Washington Insider -- Wednesday

Shifting Politics of Trade

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

China Demand For Brazilian Soybeans To Remain Stable: Reuters

China's demand for imports of Brazilian soybeans should remain stable, Yang Wanming, China's ambassador to Brazil, told Reuters in an interview.

"I personally think there is no need to worry," he said, indicating that is his view regardless of whether a deal is cut between the U.S. and China.

There has been concern in Brazil that current U.S.-China trade discussions could negatively impact Brazilian soybean shipments to China which rose dramatically after China hit U.S. soybeans with tariffs.

Yang also said that Brazil could see more meat exports to China via high-level talks set for May. "We believe through the cooperation of both countries' agriculture ministries and quality inspection departments, more Brazilian farm and animal products can be imported into the Chinese market," Yang told Reuters.

The news service said that up to 78 Brazilian meat plants could be added to the list of those approved to ship to China.


US Wheat Industry Reps in Brazil To Discuss Imports

Representatives of the U.S. wheat industry are in Brazil this week to talk about demand once the tariff-free quota of 750,000 metric tons is opened by Brazil.

The U.S. group met with the president of Brazil's wheat milling association Abitrigo, Rubens Barbosa. "They know Brazil will continue to import significant amounts of wheat in coming years, and they want to increase their share of that market," he commented, adding the group supports the import quota since it will provide the industry access to greater supply at lower prices.

There has been no date set for implementation of the quota that will cover wheat from all sources, but Barbosa noted the government is working on the regulation.

The U.S. is expected to hold some competitive advantage under the quota, but Russia has been making overtures to Brazil as a wheat supplier which could be a factor.


Washington Insider: Shifting Politics of Trade

Rural voters are widely seen as solid supporters of the President, The Hill says this week, but Senate Republicans are negotiating among themselves over how to respond to the volatile trade agenda as they brace for possible tariffs on the European Union (EU) and a trade deal with China that some fear could leave American farmers worse off.

The result is divisions over whether to send a stern message to the White House with a tough bill that’s likely to get vetoed — or a more modest proposal that could actually get the presidential signature and become law.

This was formerly “a dilemma that GOP leaders eschewed altogether” because of fears that an intraparty fight could hurt voter turnout, The Hill said. This year, however, there is strong support from influential members of the Senate GOP for reining in presidential tariff powers but disagreement over exactly how to do that, putting Majority Leader Mitch McConnell, R-Ky., in a bind.

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, says he will introduce legislation in the coming weeks that would strengthen what his office calls “checks and balances between Congress and the executive branch by imposing new consultation and reporting requirements.”

But Republicans on the Finance panel are divided over how hard to push back against the President with two leading members — Sens. Rob Portman, R-Ohio, and Pat Toomey, R-Pa., — advocating different, competing approaches that Grassley is trying to meld together behind the scenes.

Time is short, The Hill emphasizes, as President Trump has already threatened to impose $11 billion in tariffs in retaliation for EU subsidies to Airbus, putting new pressure on GOP lawmakers to act.

The White House threatened earlier this year to impose a 25% tariff on imported cars, which could boomerang on several Republican states if trade partners impose retaliatory penalties, a problem for politicians in Ohio, Indiana, Texas, Tennessee, Missouri, Kentucky, Alabama and Mississippi, which all rank in the nation’s top 10 for auto manufacturing.

McConnell, who is up for reelection in 2020, also doesn’t seem eager to confront the president head on and won’t say whether he’ll bring legislation curbing his tariff authority to the floor.

In addition to senators concerned about auto manufacturing, farm-state Republican lawmakers say they worry that the president’s anticipated trade deal with China will hurt U.S. agricultural interests and some fear that the president will negotiate an agreement under which China would buy a certain amount of soybeans or pork but leave other U.S.-produced commodities in limbo.

Though the biggest obstacle to quick action in the Senate is disagreement among Republicans over how hard to push back on Trump’s trade policies, there also are concerns about how much Democratic support to expect.

While Democrats can be counted on to oppose most anything that Trump wants to do, his trade policies have put them in a quandary as Democratic constituent groups such as labor unions are critics of globalization and free trade.

Portman has opted to work closely with the administration on legislation that could have a chance to become law and would require the Department of Defense, instead of the Department of Commerce, to justify the reliance of national security concerns to impose new tariffs under the 1962 Trade Expansion Act, and Congress could block such restrictions using a “resolution of disapproval” expanding the check provided in the original trade law — which only applied to action on oil imports. However, this approach would only apply prospectively and would not undo some of administration’s other trade actions, which might make it more palatable to the White House.

However, critics say Portman’s plan doesn’t have sharp-enough teeth and argue there’s no mechanism to guarantee the disapproval resolution floor time.

Toomey’s bill is tougher. It would give Congress 60 days to approve any proposed tariffs under the 1962 Act — which would also require “an approval resolution within that period.”

Toomey’s legislation also would shift more authority to the Department of Defense to determine whether a foreign trade practice actually poses a national security threat.

Unlike Portman’s bill, the Toomey proposal would apply retroactively and any 1962 Act tariffs and quotas imposed over the past four years would be repealed unless Congress passes approval resolutions within 75 days of enactment.

The Hill notes that several provisions in the Portman and Toomey proposals are irreconcilable, such as the conflicting oversight pathways — either a disapproval or an approval resolution — and the issue of retroactivity.

Critics of Toomey’s legislation argue that it is “destined for a presidential veto,” as the president won’t be willing to give up his tariff powers.” They say Portman’s plan has a better chance of becoming law because of his close consultation with White House advisers.

The sponsors of the competing bills say they expect Sen. Grassley to have a hearing on the legislation after the two-week April recess and to trigger a very important debate that producers should watch closely as it proceeds, Washington Insider believes.


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