Washington Insider -- Thursday

EU Trade Commissioner Visits US

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

US-China Trade Deal Signed Addressing Several Key Issues

President Donald Trump and Chinese Vice Premier Liu He signed the Phase One trade agreement at the White House Wednesday, flanked by more than 200 in attendance that represented several sectors of the U.S. economy that should see benefits from the trade deal.

The purchase commitments of U.S. ag products in the agreement are for a two-year total of $80 billion. That comes from purchases of $12.5 billion beyond a $24 billion base period for $36.5 billion in 2020 and $19.5 billion beyond the $24 billion base period for $43.5 billion in 2021.

The package also addresses issues in China such as their operation of their tariff-rate quotas (TRQs) for wheat, corn and rice. The U.S. successfully challenged China’s operation of the TRQs at the WTO as the country has not filled those for the commodities in question. The TRQs were part of China’s commitments when the joined the WTO.

The agreement also calls on China to set maximum limits on residues for three growth hormones used in beef production and removes the age limit on animals that U.S. beef can come from to ship to China.

The agreement also has China committing to a specific timeline for approving new GMO products and has other biotechnology-related provisions aimed at preventing future trade issues.

DOE to Provide Funding For Research On Bioenergy Crops

Up to $75 million over five years will be provided for research on development of sustainable bioenergy crops that can withstand environmental stress and changing environmental conditions, according to an announcement from the Department of Energy.

The funding will be directed at universities, industry and nonprofit research institutions as the lead researchers and they may collaborate with DOE national labs and other federal agencies.

The funding will be awarded on a competitive basis in the form of five-year grants ranging from $1 million to $3 million per year starting in Fiscal Year (FY) 2020.

Planned funding is $75 million over five years, with outyear funding dependent on appropriations.

Washington Insider: EU Trade Commissioner Visits US

Most of the press is focused on the first phase of the China trade deal this week but there is another effort underway as Europe’s new trade commissioner has come to Washington. His mission is “to prevent the Trump administration from ruining the European economy,” the New York Times said.

The Times is not optimistic. It thinks that trans-Atlantic relations are so low that Commissioner Phil Hogan, a blunt-talking, physically imposing Irishman, “will probably do well if he can simply prevent things from going any further downhill.”

The Times reviews its list: the U.S. is threatening tariffs that would double the price of imported French wine. The EU accuses the administration of paralyzing the system for resolving trade disputes and likely is “ushering in an era of conflict and disorder.” Punishing tariffs on European steel and aluminum remain in place. And, the administration continues to threaten duties on European cars, a potentially heavy hit.

Finally, the Times says Europeans are deeply alarmed by “what they regard as the president’s recklessness in the Middle East.”

“The current state of EU-U.S. relations isn’t good, and I don’t think it’s likely to get better anytime soon,” said Peter Chase, senior fellow at the German Marshall Fund of the United States in Brussels.

Still, Commissioner Hogan brings a different set of skills than Cecilia Malmstrom, whom he succeeded at the beginning of December. Some in Brussels think his rawer style will make him a better match for the current occupant of the White House.

“He is more direct,” said Luisa Santos, the director for international relations at BusinessEurope, an industry group. Gender may also play a role, Santos said. There is a widespread perception in Washington and Brussels that Trump officials were not comfortable with Ms. Malmstrom, an assertive Swede.

But it’s unclear whether Hogan will have any more success than Malmstrom at repairing the largest trade partnership in the world, worth $1 trillion a year.

His agenda includes meetings with Robert Lighthizer, the United States Trade Representative; Steven Mnuchin, the Treasury secretary; and Wilbur Ross, the Secretary of Commerce. To varying degrees, all support the president’s hard line on trade relations, the Times said.

On Tuesday, there was a sign that the United States and Europe were still capable of cooperating. Hogan, Lighthizer and Kajiyama Hiroshi, the Japanese minister of economy, trade and industry, said in a joint statement that they would work together to tighten international rules on government subsidies and forced transfer of technology.

The statement was clearly aimed at China, which is often accused of propping up its companies to give them an unfair advantage over foreign competitors and of forcing foreign companies to share sensitive technology in return for permission to operate in China. The three countries also agreed to work together to reform the WTO, a key objective of the Europeans.

A 6-foot-5 former farmer from Kilkenny in southern Ireland, Hogan spent much of his political career in the trenches of Irish domestic politics, helping to build the centrist Fine Gael party into Ireland’s strongest bloc. He was Fine Gael’s director of organization in the early 2000s and later head of the party’s national election campaign.

A former agriculture commissioner, Hogan was often involved in trade talks and gained a reputation for being canny and well prepared. Farm products are typically the most politically sensitive component of trade deals. A plan to reach a more comprehensive transatlantic trade deal early on in Trump’s tenure fell apart over disagreements about how to address agriculture.

But little remains of the optimism that followed a meeting in July 2018 between President Donald Trump and Jean-Claude Juncker, then the president of the European Commission. The two men said they would work to reduce tariffs to zero and eliminate regulations that hindered trans-Atlantic trade.

Still, progress has been modest at best. In July, they agreed to recognize each other’s inspections of factories that produce pharmaceuticals. But in most other ways, the relationship has only soured.

The Europeans accuse the United States of crippling the WTO by blocking appointments of new members to a crucial panel that hears appeals in trade disputes. Without a system to enforce trade rules, Hogan told members of the European Parliament last year, “Well, then, there isn’t any point in having agreements.”

“When sides take unilateral actions that harm the other side, that are inconsistent with international norms, the other side has a right to be angry,” said Clete Willems, a partner at the law firm Akin Gump who was an economic adviser in the White House until last year. “That’s where we are with the EU now.”

Hogan is expected to try to convince his American counterparts that Europe and the United States should work together to rein in China, in part by fixing the WTO. He also plans meetings on Capitol Hill, where his Irish-ness is likely to play well.

So, we will see. Clearly, avoiding negative trade sanctions is no small task, especially at this point in time. Thus, Hogan’s work in the U.S. is important and should be watched closely by U.S. producers throughout the week, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com