Washington Insider-- Wednesday

Expected Break With Past Trade Policy

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

USDA's Vilsack Predicts Far Less Use Of Small Refinery Exemptions

Biofuel policy is already a focal point for USDA Secretary Tom Vilsack, with the USDA chief telling the National Farmers Union (NFU) Monday he has already been working with Michael Regan, nominated to be Environmental Protection Agency (EPA) administrator, to strengthen America's ethanol industry and address the issue of small refinery exemptions (SREs), a politically charged issue during the Trump administration.

“We're not going to see the kind of liberal use of waivers that were granted in the previous administration,” Vilsack predicted. He added that USDA will work closely with EPA to ensure the RFS “is enforced and implemented appropriately,” adding that EPA needs to implement the Renewable Fuel Standard in a way that is “enforced and respected” throughout the administration.

With EPA already stating it backs the 10th Circuit Court of Appeals decision on SREs, it is clear that potentially far fewer of those exemptions will be granted ahead. But the formal action on that front is awaiting a Supreme Court review of the 10th Circuit decision and the conclusion there is not expected until sometime this summer.

House Ag Chair Scott Eyes Moving Disaster Aid Out Of Appropriations Process

House Ag Committee Chairman David Scott, D-Ga., spoke virtually before the National Farmers Union convention, relating discussions with President Joe Biden about getting COVID-19 vaccines to processing plants and rural areas.

He also wants a rethinking of disaster relief, noting that “what we've done in Congress in the past is not getting the aid down to our farmers in time.” The solution, he said is creating legislation for establishing an “independent funding mechanism” away from the regular appropriations process, which he called “too political.”

Observers note this appears to be yet another effort that lawmakers and this administration are eyeing to utilize the Commodity Credit Corporation (CCC) authority. That has been the case in the past when lawmakers have sought to move something outside the annual appropriations process. As more and more of these efforts are being considered, it also appears to be a way to build support for expanding the CCC borrowing authority from the current $30 billion level.

Washington Insider: Expected Break With Past Trade Policy

Katherine Tai, President Biden's pick for United States Trade Representative, promised lawmakers during her confirmation hearing last week that she would work with Congress to help reinvigorate the economy and aggressively enforce American trade rules against China, Mexico and other trading partners.

Tai, in testimony before the Senate Finance Committee, said her background challenging China's unfair trade practices in the Obama administration had given her knowledge of “the opportunities and limitations in our existing toolbox.” She promised to work with allies and enforce the terms of the trade deal that President Donald Trump signed with Beijing last year, while working to develop a more “strategic and coherent plan” for competing with China's state-directed economy.

As trade representative, Tai would work toward several of the Biden administration's key goals, including helping to restore American alliances abroad and reforming and enforcing American trade rules to help alleviate inequality and mitigate climate change.

In her testimony last week Tai promised to ensure that trading partners adhered to new trade rules, including the agreement that Trump signed with China last year and new measures included in the revised North American trade deal, the U.S.-Mexico-Canada Agreement (USMCA).

She declined to give many specifics on the trade policies the Biden administration would pursue, saying instead she would review existing tariffs and trade negotiations. But she laid out a philosophy on trade that would support broader, more equitable growth and “recognize that people are workers and wage earners, not just consumers,” which she said would be a significant departure from the past.

Biden and other Democrats have complained that the trade policies of previous presidents were often driven by the interests of corporations and lobbyists, and ended up surrendering the interests of lower-wage workers for the benefit of certain businesses and exporters.

Trade policy for the past several decades had often fallen “into a pattern where one sector of our economy and one segment of our workers feel like their livelihoods and their opportunities are sacrificed to another part of our economy,” Tai said.

She said the administration would try “to break out of that pattern, so that what we are doing in trade is coordinated with what we are doing in other areas, but also not forcing us to pit one of our segments of our workers and our economy against another.”

Asked about the tariffs that Trump had placed on foreign metals, Tai said that tariffs were “a legitimate tool in the trade toolbox,” but that the global steel and aluminum industries faced larger problems with overcapacity that might require other policy solutions. She also said that she was aware of “the many concerns” that had arisen with the process of companies applying for exclusions from the tariffs, and said that reviewing that system with an eye to transparency, predictability and due process would be “very high on my radar.”

If confirmed, Tai would be the first woman of color and first Asian-American to serve in the position.

Tai also said that she wanted take a role in a new Biden administration effort to strengthen critical supply chains, saying that past trade policy had focused on efficiency rather than resilience, and needed to be rethought. She said that she shared the Trump administration's goal of bringing supply chains back to America, but that the prior administration's policies had created “a lot of disruption and consternation,” adding, “I'd want to accomplish similar goals in a more effective, process-driven manner.”

She pledged to re-engage the United States at the World Trade Organization, which the Trump administration largely bypassed or ignored, but acknowledged that the global trade group faced big challenges to its effectiveness.

The United States can't afford not to be a leader in the organization, she said, but “the WTO does need reform.”

Ms. Tai also expressed interest in resolving a long-running trade dispute between the European Union and the United States at the World Trade Organization over subsidies given to the plane makers Boeing and Airbus, which has resulted in a volley of tariffs.

“If confirmed, I would very much be interested in figuring out — pardon the pun — how to land this particular plane,” Tai said.

Senators of both parties were mostly complimentary of Tai's experience and trade knowledge, though several Republican senators expressed concerns about her failure to commit to free trade in principle, and to pledge to aggressively drive forward new trade negotiations.

Senator Mike Crapo, R., Idaho, praised Tai's extensive experience in trade, but raised concerns about Biden's pledges to address domestic priorities first before signing any new trade deals.

“Our businesses and workers are ready to sell American to all foreign customers right now,” Mr. Crapo said. “Our businesses need that access more than ever because other countries are not standing still.”

Tai said she planned to review the trade negotiations with Britain, saying that the country's departure from Europe, the coronavirus pandemic and other developments since negotiations started in 2018 demanded new consideration.

Asked about rejoining the Trans-Pacific Partnership, a multi-country trade deal negotiated by President Obama that Trump withdrew from, Tai said that she would work with like-minded countries in the Asia-Pacific on the issue of China, but stopped short of calling for rejoining the TPP.

The “basic formula for the TPP.,” of the United States engaging with countries with shared strategic and economic interests with the challenge of China in mind “is still a sound formulation,” she said.

“I think what I would add is a lot has changed in the world in the past five or six years, and a lot has changed in terms of our own awareness of some of the pitfalls of the trade policies that we've pursued as we've pursued them over the most recent years,” she said.

So we shall see. The new administration is entering into the trade arena with a person leading the trade agenda that may not have the global recognition, but she is experienced in the enforcement side of the equation. That is something that must be monitored ahead, Washington Insider believes.

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