Washington Insider -- Wednesday

Taking Aim at the Tariffs

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

Euthanizing Hogs Brings COVID-19 Actions

Around 3,000 healthy hogs were euthanized in Minnesota last week, according to the Minnesota Pork Producers Association, and around 200,000 or more could soon follow.

House Ag Committee Chairman Collin Peterson, D-Minn., said Tuesday that the JBS hog plant in Worthington, Minnesota, is reopening today (Wednesday), but will be euthanizing hogs and not processing them into meat to reach consumers. The action will take a small crew that can practice social distancing, he noted.

And, President Donald Trump Tuesday said he would sign an executive order that would invoke

Meanwhile, Iowa Republican lawmakers, including the state’s governor and ag commissioner, are calling on USDA to compensate hog producers for animals they have to euthanize.

“At current capacity levels, there are 700,000 pigs across the nation that cannot be processed each week and must be humanely euthanized. Iowa produces one-third of the nation’s pork supply and one-fourth of the nation’s pork processing capacity. Simply put, Iowa pork producers cannot operate if they cannot send their pigs to market,” the letter said.

A group of Minnesota state lawmakers also penned a letter to President Donald Trump, asking for him to direct the Centers for Disease Control and Prevention (CDC) to coordinate efforts to develop plans to reopen processing plants, to work with small processors to get license exemptions to ensure as many hogs as possible can be processed, work with regional governors and mobilize the National Guard to assist where needed and coordinate any hog destruction to take place at processing plants rather than on-farm.

Ethanol Industry Continues Push For Aid

Help for the U.S. ethanol sector will benefit both farmers and the renewable fuels industry, according to American Coalition for Ethanol (ACE) CEO Brian Jennings.

“More than half of U.S. ethanol production capacity is already offline, high-skill jobs are being shed, livestock and food processing customers are facing supply disruptions, and our members’ working capital is vanishing. Ethanol use could fall by more than three billion gallons in 2020, eliminating the market for at least one billion bushels of U.S. corn,” Jennings wrote in a letter to President Donald Trump. “As you did on April 21, when you directed the Secretaries of Energy and Treasury to formulate a plan to provide funds to the oil and gas industry, we urge similar action for our sector.”

Noting the group has sought out help from EPA relative to the 2020 biofuel requirements under the Renewable Fuel Standard (RFS), Jennings said the situation has “exposed a shortcoming in the agency’s rulemaking, and failure to increase the RFS this year will result in a waiver of promised gallons.”

Washington Insider: Taking Aim at the Tariffs

At this moment when broad efforts are underway to reduce the impacts of the coronavirus, lobbyists are pushing hard on many areas and are especially scrambling to expand relief on more tariffs. Bloomberg says. It notes that tariff payments for U.S. companies are coming due soon on everything from imported Chinese fabrics to Italian cheeses and Scotch whisky.

And, the administration gave some importers a three-month postponement on duties for select goods imported in March and April but excluded from the announced deferral billions of dollars in other tariffs, including those imposed on goods from China, imported steel and aluminum, and a number of products from Europe. The report said that the decision was seen as a “blow to industries pushing for more comprehensive duty relief.”

“We are going to push very, very hard on Congress to say, ‘OK, thanks for the beautifully wrapped box, but can we put something in it now?’” said Nicole Bivens Collinson, the head of the international trade and government relations practice at Sandler, Travis & Rosenberg. The former official in the office of the U.S. Trade Representative is lobbying for an informal coalition of companies seeking to defer most other tariffs.

Advocates say such a policy wouldn’t have a lasting impact on government revenues because they are simply seeking to make the payments at a later date.

The new tariff deferral policy, announced on April 19, also doesn’t refund any duties already paid, even in the period covered by the deferral, thus limiting its impact to select products imported in April. Tariff invoices for May will begin to arrive soon.

Collinson said the new rule’s limited scope and eligibility criteria are problematic during the economic collapse. One of her clients in the apparel industry, she said, is only seeing $56,000 of its $190,000 in duty payments deferred under the new rule.

“My thing is, why is the government taking the money out of their hands, only to turn around and then give them a stimulus package to put it back in?” Collinson said.

The policy shift came after weeks of denials by the administration that it would make such a move. Industry groups and lobbyists are now urging officials and lawmakers to go further.

Steve Lamar, the leader of the American Apparel & Footwear Association said. “Still, there is more that can and should be done.” He is among those arguing to include in the deferral the so-called Section 301 tariffs on items imported from China which impact many retail and apparel companies.

Brian Dodge, the president of the Retail Industry Leaders Association (RILA), is pushing for a 180-day deferral on all tariff payments.

“The limited duty deferral is a start and it is appreciated. We hope the administration will be open to doing more,” RILA spokeswoman Melissa Murdock said, and added that “a suspension or full repeal of the 301 tariffs remains the ultimate goal and would do the most to help retailers.”

Prior to the change, Treasury Secretary Steven Mnuchin twice phoned into CEO calls held by RILA, during which executives advocated to defer the duties on Chinese items, according to Jo-Ann Stores, Inc., CEO Wade Miquelon. He said total tariff payments were “far more” than the company’s operating profit and have left retailers caught up in a trade war with China and hurt by tariffs that were sparked by intellectual property theft allegations.

“It’s not China or anybody else paying the tariffs. It’s U.S. companies that are paying,” said Americans for Free Trade coalition spokesman Jonathan Gold, who is vice president of supply chain and customs policy at the National Retail Federation.

U.S. steel companies and other domestic producers are pushing back against the effort to expand the deferral. For example, the Coalition for a Prosperous America represents a group of unions and domestic manufacturing and agricultural interests wrote to the president on Wednesday urging the administration not to expand the deferral. The letter stated it would “simply increase imports and make it harder for our members to avoid laying off employees.”

The president was adamant he wouldn’t delay any tariffs before doing so this month. While limited that initial reversal gives Collinson hope the administration will go even further if companies can illustrate how the initial deferral was helpful and explain why it should be more inclusive. She’s hoping to leverage congressional support on the issue to have it included in future relief legislation.

“We’ve written language that will accentuate the change,” Collinson said. “It’s three sentences, it’s very easy. It’s one of those things where if you have the right support it can become part of a piece of legislation pretty easily.”

So, we will see. Certainly, the coronavirus and its impacts raise new questions about trade issues — and, especially about the administration’s “get tough” tariff policies. Amid efforts to provide new supports to industries, the basis for the earlier tariff fights should be reconsidered — a process producers should watch closely as it expands, Washington Insider believes.

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