Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.Lighthizer Spells Out Why He Thinks China Will Meet Purchase Commitments
U.S. Trade Representative Robert Lighthizer fully expects that China will live up to the terms of the phase-one trade deal negotiated between the two sides.
In comments to USDA Secretary Sonny Perdue in the ag chief’s Sonny Side of the Farm podcast, Lighthizer said the enforcement provisions in the deal are very strong and solid.
But he also offered an interesting observation when it comes to the texts of the agreements. In most cases with agreements, there are differences in meanings when it comes to texts in different languages, he noted. “So I said, ‘bring me these other agreements, all these agreements with China – they agreed they would do this or that.’” He pointed to several agreements negotiated with China over the past 10 years, stating, “I found out none of them were in writing. They were just a press release from the United States. Well I thought, ‘Well no wonder China did not think they have to…’ it is breath taking to hear about these agreements, you read the press release and then you say, ‘Let me see the actual agreement,’ and there is no actual agreement … literally nothing there – not in Chinese not in English.”
The phase-one agreement is “in both languages. It has been authenticated, it has dispute settlement, and enforceability. And it is signed at the highest levels of government,” Lighthizer said. “I think the Chinese want to do this. I think the ag purchases, in particular, are in their interests for sure. I think they are going to do it, but if they do not, we have an enforcement mechanism to insist on it.”
House Clears Senate-Passed Bill to Add Ag Inspectors At Border
The House unanimously passed a bill that would increase the number of pest and disease inspectors at the border, the Protecting America’s Food & Agriculture Act of 2019, which passed the Senate in October.
The package would authorize the U.S. Customs and Border Protection (CBP) to hire and train 240 new agricultural specialists each year until a work shortage is filled. CBP estimates a shortage of nearly 700 inspectors across the country.
The legislation now moves to President Donald Trump who is expected to sign it.
Washington Insider: New Federal Reserve Fight
The Hill is reporting this week that the President’s latest effort to reshape the Federal Reserve faces a new test as senators grill a controversial pick for the bank’s board of governors.
The nominee this time is Judy Shelton, a former Trump campaign adviser. The Hill calls her views “unconventional” and wonders whether they will disqualify her for Board membership.
The nomination is considered the President’s most viable chance to place an ally within the Fed after Senate Republicans rejected his past two picks, economist Stephen Moore and Herman Cain--who were both seen as sharp critics of the bank.
Now, The Hill says that Shelton “can expect similarly tough scrutiny.”
Like the President, she blasted the Fed during the Obama administration for keeping low interest rates but reversed course soon after the 2016 election. Recently, she has echoed Trump’s calls for near-zero interest rates and questioned the bank’s independence as the president continues to push for lower interest rates.
Shelton has defended her changed stance since the administration first floated her nomination in July. She argues that she has always been critical of the Fed. However, her reversal on monetary policy has raised questions about her ideological integrity and whether she’ll prioritize the Fed’s legal mandate over the President’s political prospects.
“What her actual ideological beliefs are does matter,” said Brandon Barford, a former Republican Senate Banking Committee aide from 2006 to 2009. “Is she being an opportunist, or has she truly changed her policy beliefs?”
And a position on the Fed board would make her the front-runner to take over the Fed if Trump attempts to oust its current chairman, Jerome Powell, The Hill says. “That’s why it’s a lot more serious to vote for her than most Republican senators are giving credit to,” Barford said.
Shelton will appear before the Banking panel with Christopher Waller, executive vice president of the Federal Reserve Bank of St. Louis, who was nominated in tandem with her. While Waller is expected to easily pass muster with the Committee, Thursday’s hearing will give the first indication of whether Shelton’s candidacy could be derailed by her controversial record. Democrats are expected to unanimously oppose her nomination, which means the opposition of just four Republicans could quash her nomination.
Shelton has already been confirmed by the Senate as the U.S. director of the European Bank for Reconstruction and Development—a fact that suggests that strong opposition to her nomination likely would have surfaced already if that was in the cards.
Republicans have also expressed concern over Shelton’s decades of support for tying the U.S. dollar to gold, creating a global currency union and rejecting deposit insurance at American banks. For example, “There are a lot of questions about her,” Sen. Richard Shelby, R-Ala., a former Banking Committee chairman, told the press. “I have a few, but I’m not the only one.”
Her views about a gold-linked currency and fixed exchange rates are well beyond the current economic mainstream in either party, Barford a former Shelby aide, said. He recalled receiving letters from Shelton’s Sound Money Project that fell flat among the GOP staff. No one was sending us anything like that and the idea of even calling her as a witness for something was beyond the pale,” he said.
Trump’s previous efforts to put Fed critics on the bank board faltered but some Republicans now appear reluctant to reject yet another pick. For example, Sen. Kevin Cramer, R-N.D., who sank Cain’s potential Fed nomination, announced his support for Shelton and Waller after meeting with both last week, calling the two “well qualified.”
And even some of Trump’s biggest critics from the right have voiced support for Shelton’s confirmation despite differences of opinion on core aspects of monetary policy.
“She would be a good addition to the group that’s there,” said J.W. Verret, a George Mason University banking law professor and former Trump transition aide who backed the president’s impeachment. “I disagree with her views on interest rate policy and Fed independence but she’ll be one vote of 12, and I think a variety of views should be presented.”
“Confirming her as a governor would open the door to that possibility, and to her efforts to fundamentally transform how we do monetary policy in a way that I think is anathema to most Republican senators, let alone most Americans,” said Sam Bell, policy director at Employ America, which advocates for Fed policy intended to maximize employment
Bell warned of the high stakes involved in Shelton’s nomination. “Once you’ve confirmed someone as a governor, it’s hard to then go back and say, ‘I don’t want you as chair,’” he added.
So, we will see. The President’s fights with the Fed have been both bitter and prolonged. This effort to impose even more basic changes could have important implications and should be watched closely as it proceeds, Washington Insider believes.
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