Washington Insider -- Wednesday

Washington Insider US, China Trade Talks Likely Soon

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

Farm-State Lawmakers Keep Beating The Drum For Biodiesel Tax Credit

The biodiesel tax credit that lapsed at the end of 2017 needs to be extended -- both retroactively and for several years ahead, a group of farm-state lawmakers is urging House leadership.

The effort was spearheaded by Reps. Dave Loebsack, D-Iowa, and Darrin LaHood, R-Ill., with 42 additional House members signing the February 11 letter to House Speaker Nancy Pelosi, D-Calif., Majority Leader Steny Hoyer, D-Md., Minority Leader Kevin McCarthy, R-Calif., and Minority Whip Steve Scalise, R-La.

The fate of the biodiesel credit is "an unresolved issue of importance to our constituents and our states' economies," the lawmakers said, arguing an extension is needed to end prolonged uncertainty about the policy given the "off-again, on-again" nature of the credit. "A multi-year extension of biodiesel and renewable diesel incentives will provide the industry the certainty it needs to continue to generate economic and environmental public benefits," the lawmakers wrote.

The lawmakers also touted the more the 60,000 jobs connected to biodiesel production, the aid to rural communities, the fuel's benefits to U.S. energy security and reductions of waste and carbon emissions.

Biodiesel blenders, producers, truck drivers, consumers and farmers are among those benefitting from the credit. "Biodiesel production can add roughly 63 cents of value to every bushel of soybeans," they observed, a boost to U.S. farm income. The support the credit provides is especially critical today "when farm income is at its lowest point in more than a decade, crop prices are below the cost of production and farmers are bearing the brunt of ongoing trade disputes," the lawmakers argued.

USDA Seeks Public Input Ahead Of Farm Bill Implementation

USDA wants public feedback on implementation of programs that were changed in the 2018 Farm Bill and has laid out a series of questions they want answered by the public on the matter -- either in person or electronically.

USDA set a listening session at the department's Washington, D.C. headquarters for Feb. 26. An official announcement is scheduled for publication in the Feb. 14 Federal Register. USDA will also accept written comments on implementation of the new farm bill through March 1, but those planning to speak at the listening session submit their comments in writing by Feb. 22.

The purpose of the session is to solicit input from stakeholders on their "priorities, concerns and requests" for new and changed farm bill programs implemented by the Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS) or the Risk Management (RMA). The meeting is only intended to gather information and will not be a discussion or question and answer session, USDA noted.

"Truly this is a farm bill that improves farm safety net programs, protects federal crop insurance, and preserves strong rural development and research initiatives. At USDA we are eager to hear from our stakeholders on policy recommendations, so we can start working on implementing these important Farm Bill provisions," USDA Undersecretary for Farm Production and Conservation Bill Northey said in a release. The input will help FSA, NRCS and RMA "streamline and improve program delivery while also enhancing customer service," he added

Wed. Feb. 13 Washington Insider US, China Trade Talks Likely Soon

There is a lot of uncertainty in Washington this week, but Bloomberg says the next meeting between President Donald Trump and Chinese President Xi Jinping will be soon -- as U.S. officials are seen gathering in Beijing this week.

The administration noted that Trump still wants to meet Xi in an effort to end the trade war, a sign of optimism as negotiators from the world's two-biggest economies start their latest round of talks this week.

"He wants to meet with President Xi very soon," White House adviser Kellyanne Conway said Monday. "This president wants a deal. He wants it to be fair to Americans and American workers and American interests."

Still, Bloomberg noted that "uncertainty whether the leaders will meet to finalize an agreement" has stoked concerns that negotiations are faltering as the March 1 deadline approaches. If there's no deal by then, President Trump has threatened to more than double the rate of tariffs on $200 billion in Chinese imports.

In preparatory meetings this week, U.S. officials will be pressing China to commit to deeper reforms to their state-driven economic model. Mid-level officials have already begun discussions ahead of two days of talks starting Thursday involving U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.

Aides to Trump say this week's talks are important to demonstrate credible progress to both the president and financial markets. But the two sides are only just starting the work of drafting a common document and still tussling over how a deal may be enforced, which U.S. officials have repeatedly called a crucial element.

As a result, some aides privately acknowledge the most likely scenario is for the March 1 deadline to be extended, delaying the threatened increase in tariffs on some $200 billion in Chinese imports. To maintain pressure on the Chinese side, some officials are pushing for a "limited" extension and are eager not to let the timing of a Trump/Xi meeting to close the deal slip much past the end of March.

Many Chinese favor such an extension and some are optimistic about it, Bloomberg says.

"I think there will be positive outcomes from this round of trade talks, because the two sides have shown willingness to seek a deal," said Wei Jianguo, a former vice commerce minister and now vice director of China Center for International Economic Exchanges in Beijing. "Even if no deal is reached in this round of talks, I don't think tariffs will be hiked on March 1. The highest possibility is that the U.S. will agree to postpone the deadline, buying time for the two leaders to meet and sign off on the final deal."

The president told reporters in January that he planned to meet Xi in late February. He backtracked on that last week, saying "a gathering wouldn't take place this month." It's still possible the leaders may get together in March at Trump's Mar-a-Lago resort in Florida, Kellyanne Conway said.

"He [the president] has forged a mutually respectful relationship with President Xi," Conway said. "They will meet again soon."

The last round of talks in Washington late last month resulted in China importing additional American soybeans and other U.S. goods — a move that provides some relief to U.S. farmers. However, there has been no breakthrough on the structural issues separating the two nations, such as industrial policy, government subsidies, protection of intellectual property or forced transfers of technology.

Facing an economic slowdown at home, the Chinese government has a strong motivation to address American demands and put an end to the trade war, some think. China has fast-tracked approval of a law that would ban theft of intellectual property and forced technology transfers, but the question is how much more it can compromise. With the U.S. now pushing a plan of prioritizing spending on artificial intelligence research, it will be difficult to talk China out of its policies to dominate advanced technologies.

Both sides are under pressure to avoid additional trade restrictions and the political stakes are growing as the nest election cycle approaches. This is a fight with very high stakes for U.S. producers that should be watched closely as it intensifies, Washington Insider believes.

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