Washington Insider -- Monday

New NAFTA Could Hit Bump in Congress

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

FDA Extends Comment Period on Plant-Based Milk Labeling

In a move welcomed by dairy producers, FDA announced November 15 that it will extend the comment period on whether the agency should continue the practice of allowing plant-based products to bear dairy terms on their labels.

The comment period was originally scheduled to close November 27, but the agency has now decided to extend the comment deadline until January 25. The National Milk Producers Federation had sought a 120-day extension on the situation.

FDA issued a request for information (ROI) on September 27, in an effort to gauge the extent to which consumers understand the nutritional differences between plant- and animal-based dairy products before ultimately deciding whether to continue the controversial practice of allowing plant-based dairy products to use labeling terms such as “milk,” “cultured milk,” “yogurt,” and “cheese.”

Dairy, Grain Groups Hail USMCA, But Outline Shortfalls

Mostly positive impacts are expected for U.S. grain and dairy stakeholders should the U.S.-Mexico-Canada Agreement (USMCA) take effect, the top groups representing both industries said in testimony before the U.S. International Trade Commission (USITC) November 15.

Representatives from the National Grain and Feed Association (NGFA), North American Export Grain Association (NAEGA) and International Dairy Foods Association (IDFA) delivered their take on the deal intended to update the 1994 North American Free Trade Agreement (NAFTA). Their testimony came during two days of hearings held by the USITC meant to survey the impacts of the new deal as they prepare a report to Congress on the trade pact.

“Free trade agreements like the USMCA that open markets and lower trade barriers are crucial to continuing this trend of growing US dairy exports,” remarked IDFA President and CEO Michael Dykes. “Maintaining and expanding access to international markets is essential for the future success of the U.S. dairy industry.”

He noted that Mexico alone accounts for one-quarter of all U.S. dairy exports, and called it an “an indispensable partner” that helps support almost 30,000 American jobs with imports of U.S. dairy products totaling over $1.3 million.

Meanwhile, Dykes spoke favorably of USMCA concessions made by Canada on dairy market access and the elimination of Class 6 and 7 milk pricing programs that have shut U.S. dairy out of the Canadian market. Still, he warned that close attention will need to be paid to implementation of the agreement to ensure gains from those concessions are fully realized for U.S. producers.

For the U.S. grain industry, a similar picture was given of USMCA. Many "significant improvements" in terms of reduced non-tariff trade barriers, but some areas of missed opportunity, NGFA President and CEO Randy Gordon said. “The NGFA and NAEGA are pleased USMCA maintains and expands current agricultural market access and preserves the dispute-settlement process for antidumping and countervailing duty cases, while modernizing the agreement to address the challenges of 21st century global trade," he observed.

However, one area of disappointment for the grain and feed groups is USMCA's investor-state dispute-settlement provisions.

Washington Insider: New NAFTA Could Hit Bump in Congress

POLITICO reported late last week that while President Trump is touting his trade deal with Canada and Mexico as a victory, emerging complaints from liberals and conservatives are threatening it in Congress.

Democrats, whose votes are needed to pass the deal in the House, say they want to see stronger protections against pollution and climate change, improved labor standards in Mexico and “certainty that the U.S. will regain jobs lost to Mexico.”

And they want assurances the deal can be enforced.

Meanwhile, a group of 40 Republicans is protesting new protections for LGBT workers that Canada insisted on, potentially imperiling some GOP support.

Politico’s report argues that if the President is blocked in Congress, that will be a major setback on an issue where he’s already been claiming credit for delivering on a campaign promise. He would be left with the unattractive options of leaving the North American Free Trade Agreement in place, heading back to the negotiating table, or pulling out of the deal entirely, as he’s repeatedly threatened.

And it’s unclear whether the White House can make fixes that will placate enough lawmakers to win approval. The administration plans to sign the pact at the end of November, leaving the president with less than two weeks to persuade Mexico and Canada to agree to any tweaks. After that, the administration could pursue changes through side deals or implementation legislation. “Both options would be more difficult and could be a tough sell for Canada and Mexico, POLITICO says.

The administration needs 218 votes to get the deal through the House. The latest midterm results show the GOP with only 198 House members next year, although several races are still undecided. And now even some Republicans are threatening to defect. Forty lawmakers sent a letter to the President on Friday protesting new protections for LGBT workers, which were included at Canada’s request.

And those GOP defections would come on top of Democrats threatening to withhold their votes unless there are changes to labor and environmental provisions.

“I don’t think there will be Democratic votes if those steps aren’t taken,” Rep. Sandy Levin, D-Mich., told Politico. “Everyone needs to face up to that.”

If the agreement remains on track, it will go to Congress for a simple up or down vote, with no amendments allowed under the fast-track law governing trade deals.

But House Democrats could jettison the fast-track rules to force the administration to make changes. In 2008, House Democrats led by then-Speaker and presumed Speaker Nancy Pelosi, D-Calif., voted to suspend the fast-track timeline on the U.S. trade deal with Colombia over lingering concerns about labor standards and violence in the South American country.

“I warned the administration that they could find themselves in this trap of having some agreement and coming back to Congress as an afterthought expecting ratification,” Rep. Ron Kind, D-Wis., told Politico. “That’s not how this place works.”

“Everything is going to be on the table if it means trying to find 218 votes. That’s just the nature of this,” Kind said. “If there has to be some reopening, some renegotiation in order to get there, then so be it. But it’s better than having it fail” in votes.

Meanwhile, Mexico and Canada have already said they don’t see a need to reopen the negotiations. Mexican Economy Secretary Ildefonso Guajardo told reporters last week that he didn’t see “any necessity, not even through side letters,” to tweak the deal.

“The design of this agreement we already have and will be signing considered a scenario where there’d be a Democrat-led House,” Guajardo said.

Mexican officials have also signaled that Mexico’s Congress will pass legislation before the end of the year that addresses many of the labor groups’ concerns surrounding rights to collective bargaining and secret votes for members of labor unions.

Rep. Bill Pascrell, D-N.J., who is expected to chair the House Ways and Means trade subcommittee, struck a more optimistic tone. He noted that the Trump administration knows what needs to be changed on labor standards and enforceability.

Some Democrats are also waiting to see a US International Trade Commission analysis on the effect of the new agreement on the US economy and individual industries, Pascrell said. That investigation, required by law, will wrap up with a report due by mid-March. It will outline how the deal affects employment and wages — two of the chief labor concerns.

“I think we’re going in the right direction,” Pascrell said. “I’m confident we’re going to have a better document. If we don’t, we’re not going to vote for it.”

So, we will see. Trade continues to be political flash point as it has been throughout the Trump administration and could become even more important as the “new politics” takes hold next year. Certainly, this is an issue producers should watch closely as this fight intensifies, Washington Insider believes.

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