Washington Insider -- Thursday

Trade Deal With Japan

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

Trump Again Talks Potential For US-China Deal, Or Maybe Not

President Donald Trump told reporters en route from New Mexico to California that the U.S. and China could ink a trade deal soon, or it may still wait until after the 2020 elections.

"I think there will be a deal maybe soon, maybe before the election, or one day after the election. And if it is after the election, it will be a deal like you have never seen, it will be the greatest deal ever and China knows that," Trump said.

As for the elections, Trump stated China thinks he will win in November 2020. "China thinks I am going to win so easily and they are concerned because I told them: 'If it's after the election, it's going to be far worse than what it is right now.' I told them that. Would they like to see somebody else win? Absolutely," Trump added.

China's trade and economic officials arrived in Washington Wednesday for talks Thursday and Friday at the deputy level.


Sen. Hoeven Calls On House To Support Payments To Farmers

Senate Appropriations Committee Chairman John Hoeven, R-N.D., said the House should support farmers and ranchers, and ensure Market Facilitation Program (MFP) payments are not delayed.

In a letter Tuesday, Hoeven led Republican members of the Senate Appropriations Committee in pressing House Speaker Nancy Pelosi, D., Calif., and House Appropriations Committee Chair Nita Lowey, D., N.Y., to support the nation’s farmers and ranchers and ensure that Market Facilitation Program (MFP) payments for producers are not blocked or delayed in the House of Representatives’ continuing resolution (CR).

The Senate GOP group urged the House to reimburse the CCC, which is routinely supported by Congress, to ensure producers have access to much-needed agriculture assistance.

“Our nation’s farmers and ranchers badly need the MFP committed to them by the President, using the legal authority that we in Congress provided. For many of our producers, MFP will be the difference between continuing the family tradition or being denied the credit necessary to farm and ranch for another year,” the letter said.

DTN reported late Wednesday that House Agriculture Committee Chairman Collin Peterson, D-Minn., said he had received assurances the Commodity Credit Corp. funds will be in the continuing resolution.

Washington Insider: Trade Deal With Japan

The administration has been celebrating a new trade deal with Japan for some time, and Bloomberg is reporting this week that the deal will be formally announced this month, according to White House economic adviser Larry Kudlow.

President Donald Trump and Japanese Prime Minister Shinzo Abe are scheduled to hold a one-on-one meeting Sept. 25 during the UN General Assembly in New York, Kudlow said Tuesday.

“There just might be an announcement at the United Nations,” Kudlow told the U.S.-Japan Business Conference in Washington. “You can never tell, but I’m an optimist.”

On Monday, President Donald Trump said that his administration had struck a partial trade accord with Japan on tariff barriers and digital trade. He says a formal agreement is expected in the “coming weeks.”

The president, however, didn’t make clear whether he’d end the threat of slapping steep auto tariffs on Japan – a key reason that Tokyo wanted to negotiate with the U.S. from the outset of talks that began last year, Bloomberg says.

Japanese Foreign Minister Toshimitsu Motegi, the country’s point man for the talks, said on Tuesday that Tokyo wanted the Trump administration to end the threat of new auto tariffs before agreeing to a final trade deal. “We are aware of the internal process that is going on in the U.S. and the president’s notice of the U.S.-Japan trade negotiations,” Motegi told reporters in Tokyo.

The President announced the initial agreement in a notice to Congress, though he doesn’t require their approval to implement the deal.

U.S. Chamber of Commerce Chief Executive Officer Thomas Donohue, speaking at the same event as Kudlow, said business leaders are urging the administration to keep its focus on securing a “comprehensive high-standard trade agreement with Japan in the near future.”

“We need to make sure this initial package is a step in that direction,” said Donohue. “A comprehensive trade deal with Japan will provide some badly needed predictability – not only with the U.S. and Japan, but for our trade allies.”

On the prospects of a U.S.-China trade deal, Kudlow said the mood has turned more optimistic. “There’s a little music in the air, which is not always so but right now, we should enjoy the day,” Kudlow said.

U.S.-China trade deputies are meeting today and tomorrow in Washington and trade principals from the two countries will meet in mid-October to continue talks, Kudlow said.

However, in the midst of positive news about the expected deal, Bloomberg said that U.S. rice growers won’t get increased sales under the current terms of the expected deal.

While there are still details to be finalized, Bloomberg reported that there is not expected to be any expansion of Japan’s quotas for U.S.-grown rice. U.S. producers hope the issue will be dealt with in the second phase of negotiations between the two countries, Bloomberg said.

The report also cautioned that it is unclear whether or when Trump and Abe will continue talks given that any trade deal in Japan has to be approved by the parliament and the Trump administration is running out of time before the 2020 presidential election.

Japan is a key export market for U.S. rice farmers, who have been under pressure since the Asian nation signed agreements with other countries included in the revised 11-member Trans-Pacific Partnership that the administration ditched early in its tenure. U.S. Agriculture Secretary Sonny Perdue had suggested the White House may make a concession on rice, which is “sort of a cultural issue in Japan,” local media have reported.

“Although we are glad to see the bilateral agreement between the U.S. and Japan, we were disappointed to see that U.S. rice was not included,” Stuart Hoetger, a rice trader and manager of Pinnacle Rice Coop in Chico, California said.

Japan is required to import 682,000 tons of rice under a WTO commitment with the U.S. typically making up about half of that amount, according to USA Rice. Since Japan signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership there’s been more competition from Australian producers, the industry group said.

Chris Crutchfield, president of rice miller and marketer American Commodity Company LLC in Williams, California, said the U.S. industry wants not only more volume but better quality access to the Japanese market. Much of the U.S. rice going to Japan is auctioned by the government and used to make noodles, beer or sake, with only a small amount sold as table rice. American rice should be allowed to be auctioned directly to private buyers and marked as being grown in the U.S.

“We still believe the administration is going to get us something better than we currently have,” Crutchfield said.

So, we will see. The administration is looking to this agreement, along with similar ones with other important markets to damp down farmer resentments over the abandonment of the Trans Pacific deal. However, those pressures likely will depend heavily on how successful the next round of talks with China prove to be – negotiations producers certainly will watch closely as they take place, Washington Insider believes.

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