Washington Insider -- Thursday

US Ends Trade Concessions to India

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

USTR'S Doud Signals Uncertainty Over China Trade Deal

Frustration at China hitting 100% of U.S. ag exports with tariffs in response to tariffs levied by the U.S. against China was expressed Tuesday by chief U.S. ag trade negotiator Gregg Doud at a Virginia conference.

"I do not know whether we will get a deal or not," he told attendees at the Virginia Governor's Conference on Agricultural Trade. Doud would not comment on talk that the U.S. was seeking to boost China's imports of U.S. ag goods to $50 billion annually, saying his orders from President Donald Trump are to boost U.S. ag exports to China as much as possible beyond $20 billion.

Doud, however, said, "I do not know what to expect" relative to the outcome of the talks with China.

He indicated there is "ample room" for a rise in U.S. ag exports to China which totaled $125 billion from all sources in 2018.

USDA Steps Up Actions to Prevent ASF

Enhanced measures aimed at preventing the arrival of African swine fever (ASF) in the U.S. were announced by USDA, building on efforts it rolled out last fall when the disease reached China.

The new activities "intensify multi-agency efforts" already underway and were developed in coordination with the U.S. pork industry, the department said. "We understand the grave concerns about the ASF situation overseas," said USDA Undersecretary for Marketing and Regulatory Programs Greg Ibach. "We are committed to working with the swine industry, our producers, other government agencies and neighboring countries to take these additional steps," he added.

USDA detailed the following ASF prevention activities:

Work with Customs and Border Protection (CBP) to train and add 60 additional beagle teams for a total of 179 teams working at key U.S. airports and sea ports.

Coordination with CBP on the further expansion of arrival screenings at key U.S. airports and sea ports – including checking cargo for illegal pork/pork products and ensuring travelers who pose an ASF risk receive secondary agricultural inspection.

Increased inspections and enforcement for garbage feeding facilities to ensure fed garbage is cooked properly to prevent potential disease spread.

Heightened producer awareness efforts, including encouraging self-evaluations of on-farm biosecurity procedures.

Work to develop accurate and reliable testing procedures to screen for the virus in grains, feeds and additives and swine oral fluid samples.

Collaboration with officials in Canada and Mexico on a joint North American approach to ASF defense, response and trade maintenance.

Continued high level coordination with U.S. pork industry leadership to assure unified efforts to combat ASF introduction.

Washington Insider: US Ends Trade Concessions to India

Bloomberg and others are reporting this week that the administration notified Congress that it wants to scrap trade concessions for India, the largest beneficiary of the so-called generalized system of preferences that impacts $5.7 billion worth of goods.

The move affects just a fraction of India’s trade flows but is attracting special attention because it comes just weeks before India’s national elections and just as Prime Minister Narendra Modi’s government is trumpeting its foreign policy prowess and military strength following a stand-off with Pakistan.

Bloomberg thinks that both Trump and Modi “likely hope” to isolate thorny trade issues from their geopolitical ties as both position themselves in Asia against an increasingly assertive China. But even assuming the strategic alliance – which includes the so-called Quadrilateral Security Dialogue between the U.S., India, Japan and Australia – remains intact, the world’s two largest democracies are probably still headed for a bout of turbulence.

“The discourse in this country has been that America needs India to balance China,” said Harsh Pant, an international relations professor at King’s College London. “And the question will be: Why is America doing this to India?"

The U.S. move, announced at the same time as it halted the same trade preferences for Turkey, could reignite dormant anti-American sentiment within India and is likely to fuel opposition critiques of India’s ruling government, Pant said.

Needling India on trade will have a “corrosive effect” on Modi’s views of the U.S. and fits a pattern of the administration’s focus on narrow trade grievances at the expense of broader strategic concerns, according to John Blaxland, head of the Strategic and Defense Studies Centre at the Australian National University.

“It is extraordinary how Trump manages to demarcate trade from geopolitics, when in the real world they are intimately linked,” Blaxland said.

That includes pulling the U.S. pulling out of the Trans-Pacific Partnership deal that would have more closely tied Asian economies to Washington despite pleas from regional allies such as Japan to reconsider, Blaxland added. “The TPP was dismissed, just as trade links with India and Turkey now appear set to be discarded,” he said.

In a statement announcing the decision, U.S. Trade Representative Robert Lighthizer’s office said that India’s removal from the preferential system “follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.”

India has implemented “a wide array of trade barriers that create serious negative effects” on U.S. commerce and “despite intensive engagement,” had failed to take the necessary steps to meet the criterion, it said.

Trump’s removal of trade concessions are not entirely unwarranted, coming after Indian customs duty hikes, expanded import substitution rules and domestic price caps, according to Richard Rossow, Wadhwani chair in U.S.-India policy studies at the Washington-based Center for Strategic and International Studies.

However, the current spat follows previous U.S. attempts to pressure New Delhi to draw down significant oil imports from Iran, as well as Venezuela. India – whose history of non-alignment gives it close economic partners that make Washington policymakers uncomfortable--has nevertheless increased oil, natural gas and coal imports from the U.S.

President Trump has pressured other allies on trade – notably Germany, as well as the European Union and South Korea – while maintaining security relationships. But the U.S.-India alliance has far more fragile foundations, making the fallout from the scrapping of preferential trade concessions more volatile.

U.S.-India ties are more of “a collaboration of convenience,” said Nick Bisley, an international relations professor at Melbourne’s La Trobe University. “This could be used by the foreign policy elite in India to say, ‘Don’t get too close to the U.S.”’

Especially as the Indian election approaches, the administration’s decision could well get sucked into the campaign atmosphere of domestic politics. “The optics of this are bad, because it comes at a sensitive time,” said Pant of King’s College London. While unlikely to hurt broader bilateral ties, “with elections in just a couple of months, I don’t think the Indian government would like to be seen buckling to American pressure.”

The decision on Indian trade is also likely to be controversial among U.S. business interests – since it follows the administration’s pattern of using “get tough, bare knuckle policies” regarding trade issues when more nuanced negotiations might have achieved similar – or better – results, administration critics argue.

Thus, it is likely that the shifts in trade policy toward India will join the numerous other international policies that will be on the table in the upcoming debate over Congressional approval of the “new NAFTA” in the coming months – debates with important implications for producers and which they should watch closely as they intensify, Washington Insider believes.

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