Washington Insider -- Monday

China Tariffs Likely to be Investigated by WTO

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

Trump Signs Temporary Spending Plan to Reopen Federal Government

The Senate and House on Friday approved via voice vote legislation reopening the partially closed government for three weeks, through Feb. 15. President Donald Trump signed the measure late Friday, bring the longest U.S. government shutdown in history to an end.

The deal did not include any funding for border wall that prompted the government shutdown to unfold. Federal government workers are expected to be paid for period covering the shutdown sometime early this week.

“After 36 days of spirited debate and dialogue, I have seen and heard from enough Democrats and Republicans that they are willing to put partisanship aside, I think,” Trump said. However, he signaled that another lapse in funding was possible and that the use of emergency powers was still an option for building a wall along the southern U.S. border. "If we do not get a fair deal from Congress, the government will either shut down on Feb. 15 again, or I will use the powers afforded to me under the laws and the Constitution of the United States to address this emergency."

The House and Senate will convene a conference committee of appropriators to work out a deal on Fiscal Year (FY) 2019 Homeland Security spending, including the fate of $5.7 billion for a border wall that Trump has demanded.

The timeline for USDA issuing its delayed reports should become clear relatively quickly. When the government reopened October 17, 2013, the released a detailed schedule of when reports would be released. That is likely to be a lengthy list given the length of the shutdown. As for the suite of reports that were to be issued January 11 – Crop Production – 2018 Summary, Grain Stocks, Winter Wheat and Canola Seedings – some sources say they could be released next week while others have suggested those could released Feb. 8, the next regularly scheduled date for the WASDE report.

In 2013, FAS issued the Weekly Export Sales report for the period covering September 27-October 3 – data that would have partially come in before the shutdown started October 1 – was issued on Thursday, October 24. FAS then issued on October 31 a report with a combined sales total covering the weeks ending October 10, 17 and 24. As for daily export sales announcements, USDA in 2013 did issue a daily sales announcement on October 1, the day the government shutdown started. The daily sales announcements resumed on October 18, the day after the government reopened. If USDA follows the same pattern, that would indicate that if there are sales required to be reported by exporters to USDA, the public announcements would resume January 29.

Exporters are required to report to USDA any export sales activity of 100,000 tonnes or more of one commodity, made in one day to one destination, by 3 p.m. (ET) on the next business day following the sale. Export sales of less than these quantities must be reported to USDA on a weekly basis.

USDA Announces Several Deadline Extensions For Various FSA Programs

The reopening of county Farm Service Agency (FSA) offices nationwide for some activities January 24 saw USDA announce that signup for the Market Facilitation Program (MFP) payments would be extended to Feb. 14. USDA has now announced several other shutdown-related deadline extensions for several programs.

Many of the changes announced have a reference date in them covering information that would have been due to be submitted to USDA offices between Dec. 31, 2018, and Jan. 23, 2019, unless otherwise noted.

Final Acreage Reporting Date (ARD): If the final ARD would have fallen between Dec. 31, 2018, and Jan. 23, 2019, the report will be considered to be timely filed and there is no late fee if it submitted and filed with FSA by Feb. 14. However, this does not move the ARD and all other provisions to comply with acreage reports have not been changed.

Emergency Conservation Program (ECP): If the deadline for reporting performance was between Dec. 31 and Jan. 23, it will be considered timely filed if submitted and filed by the later of Feb. 14 or a date granted by the FSA State Committee representative.

Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish (ELAP): If the deadline for notice of loss fell between Dec. 31 and Jan. 23, it will be considered timely filed if done by February 14.

Livestock Forage Program (LFP): For the 2017 program year, eligible livestock owners or contract growers with a producer interest in grazed forage crop acreage must submit their completed form (CCC-853) and supporting documentation by Feb. 28.

Livestock Indemnity Program (LIP): If the deadline to file notice of loss was between Dec. 31 and Jan. 23, it must be submitted and filed by February 14.

Marketing Assistance Loans (MAL): If loan maturity was in December 2018, it can be repaid, forfeited or settled through Feb. 14. Requests for peanut loans or Loan Deficiency Payments (LDPs) will be considered timely filed by the loan availability date of Jan. 31 if filed by Feb. 28.

