Washington Insider -- Wednesday

Another China Flare Up

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

USDA Prerule On Labeling Cell-Based Meat, Poultry Products Under Review At OMB

USDA's Food Safety and Inspection Service (FSIS) has sent a prerule on labeling of meat and poultry products made using animal cell culture technology to the Office of Management and Budget (OMB) for review.

The Trump administration targeted April of this year to issue an advance notice of proposed rulemaking on the topic but had no final timeline identified when they included it in their regulatory agenda released in the fall of 2020.

A prerule is defined as a rule in the earliest stage of rulemaking, and may include actions agencies are considering that may or may not ever become actual rules, according to the Congressional Research Service (CRS).

Contacts say this is similar to what FDA did on similar issues relative to cell-based products. It is not clear what timeline the Biden administration has in mind relative to this topic, one that will be very closely watched by the U.S. food and agriculture industry.

DOJ Says Zen-Noh Must Sell Nine Elevators to Complete Purchase of Facilities From Bunge

The Department of Justice (DOJ) Antitrust Division determined that purchase by Zen-Noh Grain Corporation (ZGC) of 35 operating and 13 idled grain origination elevators from Bunge North America would violate Section 7 of the Clayton Act. Those elevators are primarily along the Mississippi River and its tributaries.

In its proposed final judgment, ZGC would be required to divest nine grain elevators in five states along the Mississippi River and its tributaries.

DOJ said the action is based in part on ZGC operating in some areas along the Mississippi and Ohio Rivers along with its affiliate CGB Enterprises in competition against Bunge. "The acquisition will eliminate competition between ZGC and Bunge in those locations; as a result, many U.S. farmers are likely to receive lower prices and poorer quality service when seeking to sell their grain," DOJ said in the proposed Final Judgment.

ZGC sought to acquire the Bunge facilities for approximately $300 million under an agreement in April 2020.

In the proposed Final Judgment, DOJ said there were overlapping draw areas where ZGC would be required to divest included McGregor, Iowa; Albany/Fulton and Shawneetown, Illinois; Caruthersville, Missouri; Huffman, Osceola and Helena, Arkansas; and Lake Providence and Lettsworth, Louisiana. Comments on the proposed Final Judgment are due 60 days from today.

Washington Insider: Another China Flare Up

After recent contacts between U.S. officials and Chinese officials appeared to go relatively smooth, the U.S. has now raised the ire of China over Taiwan. Recall that China considers Taiwan to be a part of China, not an individual country.

Secretary of State Antony Blinken told a House committee on Monday the U.S. plans to open trade talks with Taiwan. "We are engaged in conversations with Taiwan, or soon will be -- on some kind of framework agreement," Blinken said in response to a question from Rep. Andy Barr, R., Ky., during the hearing.

Blinken declined to provide more information on the topic and referred questions about details to U.S. Trade Representative Katherine Tai.

A spokesman for Tai's office said that strengthening relations with Taiwan is important, though "we have no meetings to announce at this time."

But the response from China was anything but sanguine. Asked about the trade talks with Taiwan, a spokesman for the Chinese Embassy in Washington said the U.S. should "stop all forms of official exchanges and contacts with Taiwan, stop elevating its relationship with the Taiwan region in any substantive way."

The spokesman urged Washington to adhere to decades-old agreements with Beijing, which commit the U.S. to maintaining only formal ties as a condition for formal relations with China.

Taiwan is a major source of semiconductors for the U.S., which imported $7 billion last year in chips and $20 billion in other computer and telecommunications equipment out of $60 billion in total imports. That is double U.S. exports to the island, according to Census Bureau data.

The Biden administration Tuesday also announced it has wrapped an initial 100-day review of supply chains in some key areas outside of agriculture.

The upshot of that review? The United States will target China with a new "strike force" to combat unfair trade practices that the administration says are damaging U.S. supply chains, according to Reuters. The group will be led by the USTR, which has the power to enforce tariffs against China and other countries.

News reports also said the Department of Commerce is considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors and other industrial applications, which the United States largely obtains from China.

This comes as imports of U.S. ag goods by China have continued to be strong, with weekly export figures putting up lofty numbers for U.S. corn in particular as China seeks to build up supplies of the grain.

The U.S.'s situation with Taiwan and China has always been a dicey. This latest action sets the stage for another friction point between the two sides that should be watched closely, Washington Insider believes.

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