Washington Insider -- Tuesday

Year-End Policy Confrontations

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

EU soybean imports from US have doubled, Commission reports

European Union (EU) soybean imports from the United States are now twice as high as in the same period last year, according to the latest figures released by the European Commission.

The new statistics show that EU purchases of American soybeans amounted to 3,722,860 metric tons after the first 22 weeks of the 2018 marketing year (July to end-November), which is 100% higher than over the same period in 2017.

The U.S. remains the bloc’s leading supplier of the commodity with more than two-thirds (69%) of total soybean imports, compared to just 38% last year.

The country stayed well ahead of Brazil, whose share dropped to 24.5% (1,323,193 metric tons) from 32.7% (1,616,901 metric tons), as well as Canada (2%), Paraguay and Uruguay (both 1%);

In turn, the EU has also become the main destination for U.S. soybean exports with almost a third of total sales (27%), leaving Argentina and Mexico behind (each accounting for 10%).

The figures are part of the European Commission’s bi-monthly reporting mechanism on the bilateral trade flows for the commodity that was set up after the Joint EU-U.S. Statement of July 25.

Commission President Jean-Claude Juncker signed the declaration together with President Donald Trump and pledged to “immediately import a lot of soybeans” in order to prevent the Americans from imposing additional tariffs on European cars.

The Commission published the first of these statistics in August and September, which revealed that annual soybean imports were 283% higher after the first five weeks and 133% higher after the first 12 weeks of the current marketing year.

GMO Disclosure Rule Cleared By OMB

The much-anticipated federal GMO disclosure standard has been cleared by the White House Office of Management and Budget (OMB), a final step before USDA publishes the rule.

OMB's Office of Information and Regulatory Affairs (OIRA) completed its review late last week (Nov. 29).

The food and agriculture industries are bracing for the GMO disclosure rule and nervously waiting to find out the details of the regulatory regime, officially known as the National Bioengineered Food Disclosure Standard.

Confusion remains about the scope and impact of the rule as the 106-page draft plan released by USDA's Agricultural Marketing Service (AMS) in May left many questions about the regulations unanswered.

The AMS draft rule did not fully explain which foods are covered, lacking definitions needed to clarify what is considered a "bioengineered food." The draft also left key exemptions unexplained and failed to completely outline the disclosure requirements or how companies must comply.

The law says food manufacturers and retailers can satisfy the standard by use of on-package text, a USDA-created symbol or electronic means such as a quick response code, but the draft rule suggested AMS would also allow compliance via text message.

Washington Insider: Year-End Policy Confrontations

Bloomberg reported on Monday that the president’s recent Argentine trip was somewhat unusual, compared to earlier trips “remembered most for what went wrong.” Bloomberg notes he “stuck to the script with fellow leaders, avoided major gaffes and got some qualified successes, including an admission that the World Trade Organization needs reform and a commitment from China to buy more U.S. goods.”

Even this summit started with that familiar feeling of trepidation about the potential chaos to come after news broke that presidential lawyer Michael Cohen had pleaded guilty to lying to Congress about plans for a Moscow real estate project. That provoked a pair of Twitter posts in which the president denied any wrongdoing – he said his business was “very legal & very cool.”

This time, though, the President did what he rarely does--he eased off the tweets and he scrapped a meeting with Russian President Vladimir Putin, ostensibly to show disapproval after Russia opened fire on Ukrainian ships in the Sea of Azov near Crimea and captured several sailors.

For the rest of the summit the President performed much world leaders typically do. He met with close allies--such as Germany’s Angela Merkel and Japanese Prime Minister Shinzo Abe--and shunned counterparts such as Putin and Saudi Crown Prince Mohammed bin Salman, both of whom actively lobbied the U.S. side for formal meetings with him.

And, moments of tension or awkwardness were the exception, not the rule. For example, rather than ripping up the final communique over U.S. disagreements with the language and Trump’s own “America First” approach, U.S. negotiators scored what they viewed as a crucial victory on one of the administration’s biggest issues – an acknowledgment that the WTO needs to be changed.

In the dispute over climate change, rather than allowing it to scuttle the communique, the signatories to the Paris climate accord reaffirmed their support for the deal while letting the U.S. reiterate its decision to quit the agreement, essentially agreeing to disagree.

Part of the reason for the president’s restraint was respect for President H. W. Bush who will be honored with a national day of mourning on Dec. 5. President Trump canceled two planned media briefings hours beforehand, saying it would be inappropriate to take the podium so soon after Bush’s death.

The key question is, what will happen now after the “brief respite” for the Bush funeral, both with regard to trade and to the budget fight. President Donald Trump and members of Congress are now poised to shelve that battle with its risks a partial shutdown of the government at the end of the week in order to pay their respects to late President Bush. However, that comity isn’t expected to last long, Bloomberg says.

The president has repeatedly threatened to veto a bill extending expiring funding for some government agencies if he doesn’t get the $5 billion he wants for a wall on the southern border. Democrats, whose votes are needed to enact spending bills, have refused to supply that level of funding unless Trump agrees to shield young undocumented immigrants from deportation.

The Dec. 7 deadline to renew funding for agencies including the Internal Revenue Service and Homeland Security Department is widely expected on Capitol Hill to pushed back by one week, although Trump has floated the idea of extending it until Dec. 21. Lawmakers, especially lame-duck members, are eager to leave town, and a deadline right before Christmas risks forcing Congress to work through the holidays.

All eyes will be on Trump, Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., who had been scheduled to meet to discuss the spending standoff. Their planned meeting on Tuesday was postponed until after Wednesday’s funeral services for President Bush.

About a quarter of the government’s $1.2 trillion discretionary budget remains unsettled for the fiscal year that began on Oct. 1. Congressional negotiators say they’re making steady progress resolving differences over line-items in the budgets of the departments of Treasury, State, Commerce, Justice, Interior and Agriculture as well as the Environmental Protection Agency. The main problem area is the Department of Homeland Security and Trump’s demand for $5 billion to build a wall on the southern border.

Congressional Republicans have attempted to persuade Democrats to compromise by providing $2.5 billion in wall funding in the coming year, and another $2.5 billion the year after. But so far, Democrats have refused.

Schumer of New York said on the Senate floor Thursday that the $1.6 billion for border security agreed to by Republican and Democratic senators in a draft bill is “our position” and any shutdown will be Trump’s fault.

Democrats say they have the upper hand because Trump has threatened a shutdown repeatedly in the past over the border wall and backed down.

In the House, more liberal Democrats are urging Pelosi not to compromise on the wall after the party won control of the chamber in Nov. 6 midterm elections. She’ll need those lawmakers’ votes in her bid to return as speaker when Democrats take over in January.

So, we will see. A proposed deal on immigration failed in February after Trump was pressured by conservatives into seeking additional cuts in legal immigration. Tensions are higher now, and the deadline is closer. These clearly are fights producers should watch closely as they intensify, Washington Insider believes.

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