Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Dairy Producers Already Warning On Canada Dairy Changes
The U.S.-Mexico-Canada Agreement (USMCA) took effect on Wednesday and the International Dairy Foods Association (IDFA) penned a June 30 letter which contends already there are issues on dairy policy relative to Canada's implementation of dairy product tariff rate quotas (TRQs).
“…we believe that Canada is limiting certain U.S. dairy exports by maintaining restrictive TRQs and not moving quickly enough to implement a tariff rate quota (TRQ) administration system that is consistent with USMCA's Agriculture Chapter (the Agreement) as well as the annex on TRQs in the Canadian Schedule,” IDFA said in the letter to Gregg Doud, the ag trade negotiator at the Office of the U.S. Trade Representative.
They note that under USMCA, Canada is not to put in place any new conditions or eligibility requirements on TRQs “beyond those set forth in the Canadian schedule.” However, the group noted that the eligibility and allocation calculations on proposed TRQs for many dairy products “impose eligibility and allocation calculation conditions that clearly fall outside of those set forth in the Canada schedule.”
They specifically pointed to limiting access on the TRQ for Cheese of All Types to 15% for distributors and 85% for processors. “There is no such restriction in the Canada schedule,” IDFA said. They further noted there are new restrictions in place that “eliminate the opportunities for distributors to import bulk and retail-ready butter across the entire quote year,” based on a recent announcement by Global Affairs Canada (GAC).
“I formally am registering our organization's deep concerns regarding Canada's non-compliance with the clear terms of the Agriculture Chapter of the Agreement,” IDFA President and CEO Michael Dykes said.
U.S. Trade Representative Robert Lighthizer told the House Ways & Means Committee the administration would be closely monitoring Canada and dairy and other provisions in USMCA, warning, “If there's any shading of the benefits to American farmers, we're going to bring a case against them.”
Sen. Grassley Pushing On Cattle Legislation
Sen. Chuck Grassley, R-Iowa, criticized Senate Agriculture Committee Chairman Pat Roberts, R-Kan., for blocking his bill that would require a percentage of cattle sales to be for cash rather than pre-negotiated.
Grassley told reporters Tuesday that Roberts said he was “considering” the Grassley-pushed measure, but when other members of the Committee wanted to have breakfast with Roberts to discuss it, he declined. “Here is the sad thing about the chairman of the committee,” Grassley said. “This is badly needed... I think of the money beef producers are losing.” Grassley detailed that 80% of the cattle sales are pre-negotiated contracts.
“Four producers that have 80% of slaughter capacity, they are powerful forces in this town. You would think the chairman of the Ag committee would see the needs of the family farmer.”
It is not clear yet that the Grassley provision will gain enough support to be put in place, particularly if the Senate Ag Committee does not act on the legislation first.
The Hill is reporting that, not surprisingly, Treasury's Steven Mnuchin and the Fed's Jerome Powell differ significantly over how soon economy will recover and what that will involve.
In testimony before a House committee this week, Fed chair Powell and Treasury Secretary Mnuchin offered disparate forecasts for the recovery – despite broadly agreeing on the success of the federal response so far.
Mnuchin told members of the House Financial Services Committee this week that he expected the economy to “improve significantly” in the second half of the year after adding 2.5 million jobs in May. “We are in a strong position to recover because the administration worked with Congress on a bipartisan basis,” Mnuchin said. He later agreed that further help for certain industries may be necessary.
While Mnuchin asserted that the worst of the pandemic-driven recession is in the rearview mirror, Powell was less sanguine. He pointed to daunting obstacles still ahead after the country suffered “a level of pain that is hard to capture in words.”
Powell pointed to particular challenges, saying that “the path forward will also depend on the policy actions taken at all levels of government to provide relief and support the recovery for as long as needed.” He argued in favor of another round of stimulus.
The officials' comments come as Democrats push for another sweeping coronavirus relief bill and Republicans caution against moving forward before existing measures work their way through the system. The recent competing levels of optimism mark one of the few splits between the two most powerful U.S. economic officials amid months of close collaboration.
Both have worked in lockstep to deploy trillions of dollars in economic aid that's widely credited with dampening the staggering blow of the pandemic. But Mnuchin's bullish outlook, which is shared widely among the top administration aides, has occasionally contrasted with Powell's cautious approach as the chief of the independent central bank.
At least part of the Congressional discussion during the hearing focused on concerns about specific near-term developments including potential tenant evictions without more aid from Congress. Millions of tenants are at risk of receiving eviction notices in late July as protections from a major coronavirus stimulus program are set to expire, The Hill said.
The coronavirus relief bill, signed as the CARES Act in late March, included a moratorium on evictions for tenants in units with federally backed mortgages or other assistance who were unable to pay rent. But agreement in Congress on an extension of the moratorium will be required to help families hit hard by the coronavirus pandemic who may soon have to make new living arrangements.
Because the federal moratorium applies only to housing being paid off through federally backed mortgages or insurance, it only applies to about a fifth of renters. But because many of the government programs are aimed at keeping costs down for low-earners, those renters also tend to be among the most vulnerable. A patchwork of other state and local level policies for keeping people in their homes are also due to expire, creating a slew of potential problems nationwide.
Experts note that one of the best ways to keep the housing problem in check is to maintain an expanded level of unemployment benefits, which are also due to run dry come August. The income is one of the main things keeping millions of newly unemployed Americans afloat.
House Financial Services Committee Chairwoman Maxine Waters, D-Calif., sponsored her own bill that would extend the eviction moratorium into March and also expand its scope, while providing billions in emergency rental assistance and low-cost loans for landlords. It passed in the House Monday night 232-180, largely along party lines.
In addition, the administration's IRS chief, Charles Rettig, said Tuesday that his agency would work with Congress to examine ways that the tax code contributes to racial wealth disparities. "I'm [a] huge proponent of inclusiveness, diversity," Rettig said during a Senate Finance Committee hearing, in response to a question from Sen. Sherrod Brown, D-Ohio.
"I think you're possibly aware of the fact that I'm the first commissioner whose spouse came to this country as a refugee. And so I understand how people are treated in different arenas, and we're all in," he added. Rettig's wife came to the United States as a refugee from Vietnam.
So, we will see. There continues to be strong support for additional relief from the virus impacts, but there are also growing cases of administration reluctance or even pushback to follow-on legislation. While Fed chair Powell continues to highlight the importance of additional anti-virus support the growing fights about specific proposals should be watched closely as they continue to emerge, Washington Insider believes.
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