Washington Insider -- Wednesday

Weaker Future G-20 Summits

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

House Package To Revive But Phase Out Biodiesel Tax Credit

A package unveiled Monday by House Ways and Means Committee Chairman Kevin Brady, R-Texas, would revive the lapsed $1-per-gallon tax credit for biodiesel but gradually phase it out after 2021.

The plan would lower the tax incentive to 75 cents per gallon starting in 2022, reduce it to 50 cents in 2023 and 33 cents in 2024. The credit would be eliminated after 2024.

The $1.01-per-gallon tax credit for second-generation biofuels, including ethanol derived from corn stover or wood chips, and a separate tax benefit for biofuel pumps would be extended only for 2018.

While the measure may clear the House, some are questioning whether the package can clear the Senate. However, the measure also includes disaster relief, which could help grease the skids toward passage.

Senate Confirms Vaden as USDA General Counsel

The U.S. Senate on Tuesday (Nov. 27) voted 53-46 to confirm Stephen Vaden as USDA general counsel, more than a year after President Donald Trump nominated him for the post.

The vote was largely along party lines with only three Democrats joining 50 Republicans to approve Vaden's nomination.

A Tennessee native and 2008 graduate of Yale Law School, Vaden was on the Trump administration's landing team at USDA and has served as principal deputy general counsel since March 2017. The president chose Vaden to serve as general counsel in September 2017, a post tasked with providing legal advice to the USDA officials and agencies.

USDA Secretary Sonny Perdue praised the Senate for approving Vaden, who will advise Perdue on food safety, nutrition, marketing and a range of other agriculture programs.

"He will continue to provide important legal advice and services to the department and our agencies as they operate the programs that are so important to our customers," Perdue said in a statement. "Stephen’s roots on a working farm in Tennessee and expertise in the law will well serve the people of American agriculture."

The Senate Agriculture Committee voted to confirm Vaden in December 2017, but his nomination stalled amid controversies surrounding his role in the reassignment of career staff at USDA.

Washington Insider: Weaker Future G-20s

Bloomberg is reporting this week on a basic shift in international relations that has been mainly below the media radar. The report says that an important way of ironing out many important global issues is now threatened and that the “global summit communique, with its all-night negotiations over square brackets and the placement of commas, is in danger of extinction.”

For more than 40 years, so-called sherpas and their assistant “sous-sherpas” and “yaks’’ have been heaving these documents toward the pinnacles of international summits, “producing blueprints for how their nations aim to work together to fix what’s broken in the world.”

“'Communiques' at this level have had to be finessed in the past,” Bloomberg says, “but twice this year the entire process collapsed.” At the June G-7 meeting in Canada, President Donald Trump withdrew U.S. support for the document he had just agreed to, upset about “the treatment by his host amid bilateral tensions over trade.”

And, no final statement was reached at an Asia-Pacific Economic Cooperation summit in Papua New Guinea this month, as China and the U.S. clashed, again over trade.

Events often complicate things further at the G-20, Bloomberg says. President Vladimir Putin will arrive in Argentina fresh from his military’s provocative seizure of Ukrainian naval vessels. And, President Trump is expected to emphasize the importance of his private meeting with China’s President Xi Jinping and the threats to slap tariffs on hundreds of billions of dollars more Chinese imports if the concessions he wants from their bilateral meeting are not forthcoming.

The summit’s Argentine hosts have drafted a shortened text of as few as three pages, compared to 15 plus supporting documents at the last G-20 in Germany. The risk is they produce a communique so watered down as to be meaningless, Bloomberg said.

However, trade experts also say that the troubles in global summitry aren’t just due to the U.S. administration. The root causes stretch deeper, according to Cecilia Nahon, who calls the Trump policies themselves “symptoms of a backlash against globalization that was already underway for some time."

Another problem is the negotiators themselves, who are the personal representatives of national leaders. In 2008-2009, the people appointed to draw up communiques that helped avoid a meltdown of the global financial system were mostly economists, Bloomberg says, and were keenly focused on the substance of fiscal and monetary policy coordination.

“No longer,” Russia’s G-20 sherpa Svetlana Lukash, told Bloomberg, recalling how the depth of the financial crisis created a common sense of commitment that’s no longer as strong.

For many outside the arcane world of these working dinners, the question is: “so what?” A world without global summits and their communiques would continue to turn much as it did before the first “G” meeting in 1975. At that time, after Vietnam, the industrialized West seemed in retreat. So French President Valery Giscard d’Estaing invited the leaders of Britain, Germany, Italy, Japan and the U.S. to Paris to take control. Most of the alphabet soup of international summitry — from the G-7 and G-20, to APEC, ASEAN, the EU and more — grew up on one side or the other of the Iron Curtain during the Cold War, or soon afterward and were dominated by “the U.S. and its norms.”

But that domination ended in the aftermath of the financial crisis. And the competition to define global rules and responses has since grown fierce.

“The communiques are dead letters, there is really nothing in them at this point,” says Ian Bremmer, the political scientist who coined the term G-Zero to describe a world in which declining U.S. dominance and a wave of nationalist and protectionist impulses are leaving a vacuum of effective global governance.

That’s a view fiercely resisted by the sherpas, who believe the summits and their communiques are still vital tools for resolving differences as those multiply.

Still, last year’s Hamburg communique squeezed through only by recusing the U.S. from language on climate change. The same may now be needed for trade. “Domestically there is a bit of re-prioritization taking place,” said India’s G-20 sherpa, Shaktikanta Das. “But on issues that have a cross-border impact, it has to be done within the framework of multilateralism. People have to be mindful of the spillover effects.”

To avoid future public failures, some sherpas believe it may be time to shift toward a less contentious document — the chair’s statement. That’s what Peter Boehm, sherpa for Canada, expected to do at the combustible G-7 summit in June. Others insisted on a communique, which emphasized specific commitments and accountability.

The next couple of years, with France and the U.S. due to host G-7s, could well see change in how the summits are run, he said. Asked if we might see the circuit of global summitry stop altogether, Boehm said: “we might.”

Trade policy issues have become increasingly volatile and politicized this year, and the Argentine meetings are seen as high stakes confrontations for many U.S. groups—and the image of a less important U.S. presence in global trade policy likely will be increasingly difficult to explain to many of these groups. Producers should watch closely as the implications of the coming “summit” unfold over the next few weeks, Washington Insider believes.

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