Washington Insider: China Tariffs Likely to be Investigated by WTO

Bloomberg is reporting this weekend that China is charging that the Trump Administration’s tariffs violate WTO’s most favored nation rules. The result, Bloomberg says, is that current complicated tensions between the U.S. and China are about to get more complicated. The WTO is poised to begin an investigation into President Donald Trump’s tariffs on $250 billion of Chinese goods.

This week, the WTO, the Geneva-based arbiter of trade disputes will likely launch an inquiry into whether the U.S. duties run afoul of a requirement that all WTO members give each other the same tariff treatment, as China asserts.

The investigation comes at a delicate moment between the world’s two largest economies. A new round of trade talks is scheduled to begin on Jan. 30, and if a deal isn’t reached by March 1, the Trump administration has threatened to raise the tariff rate on $200 billion in Chinese goods to 25% from 10%.

“This WTO case is especially significant because it deals with the central international legal issue in the U.S. conduct of its trade war with China -- whether the U.S. can impose trade restrictions on China in response to alleged Chinese WTO violations without first seeking dispute settlement in the WTO,” James Bacchus, a former Democratic congressman and onetime head of the WTO’s appellate body, said. “I believe these U.S. tariffs are inconsistent with WTO obligations, but it will be left to my successors on the WTO appellate body to decide.”

The WTO is already facing an existential threat over a hold the U.S. has placed on new appellate judge nominations. Absent any reforms, the decision-making wing of the organization will have too few judges to rule on cases by the end of the year. This new investigation could further antagonize the U.S., which sees the WTO as overstepping its authority.

This is China’s second request for an inquiry on the matter, the first one last month was vetoed by the U.S. The investigation is likely to move ahead this week because WTO rules prevent members from blocking a dispute inquiry a second time.

But China won’t be expecting a resolution to the investigation any time soon due to a backlog in the WTO dispute settlement system. So far, 23 disputes have been brought against the current U.S. administration, including an EU inquiry into tariffs levied against aluminum and steel imports.

“These trade tensions are not only a threat to the system, they are a threat to the entire international community,” Roberto Azevedo, the director-general of the WTO, said on a panel in Davos on Jan. 24. “The risks are very real and there will be economic impacts.”

The case cuts to the heart of the U.S.-China trade conflict because the administration says the tariffs are necessary to counter an alleged Chinese campaign to steal American intellectual property.

China’s dispute alleges the U.S. tariffs violate the WTO’s most favored nation provision because the measures fail to provide the same tariff treatment that the U.S. offers to imports of all other WTO members.

The U.S. counters that the tariffs fall outside the WTO’s remit because they address trade issues that are not specifically covered under WTO rules.

In addition, now that the government shutdown is at least temporarily lifted, the media is working to describe what the conflict meant. The Washington Post argues that the administration has inadvertently “revealed how much America depends on government.”

The President has “repeatedly proposed gutting the federal bureaucracy, privatizing the air traffic control system and shrinking the federal workforce, the Post says. But by leading the country through the longest government shutdown in American history, he inadvertently revealed how intertwined the government is with millions of households, businesses and the entire U.S. economy.

“The sharp rebuke he received from the public,” the Post says, and his decision Friday to reopen the government without winning concessions, could refresh a debate about the size and scale of government that has begun to frame the 2020 election.

“We cannot mess with people’s lives this way,” Sen. Lisa Murkowski, R-Alaska, said.

The Post ticked off the damages, “the air travel system bogged down.” It said. Tax refunds appeared in jeopardy. Parts of the federal court system were preparing to close. Food stamp benefits neared expiration, and the government was running out of money to pay rent for its own agencies, let alone low-income families who receive housing benefits.

The U.S. government is projected to spend roughly $4.5 trillion this year, a figure that represents 21 percent of the overall economy. The funding lapse affected just a small segment of that budget. Even though it was record-long, broke the previous record for a funding lapse, it still only lasted for 35 days.

The President signed into law a three-week spending bill and raised the prospect on Friday of another shutdown in mid-February, an idea that many Republican lawmakers detest. And that’s in part because key parts of the government that hadn’t elicited much thought until the shutdown were thrust into the spotlight in the past month. They could stay there for a while.

So, we will see. Clearly, producers are on the front lines in any ongoing trade fights—and, were affected seriously by other aspects of the shutdown—and could be so once again if yet another shutdown emerges, that likely will be “a fight producers should watch closely,” Washington Insider believes.

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