Washington Insider -- Tuesday

By DTN's Washington Insider

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

USTR Defends Tariffs on China, But Seeks Input on Potential Exemptions

The Office of the U.S. Trade Representative (USTR) is defending the imposition of tariffs on China under Section 301 of U.S. trade law, noting they have exempted several “critical products” like ventilators, oxygen masks, and nubilators and issued tariffs exemptions on large numbers of health-related products.

U.S. imports of all critical medical and pharmaceutical products were up over 20 percent since 2017, before Section 301 tariffs were imposed, USTR said.

However, they announced they have now opened a new docket for the public, businesses and government agencies to submit comments “if they believe further modifications to the 301 tariffs may be necessary. This comment process does not replace the current exclusion process and supplements that process.

Submissions are limited to comments on products subject to the tariff actions and relevant to the medical response to the coronavirus.”

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FSIS Makes Several Changes to US Export Policies For China

USDA’s Food Safety and Inspection Service (FSIS) late last week unveiled a host of changes in the U.S. export library for meat products to China reflecting terms of the phase-one agreement.

Most of the actions detailed by FSIS involve the moves made by China to remove the age limit on beef and the setting of maximum residue limits (MRLs) on beef hormones. The guidance also reminded exporters are urged to “to work closely with their importer regarding Chinese standards of meat and poultry products intended for export to China.”

Meanwhile, China has indicated it will move away from a nationwide ban on imports of U.S. poultry should the U.S. experience a case of avian influenza, another component of the phase-one agreement between the two countries.

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Washington Insider: Humanitarian Crisis in Iran

Almost everything is about the virus these days, but some of the news is deeply nuanced. For example, the U.S. is being pressed to ease sanctions on the Islamic Republic of Iran, but is pushing back, Bloomberg says.

Iran has reported more than 1,800 deaths from the pandemic and its leaders and some aid groups say America’s crushing “maximum pressure” campaign against it is worsening a humanitarian disaster. The U.S. says it stands ready to help Iran — although it simultaneously blames the crisis on the regime’s mismanagement.

“U.S. sanctions are not preventing aid from getting to Iran,” Brian Hook, the State Department’s point person on Iran issues, said. “The ayatollah has vast resources at his personal disposal. We have broad exemptions that allow for the sale of medicines and medical devices by U.S. persons or from the United States to Iran.”

However, finding companies that are willing to navigate U.S. rules in an effort to sell to Iran but sidestep punishing American sanctions has been difficult since the U.S. administration began ratcheting up pressure in 2018. That makes it even harder to get purely humanitarian goods into the country, said Tara Sepehri Far, a researcher in the Middle East and North Africa division of Human Rights Watch.

“These exemptions have failed to offset the strong reluctance of U.S. and European companies and banks to risk incurring sanctions and legal action by exporting or financing exempted humanitarian goods,” said Sepehri Far. “We saw letters by banks and companies refusing to conduct humanitarian trade with Iran.”

Iranian President Hassan Rouhani on Monday dismissed U.S. overtures as dishonest and he called the Trump administration “terrorists in the true sense of the word” for subjecting his country to relentless sanctions while expressing an interest in helping.

Secretary of State Mike Pompeo retorted that the “regime ignored repeated warnings from its own health officials, and denied its first death from the coronavirus for at least nine days.” He asserted that the number of cases and deaths in Iran is “far higher than the regime admits.”

Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace and a former State Department coordinator for Iran nuclear implementation under President Barack Obama, said that previous U.S. administrations would typically send officials to Europe and Asia to help ease the path to humanitarian aid by clarifying how the exemptions work.

President Donald Trump on Sunday suggested his offers for assistance to Iran — as well as North Korea — to combat the virus are genuine, saying “Iran is really going through a difficult period with respect to this.”

Yet some members of the Trump administration have speculated in private that with all the challenges Iran faces — the sanctions, a teetering economy, disputed elections and animosity over the violent suppression of protests — the coronavirus epidemic might be the thing that pushes the regime from power at last.

And, even as the outbreak has spread in Iran, the U.S. has continued to impose more restrictions, targeting a group of companies involved in the petrochemical trade and a handful of nuclear scientists in successive measures this month, Bloomberg says. The U.S. administration says its sanctions are aimed at pressuring Iran’s leadership into abandoning its nuclear program, ending support for groups in the region such as Hezbollah and halting the development of ballistic missiles.

China and Russia — former partners in the 2015 Iran nuclear deal that the U.S. administration abandoned — have stepped up calls for the U.S. to relax its sanctions. While that’s not surprising, there are signs that European countries are increasingly crossing the sanctions threshold and helping Iran where they can, according to one Western diplomat in Tehran. That’s because the U.S. stance amid the crisis is frustrating many European Union nations, the diplomat said.

Pakistan’s Prime Minister Imran Khan also urged the U.S. to lift sanctions after his country’s coronavirus cases surged when Pakistani pilgrims returned from Iran last week. The two nations share a long land border.

Even before the coronavirus outbreak, the U.S. was at odds with other world powers, who disagreed with the president’s decision to pull out of the nuclear deal in 2018 and reimpose sanctions.

The UK has quietly prodded the Trump administration to ease sanctions because of the crisis, the Guardian reported, without saying where it obtained the information. On March 17, Iran granted temporary release to British-Iranian Nazanin Zaghari-Ratcliffe, who has been in jail in Tehran since 2016.

Humanitarian organizations, unwilling to pick a public fight with a top contributor, are quietly trying to get supplies into Iran despite U.S. restrictions.

Iranians say that their economy is weak and unable to cope with the humanitarian toll because of the U.S. sanctions. Last week, Iran turned to the International Monetary Fund for the first time since the 1960s for aid, though Ali Vaez, the Crisis Group’s Iran project director, said the U.S. may try to block the IMF loan in order to keep up the pressure on the regime.

“Countries like Italy and South Korea, who were not hampered by sanctions, found it difficult to contain and fight the outbreak,” he said. “Iran is now fighting it, albeit belatedly, with one hand tied behind its back by sanctions. Its failures, partly due to sanctions, will affect everyone else in the region and beyond.”

So, we will see. It will be politically difficult for the administration to ease its sanctions on Iran, but also difficult to ignore humanitarian claims — issues that have the potential to raise tensions in an already tense region, Washington Insider believes.

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