Washington Insider -- Tuesday

More Trade Disarray

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

EWG Renews Push for Farm Bill Pay-Cap Changes Based on Trade Payments

Data from USDA on payments made to farmers under its trade aid plan were cited by the Environmental Working Group (EWG) as further evidence that changes to the definition of "actively engaged" farmer for farm program payments are needed.

Over 1,000 individuals living the top 50 U.S. cities, such as New York and San Francisco, received payments under USDA's Market Facilitation Program (MFP). EWG Vice President of Government Affairs Scott Farber repeatedly referred to such individuals as "city-slickers" during a conference call intended to share the result of his group's analysis of trade aid payments. The aid payments are intended to help offset the negative effects of ongoing trade turmoil.

EWG said its analysis covered 87,704 MFP payments made through October 31, which represent only a "tiny fraction" of the total payments expected to be dispersed. In all, the group analyzed payments totaling $356 million, or less than half of the more than $800 million paid out to date under the MFP and less than 8% of all expected first round payments if $4.7 billion. EWG noted a second round of payments could flow to the same recipients later this year.

The primary reason payments ended up going to individuals living far from the actual farms is USDA's flawed definition of what constitutes an "actively engaged" farmer, said EWG's Farber. The definition has been a long-running point of contention for the environmental group, which maintains a database of farm program payment recipients and has repeatedly argued for additional reforms on who should qualify for such funds.

EWG cast its findings on trade aid payments as further evidence that "actively engaged" requirements need to be tightened. Farber expressed his hope that Congress adopt farm payment reforms included in the Senate-passed farm bill, which now sits before a House-Senate conference committee tasked with reconciling both chamber's versions of the legislation.

However, indications are the Senate provisions on payment provisions will not be a part of a hoped-for final farm bill compromise.

Russia Brings Back Ban on Transshipment Of US Poultry To Kazakhstan

Russia is once again blocking the movement of U.S. chicken to Kazakhstan in a move that could put fresh strains on relations within the Eurasian Economic Union (EAEU).

Russia’s state veterinary service Rosselkhoznadzor said it had decided to reinstate the transshipment ban from Tuesday (November 20) after failing to get assurances from Kazakh authorities.

The decision comes just a matter of months after Russia lifted a similar set of restrictions.

Earlier this month, Moscow lodged a request for guarantees that unlabeled U.S. poultry meat would not be illegally shipped back from Kazakhstan to Russia, a country where it is banned.

In a statement at the weekend however, Rosselkhoznadzor said Kazakh authorities had failed to provide these assurances.

The agency said it is concerned by Kazakhstan’s failure to prove that the finished poultry products it exports back to Russia are not made with raw material brought in from the U.S.

Washington Insider: More Trade Disarray

Well, there has been at least a glimmer of hope that better global trade relationships could be hammered out in the recent high-level meeting that was held last week as well as one planned for the coming G-20 meeting in Argentina.

However, Bloomberg says that the most recent APEC meeting ended in “disarray” after the U.S. and China disagreed over a proposed “closing statement.”

The group reported that last week’s Asia-Pacific summit ended in tumult after the U.S. and China disagreed over proposed language for a final statement as the meeting ended. Bloomberg called it the “latest sign that a trade war between the world’s biggest economies won’t end anytime soon.”

For the first time since leaders began attending the annual Asia-Pacific Economic Cooperation meeting in 1993, no statement was issued after two days of talks in Papua New Guinea. The Pacific island nation’s Prime Minister, Peter O’Neill, blamed “two big giants in the room” for the discord.

The failure to agree on a largely symbolic statement “lowers expectations” for U.S. President Donald Trump and Chinese counterpart Xi Jinping to reach a breakthrough when they meet a few weeks from now at a Group of 20 summit in Argentina. Financial markets have swerved in recent weeks as investors gauge whether an end to the trade war is near.

Tensions were already high heading into Sunday after Xi and Vice President Mike Pence traded barbs in back-to-back speeches a day earlier. Pence warned nations against taking Chinese loans, saying the U.S. “doesn’t drown our partners in a sea of debt.” For his part, Xi said implementing tariffs and breaking up supply chains was “short-sighted” and “doomed to failure.”

The events in Port Moresby were unusual for a summit that is mostly regarded as a “talk shop.” The non-binding statements at the end of such gatherings often consist of thousands of words covering anodyne topics such as urbanization, sustainable tourism, natural disasters and “MSMEs” (micro, small and medium enterprises).

The first sign of trouble occurred when reports dripped out that Papua New Guinea police were called after Chinese officials attempted to “barge” into the office of the country’s foreign minister to influence the document. Chinese officials later denied the report, calling it “a rumor spread by some people with a hidden agenda."

As reporters waited for an outcome, it became clear something was wrong. After the closing press conference was delayed, Canadian Prime Minister Justin Trudeau eventually confirmed that negotiations over the communique had collapsed.

“I don’t think it will come as a huge surprise that there are differing visions on particular elements in regard to trade,” Trudeau told reporters on Sunday. “That prevented there from being a full consensus on the communique document.”

When Papua New Guinea’s O’Neill finally spoke to the press, initially he said a formal statement would come at a later date and then left without taking questions. Reporters then chased him through the building, resulting in a chaotic scrum, Bloomberg said.

Eventually O’Neill confirmed that the topic of World Trade Organization reforms was the main cause of the dispute, though he said it wasn’t “only the U.S. and China.”

Both the U.S. and China sought to deflect blame, Bloomberg reported.

Wang Xiaolong, a Chinese foreign ministry official, said “many countries” raised issues about the WTO. He didn’t elaborate on specifics.

“Frankly speaking we are in an early stage of discussing these issues,” said Wang, director-general of the Department of International Economic Affairs at China’s foreign ministry. “Different countries have different ideas about how to take this forward.”

A U.S. official familiar with the talks said it’s inaccurate for China to say the communique was held up due to American concerns about the WTO. The U.S. agreed to language over improving the global trade body’s dispute settlement function, the official said, adding that the talks collapsed because China objected to a line that all other 20 economies had endorsed.

At issue was a pledge by the governments to fight “all unfair trade practices,” which China thought was unfairly singling them out, said the U.S. official. The U.S. had agreed to a line on fighting protectionism, the official said, a concession designed to allow the communique to go forward.

The U.S. official said it appeared as if China didn’t want to reach a consensus and Chinese negotiators applauded when it was announced that talks had collapsed.

The chaos came amid other challenges associated with holding the summit in one of the region’s poorest countries. A lack of hotel accommodation meant many delegates and journalists slept on a cruise ship. Port Moresby is notorious for being crime-ridden: The Lonely Planet says “visitors are tempted to spend as little time here as possible.”

O’Neill, Papua New Guinea’s leader, sought to look on the bright side. “We had almost 21 economies agreeing to the issues,” he told reporters. “This is not frustrating.”

So, we will see. There are still some signs from one side or the other suggesting that they are looking forward to serious negotiations in Argentina. However, it also is clear that both sides are deeply dug in — and that differences may be widening rather than narrowing toward agreement. Clearly, the Argentine talks will be important but sensitive efforts by both sides will be required to bridge the conflict. This is a fight producers should watch especially closely as it proceeds, Washington Insider believes.

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