Washington Insider -- Monday

More US, Latin American Angst

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

Progress In US-China Talks with More This Week

Attention in the week ahead will be on U.S.-China trade talks to take place in Washington. The sessions this week come after U.S. officials were in Beijing for talks last week.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin met with China officials, headed by Vice Premier Liu He.

"The two parties continued to make progress during candid and constructive discussions on the negotiations and important next steps," the White House said. "The United States looks forward to the meetings planned with Vice Premier Liu He and the Chinese delegation in Washington."

Chinese Commerce Ministry spokesman Gao Feng told reporters last week that while some progress has been made, “much work remains to be accomplished.”

National Economic Council Director Larry Kudlow said on Thursday that the Trump administration was prepared to stretch the talks with China for “months” and Washington was in no rush to resolve the problems. “This is not time-dependent,” Kudlow in a speech in Washington. “This is policy and enforcement-dependent … If it takes a few more weeks, or if it takes months, so be it. We have to get a great deal, as the president says, that works for the United States. That’s our principal interest.” Kudlow added that Washington had proposed including in the pact a provision for regular meetings to assess China’s implementation of any reforms agreed — including improving treatment of U.S. intellectual property and opening up market access.

US Ag Export Continue to Struggle

U.S. agricultural exports in January totaled $11.929 billion against imports of $11.365 billion for a trade surplus of $564 million. The export figure reflected a rise from December when exports were valued at $11.277 billion while imports also moved up from a December mark of $10.680 billion for a $597 million surplus.

The totals also marked stronger export and import values compared to January 2018 and the trade balance was wider than the $305 million in January 2018, the smallest trade surplus of Fiscal Year (FY) 2018.

The January data means after the first four months of FY 2019, exports are off more than $3 billion compared to the same period in FY 2018. Similarly, import values are up more than $4 billion over the year-ago four-month period.

So far in FY 2019, the U.S. ag trade surplus totals $4.313 billion compared with $8.932 billion at this stage of FY 2018.

FY 2018 saw U.S. agriculture register five months with trade surpluses of $1 billion or more, including three months to open the FY. This year, U.S. agriculture was only able to put together two months in a row with an ag trade surplus of $1 billion or more.

That suggests U.S. agriculture could well struggle to meet the USDA export forecast of $141.5 billion against imports of $128 billion for a surplus of $13.5 billion.

Washington Insider: More US, Latin American Angst

There is a great deal of pressure on the Southern U.S. border these days as the president threatens to close it at the same time he cuts “hundreds of millions of dollars in aid to three Central American countries in retaliation for what he called their lack of help in reducing the flow of migrants to the U.S. border,” the Washington Post reported Sunday.

The Post said the aid cut was one of the harshest actions yet as the administration escalates a confrontation with Mexico and Central America over a surge in irregular migration, largely involving children and families seeking asylum.

The aid cut was announced by the State Department on Saturday. It said the U.S. will be “ending ... foreign assistance programs for the Northern Triangle” — a region encompassing El Salvador, Guatemala and Honduras. The move would affect nearly $500 million in 2018 funds and millions more left over from the prior fiscal year. The money was destined for Central America but has not yet been spent, the Post said.

The administration’s action was the culmination of a months-long battle in the U.S. government over the aid program, which grew substantially under the Obama administration and was intended to address the root causes of migration—violence, a lack of jobs and poverty.

Some administration officials argue that the program failed to achieve “enough” results and in recent months have been looking into alternatives. Still, the decision to cut off the remaining funds appeared to take many people by surprise, especially since it came just a day after Homeland Security Secretary Kirstjen Nielsen signed what the department called a “historic” memorandum of cooperation on border security in Central America.

One former U.S. official said there was “chaos” in the State Department and U.S. embassies as officials tried to figure out whether they had to cancel existing contracts or simply not renew them.

The number of apprehensions along the U.S.-Mexico border has been soaring, with more than 76,000 migrants taken into U.S. custody in February, most of them from Central America. On Friday night, during a trip to Florida, the president faulted governments in the region for the increase.

Democratic officials, aid groups and former officials said the president’s action could boomerang by shrinking or eliminating some of the very programs keeping would-be migrants in Central America.

“Ironically, our goals of having people stay and thrive in El Salvador are very similar to the current administration’s,” said Ken Baker, chief executive of Glasswing International, which runs education, health and entrepreneurship programs in El Salvador and receives funding from the U.S. Agency for International Development. “Through our programs, we’ve been able to provide opportunities and the belief that they [would-be migrants] can thrive here.”

“The key is to get to them before” they leave for the United States, he said. “When you’re talking about the problem at the border in the U.S., it’s already too late.”

Jim Nealon, a former U.S. ambassador to Honduras, said that the president “doesn’t seem to understand” the way the Central American aid program works. The U.S. government doesn’t give the money to foreign governments, but rather “to programs designed and implemented by the U.S., with the cooperation of governments and civil society,” he said. Much of the aid is administered by nonprofit groups.

He also thinks that Central American governments are not seeking to send their citizens to the United States. “To the contrary, they already cooperate with us in trying to deter migration.” Honduras, El Salvador and Guatemala are among the poorest countries in the hemisphere, and among the most violent in the world. Authorities in the region have said they are taking what measures they can under their laws. Mexico, for example, has offered thousands of temporary humanitarian visas to migrants, permitting them to stay and work in the country.

Raul Lopez, vice minister of justice in El Salvador, said Friday that the flow of migrants from his country was actually slowing. U.S. assistance has had a positive impact in reducing migration from El Salvador, but “we need more help to continue this fight,” he said.

It was unclear whether Congress will try to block Trump’s decision to shift the Central American aid elsewhere. A delegation of congressional Democrats visiting El Salvador on Saturday called the administration’s move “counterproductive” and said they would “do everything in our power to push back on the president’s misguided approach to Central America.” The group included Rep. Eliot Engel, N.Y., chairman of the House Foreign Affairs Committee and Rep. Jerrold Nadler, N.Y., chairman of the House Judiciary Committee.

Unauthorized crossings of the U.S. border have reached their highest level in a decade, although they are still well below the peak of 1.6 million in 2000. But the migrant flow has changed in character. Most migrants used to be Mexican men who could be easily deported, but now they are asylum-seeking families that are entitled to certain protections under federal law.

The president apparently has won his fight to substantially expand the border wall, but immigration continues to be an intensifying flashpoint—and likely will continue to be throughout the runup to the 2020 elections. These fights should be watched closely by producers as they intensify, Washington Insider believes.

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