russian President Vladimir Putin at their summit in Helsinki.

And Trump’s history of reneging on agreements is presumably well understood in Beijing, Bloomberg said.

President Trump revoked his government’s support for a joint statement following the G7 conference in Canada after Canadian Prime Minister Justin Trudeau criticized U.S. steel and aluminum tariffs. He backed out on a deal congressional Democrats said they struck with Trump to provide legal status to young undocumented immigrants.

China has repeatedly questioned the U.S.’s sincerity in trade talks, wary of agreeing to something only to have Trump change his mind.

In addition, much remains unclear about Trump’s current posture toward China. For example, it’s unknown whether he is considering relenting on his administration’s hard line against China’s theft of U.S. intellectual property, which some see as a “key sticking point” in any potential deal.

A Chinese state-owned company was charged on Thursday with stealing technology from U.S. chipmaker Micron Technology Inc., part of a Justice Department crackdown against China in cases of suspected economic espionage.

Trump has imposed tariffs on $250 billion in Chinese imports and has threatened to slap duties on everything else the country ships to the U.S. But that would mean raising prices on billions of dollars’ worth of U.S. consumer products, a category the administration has so far mostly avoided.

Stocks surged in Hong Kong and China on the report of constructive talks between Trump and Xi, while the offshore yuan jumped as much as 0.5% for the biggest two-day gain since August. The Hang Seng Index rose 4.2%, the biggest gain since 2011, and the Shanghai Composite Index climbed 2.7%, posting a fourth day of gains for its longest winning streak since February.

Actually U.S.-China talks have made little progress since May, when Trump put a stop to a deal that would have seen China buy more energy and agricultural goods to narrow the trade deficit. In Beijing that move was seen as an insult to Xi, who sent a personal emissary to Washington for the negotiations, and cemented a view that Trump’s real goal is to thwart China’s rise.

In the telephone conversation on Thursday, both sides reported that they had constructive discussions on North Korea and trade, with Chinese state media saying that Trump supported “frequent, direct communication” between the presidents and “joint efforts to prepare for” the planned meeting on the sidelines of the Group of 20 summit.

So, we will see. There is little evidence that either side is willing to move much on the issues involved, so the fight remains one producers should watch closely as it proceeds, Washington Insider believes.

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