Washington Insider -- Wednesday

Brighter Trade Outlook

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

Commerce Reopens Dumping Probe On Imports of Mexican Tomatoes

The Commerce Department is reactivating an anti-dumping case against tomato imports from Mexico, just one month after signing a deal to resolve the dispute.

The suspension agreement reached remains in effect, Commerce said Monday. The investigation was continued at the request of Red Sun Farms and the Florida Tomato Exchange (FTE).

The antidumping investigation by Commerce’s U.S. International Trade Commission (USITC) had been nearly complete when it was shelved after a new suspension agreement was reached August 20 and finalized September 19. FTE said it was requesting the investigation be reopened amid evidence the Mexican tomato industry was looking to launch legal challenges to the new agreement and could even seek to withdraw from it.

Commerce is required under the Tariff Act of 1930 to resume the antidumping investigation upon the request of interested parties when there is a suspension agreement in place.

The USITC will hold a public hearing on the situation October 24.

Repeal of Obama-Era WOTUS Rule Published

The rule to repeal the 2015 Waters of the U.S. (WOTUS) rule has been published in the Federal Register by the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers.

The agencies said they were taking the action as they view the 2015 rule as not implementing legal limits on the scope of the agencies’ authority, the 2015 rule did not give Congress adequate weight in the process, that the 2015 rule and more. The final rule from the agencies indicates that the 2015 WOTUS rule will be replaced with the portions of law under the Clean Water Act that “existed before the amendments promulgated in the 2015 rule.”

The action will become effective December 23. EPA and the Corps are also continuing to work on a replacement for the 2015 WOTUS rule.

Washington Insider: Brighter Trade Outlook

President Donald Trump told the Cabinet on Monday that “negotiations over an initial trade deal [with China] are advancing and raising expectations” and that a trade deal could be signed at a global leaders’ meeting next month in Chile.”

For example, Bloomberg quoted the President as telling the Cabinet, “they have started the buying,” during Monday’s White House meeting, referring to Chinese purchases of U.S. agriculture products that he has pushed as part of a deal. “I want more,” he added.

Earlier in the week, Commerce Secretary Wilbur Ross said that it was more important to get details of the agreement right than it was for the President to sign it at an expected meeting with Chinese President Xi Jinping next month.

Stocks in Asia gained Tuesday as positive signs regarding the trade talks emerged ahead of earnings from some of the world’s biggest companies. S&P 500 futures rose suggesting there is scope for the underlying gauge to extend gains after it surpassed 3,000.

Ross also said on TV that the “actual meat” of the agreement would come in two additional phases yet to be completed. While the White House touted a preliminary agreement earlier this month, officials in Beijing have yet to confirm that anything is set in stone.

U.S. officials say they expect China to significantly increase purchases of American agricultural commodities and agree to some intellectual property, financial services, and currency concessions. In exchange, the U.S. paused a tariff increase due to hit in the middle of October, just ahead of Christmas shopping season.

The agreement is being seen by some observers as a pause in the 18-month trade war that has hurt the economies of both countries – but which falls short of the dramatic overhaul of Chinese economic policy the administration has sought. The agreement also doesn’t address Huawei Technologies Co., which has pushed forward with a global effort to sign 5G commercial contracts even as the U.S. seeks to persuade other countries to blacklist the firm.

In addition, Reuters was reporting earlier in the week that India’s Trade Minister Piyush Goyal had said that the broad outline of a trade deal with the United States has been worked out. He suggested that an announcement would follow soon.

The two countries have been locked in trade disputes for months, “slapping higher tariffs on each other’s products and the U.S. withdrawing a key concession to India,” Reuters said.

Washington has been especially concerned about Indian policies that mandate foreign firms to store more data locally and restrict the way U.S. e-commerce giants such as Walmart-owned Flipkart and Amazon.com operate. Goyal told a business conference that he was hoping to meet U.S. Trade Representative Robert Lighthizer soon.

“We have almost resolved the broad contours of what we are going to announce. I don’t see any great difficulty in closing the gap on the first announcement,” Goyal said at the U.S.-India Strategic Partnership Forum (USISPF).

The deal under discussion includes lowering tariffs on U.S. farm produce while giving Indian pharmaceuticals faster approval to enter the U.S. market. India dominates the world’s generic drugs market and the United States is among its top importers.

“With regards to the trade talks between India and the U.S., the Commerce and Industry Minister said that things are on the right track and India is looking to the U.S. for technology, innovation, skills and quality education,” a government statement quoted Goyal as saying.

According to USISPF estimates, India-U.S. bilateral trade is projected to grow to $238 billion by 2025 from $142.1 billion in 2018. The expected boosts in trade and investments are expected to include sectors such as defense, commercial aircrafts, oil and LNG, coal, machinery and electronics, Reuters said.

India is aiming to promote automotive, pharmaceuticals, seafood, IT and travel services to the U.S. market. Goyal indicated that India and the U.S. “must look at a larger trade agreement,” the government statement said, without elaboration.

So, we will see. Clearly, the negotiating progress in these talks being pointed to is in early, vulnerable stages similar to those in which disruptions have come before with little warning. But even fragile signs of agreement are better than the alternative and should continue to be watched closely as they approach completion, Washington Insider believes.

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