Washington Insider--Monday

By DTN's Washington Insider

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

Authorization for Export-Import Bank Likely to Lapse

The U.S. Export-Import Bank is likely to lose its authority to support U.S. companies, at least temporarily, because congressional supporters of reauthorization have yet to find a way to force a vote to renew the bank's charter. That charter expires at the end of June.

Ex-Im provides loans, loan guarantees and insurance to facilitate overseas sales by U.S. companies. If its charter expires, the bank will be administer the transactions it has already underwritten but would be unable to approve applications for new ones.

While big businesses might be able to provide some financing themselves, an expiration of Ex-Im's charter would hamstring small businesses, advocates say. They worry that once the charter lapses, U.S. exporters might permanently lose customers who turn to rival companies in other countries with export credit agencies.

Republicans, who control both houses of Congress, are divided on the bank's future, with some saying that killing the bank would hurt jobs, and others deriding Ex-Im as "crony capitalism."

Inside the Beltway betting supports the idea that Congress eventually will get around to reauthorizing Ex-Im, but only after philosophical opponents have had time to fully vent. Just how long the venting will continue is still a matter of speculation.

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Boehner Angling for Budget Talks With White House

House Speaker John Boehner, R-Ohio, has repeatedly indicated he would be open to talks with the White House about how to resolve an expected impasse on annual funding bills, but Boehner says President Barack Obama hasn't made an offer to sit down. "He hasn't asked. It's as simple as that," Boehner told reporters at his weekly Capitol Hill press conference last week, in response to a question about his willingness to hold negotiations.

In response to Boehner's remarks, White House Press Secretary Josh Earnest said lawmakers should take a crack at resolving the issue themselves. "Ultimately, this is something that Congress must resolve," he said. "And what we have been clear about is that Congress identified a pretty effective process for resolving differences and trying to come to agreement on some of these difficult issues when Senator Patty Murray and Congressman Paul Ryan sat down at the negotiating table [in 2013] and hammered out an agreement. And they did that to build a bipartisan agreement that both Democrats and Republicans in both houses of Congress could support."

Developing and passing an annual budget is hard work in the best of times. The fact that Congress has put itself into a tighter-than-normal situation through spending caps and sequestration make the process even more difficult. With Republicans in control of both houses of Congress, the Democratic president appears eager to avoid the current budgetary quandary for the time being.

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Washington Insider: The Next Trade Vote

Well, few thought congressional passage of fast track would be easy. It also is true that intra-party fights are the bitterest, and this one is no exception. Labor unions have been surprisingly effective in presenting unified and determined -- if highly controversial -- opposition to the trade legislation.

What will happen next is cloudy, at best. Another vote is likely and most think it will take an uphill push by the administration and the Republican leadership in Congress to turn this defeat around, especially since labor's strong Friday showing has given cover for almost anyone who has a beef with the president.

Still, at least one important group is still fighting hard. Leaders of the U.S. business community believe a deal to lower barriers to trade and investment between the United States and 11 other Pacific Rim nations is essential.

Business executives seemed shocked by Friday's vote, and were quick to voice their displeasure with the House rejection of aid to workers harmed by imports and its negative implications for the wider pact. For example, Todd Teske, chief executive of Briggs & Stratton, told the press, "... this is disappointing and discouraging. We do business around the world, and free and fair trade allows the U.S. and our company to be competitive globally."

"Manufacturers will not back down in this fight for expanded trade, for the future of our industry and our country," the National Association of Manufacturers vowed.

Manufacturers have been among the most vocal supporters of TPP, but officials from other sectors also made their frustration plain. David French, senior vice president for the National Retail Federation, called the vote "a victory for those with a narrow agenda that puts petty politics ahead of people, while jeopardizing the futures of millions of men and women in America.

"It is nothing short of astounding that in the 21st century anyone would think it is in our country's best interest to sit back and let foreign governments dictate our role in a global marketplace," he added.

After the vote, many trade associations representing consumer electronics, semiconductor manufacturers and Silicon Valley firms, as well as individual companies like the computer chip maker Intel, issued statements cheering on the president and urging Congress to reconsider its opposition to the piece of the legislation dealing with assistance to workers.

So, we'll see. Observers agree that Friday's vote makes the odds of a Pacific trade deal much longer, but some experts insist the fight is far from over.

"I'm still hopeful," said Gary Hufbauer, a senior researcher with the Peterson Institute for International Economics, who characterized the vote on Friday as a vehicle for Democrats to show their displeasure with aspects of the pact. "This was a way of them stomping their feet, but in the end I think the president will get his way," he said.

Bill Lane, director of global government affairs for Caterpillar, echoed Hufbauer's view that the door was not completely shut. "Even though the process is temporarily stalled, we are optimistic," he said.

Manufacturing giants such as General Electric, Honeywell and Cummins have been pushing hard to create a broad set of trade rules across major Pacific Rim nations (possibly even including China) in part because they already have a major presence in the region. But even a company like Briggs & Stratton, which exports less than 10% of what it makes to Asia, stands strongly behind the pact being negotiated. If sales of the gasoline engines for outdoor power equipment that Briggs & Stratton makes are to grow in the future, said CEO Teske, new customers in Asia are vital. And, he noted, his U.S. work force is efficient enough to be competitive with rival manufacturers in low-wage countries.

"If we become isolated as a country," Teske said, "that's not to our advantage."

Now the push for trade supporters is on in earnest and large vote shifts will be necessary to turn the tide of labor and Democratic opposition. This is a fight with high stakes for U.S. producers, and certainly one the U.S. agricultural community should watch carefully as it proceeds over the next few days, Washington Insider believes.

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(GH/CZ)

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