Washington Insider -- Tuesday

US and China Seek April Trade Deadline

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

Reuters: Brazil import quota for US wheat could come with Bolsonaro visit

Brazil is considering granting an import quota of 750,000 metric tons of U.S. wheat per year without tariffs in exchange for other trade concessions, Reuters reports, citing a Brazilian official with knowledge of the negotiations ahead of President Jair Bolsonaro's visit to Washington.

That would be about 10% of Brazilian annual wheat imports and is part of a two-decades-old commitment to import 750,000 metric tons of wheat a year free of tariffs that Brazil made during the World Trade Organization Uruguay Round of talks on agriculture but never adopted.

Bolsonaro arrived in Washington on Sunday and will meet today with Trump at the White House.

Reports indicate a quota would increase U.S. wheat sales by between $75 million and $120 million per year.

In return, the Brazilian government is hoping to see movement toward the reopening of the U.S. market to fresh beef imports from Brazil and improved market access for its limes and also more access for its sugar to the U.S., though the latter is not seen happening.

EPA Publishes Notice on Meeting For E15/RIN Reform Plan

EPA on Monday published the notice for the March 29 public hearing on their proposed rule to allow year-round sales of E15 fuel and to make changes to the Renewable Identification Number (RIN) system.

The hearing will be held in Ypsilanti, Michigan, March 29, beginning at 9 a.m. (CT). Those wishing to testify at the hearing need to make that known by March 26, according to a notice to be published in the March 18 Federal Register.

"The EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time," EPA said. "Written statements and supporting information submitted during the comment period will be considered with the same weight as any oral comments and supporting information presented at the public hearing.

Written comments must be received by the last day of the comment period, as specified in the notice of proposed rulemaking."

But the notice for the E15/RIN proposed rule has not yet been published. A pre-publication version notice said that comments would be due April 29.

Washington Insider: US & China Seek April Trade Deadline

The New York Times and many other news outlets are reporting that the United States and China are pushing for a summit meeting in late April to complete a trade deal — even as negotiators are still grappling over its terms and how they should be enforced.

Although much remains unsettled, one thing is becoming clear: The administration intends to continue to hold the threat of tariffs over Beijing to ensure that it lives up to any commitments it agrees to in the final deal — an intention that worries American businesses who fear that the damage and uncertainty caused by this trade war could persist even after negotiations end.

On Friday, a report commissioned by the nation’s biggest business lobbying group concluded that the administration’s tariffs are “damaging industries the levies were intended to protect.”

The report, by the U.S. Chamber of Commerce and the Rhodium Group, a research firm, said that the U.S. tariffs on $250 billion worth of Chinese goods would, if they remain in place, reduce U.S. GDP by at least $1 trillion within 10 years. The American GDP was about $20.5 trillion in 2018.

The business community, along with both Democrats and Republicans in Congress, has been critical of the administration’s tariffs but has been willing to carry the costs of the trade war “if it brings about needed change.”

Businesses have long complained of unfair treatment in the Chinese market, including pressure to hand over valuable technology and discrimination against foreign companies operating there, the Times said. The administration claims that China’s hacking intrusions and coerced acquisitions of technology cost American companies at least $50 billion a year alone.

But it remains unclear whether the U.S.-proposed final deal will achieve the kind of change that would make the fight worth the cost. American negotiators have been pushing China for more substantive economic changes than it seems willing to accept, including rolling back subsidies to Chinese companies and lowering barriers to foreign competition.

China’s lawmakers last week passed a sweeping rewrite to its laws on foreign investment. While the reforms are a nod to Trump’s concerns, some China experts say it represents only a step toward the kind of more transformative changes that are needed.

The president has insisted he could “walk” if America does not get what it wants from China. But he also wants to avoid further roiling a jittery stock market, which has fallen on news of a prolonged trade war, and to limit economic damage ahead of the 2020 election.

That is prompting concern among Republican lawmakers and American businesses that the administration could ultimately accept a weak deal that includes high-profile purchases of some U.S. products like liquid natural gas and soybeans but only vague and unenforceable commitments in more important areas of structural reform.

The administration pushed earlier toward a signing summit at the end of March. But outstanding differences mainly over tariffs and enforcement of the agreement have prolonged the talks.

In a meeting last week, the president consulted Vice President Mike Pence, USTR Robert Lighthizer, and other advisers to discuss whether China is serious about offering concessions or if it was merely paying lip service to the United States.

Steven Mnuchin, the Treasury secretary, said Thursday that the administration was “pleased with the progress” of the talks and that “a lot of documents” were moving back and forth — but acknowledged that a signing ceremony this month was out of the question.

“We still have more work to do,” Mnuchin said. The Chinese are now pushing for Xi’s trip to take the form of a state visit to Washington, though plans are still in flux.

Susan Shirk, chairwoman of the 21st Century China Center at the School of Global Policy and Strategy at the University of California, San Diego, said, “if my supposition that this is actually a more professional negotiation is correct, then it’s not surprising it would need more time — it doesn’t mean things are bad.”

We don’t need another U.S.-North Korea summit, where so much was left unresolved, said Gary Locke, an American ambassador to China during the Obama administration. “You need all the minutiae negotiated ahead of time.”

A final deal could also be stymied by America’s insistence that it be allowed to use tariffs against China if Beijing does not uphold its end of the agreement. China is pushing for the U.S. to lift all tariffs now in place and there is concern among Chinese officials about agreeing to a deal that does not do that or that allows the United States to impose additional levies in the future.

In testimony before Congress last week, Lighthizer declined to specify whether the administration would lift all of its tariffs when a deal is struck, or make some of them contingent on certain reforms. Lighthizer is thought to prefer the latter approach, but might be overruled, the Times said.

In China, the tone has turned more positive, the Times thinks, potentially presaging a conclusion to the talks. Xinhua, China’s state news agency, reported that Mnuchin and Lighthizer spoke with Vice Premier Liu He by phone on Thursday and made “further substantial progress” on the text of the deal.

Pushing back the summit for another month seems to be a good sign, although it is clear that there are still numerous issues to be resolved. Certainly, these talks should be watched closely by producers as they proceed, Washington Insider believes.

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