Washington Insider -- Wednesday

Final Hurdles for the Trans Pacific Partnership

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

Army Corps Questions EPA's Use of Documents in Developing Clean Water Act Rule

The Army Corps of Engineers is criticizing the methodology used by the Environmental Protection Agency as it developed rules to clarify the scope of the Clean Water Act. EPA and the Army Corps issued the rule jointly last month, but the corps now says the economic analysis and technical support documents used in developing and justifying the regulation are flawed and out of context.

According to reporting by Bloomberg BNA, an internal Army memo sent just before the rule was released says, in part: "[O]our technical review of both documents indicate the corps data provided to EPA has been selectively applied out of context, and mixes terminology and disparate datasets. In the corps' judgment, the documents contain numerous inappropriate assumptions, with no connection to the data provided, misapplied data, analytical deficiencies, and logistical inconsistencies."

The memo and other documents related to the final regulation are likely to pose legal and other problems for EPA as it deals with numerous lawsuits that have been filed as challenges to the rule which is intended to stipulate which "waters of the U.S." are subject to regulation under the Clean Water Act.

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Businesses Pledge Support for International Climate Change Agreement

The White House this week held meeting attended by the heads of 13 major U.S. companies who committed to support a climate change deal when one emerges following an international summit that gets underway in late November in Paris.

The Obama administration hopes the companies' commitments will entice other companies and other sectors of the economy, especially the power sector, to become involved in preparatory discussions for climate treaty negotiations.

The administration already has committed to cutting U.S. greenhouse gas emissions 26% to 28% by 2025 as its contribution toward the Paris deal. The pledge is dependent on executive actions — including proposed limits on carbon pollution from power plants that have become the target of legislators in the Republican-controlled Senate, who have also threatened to undercut the global climate agreement in some way.

Among the companies pledging their support were Alcoa, Cargill, Coca-Cola, General Motors, Google, Goldman Sachs, Microsoft, PepsiCo and UPS. The White House is hoping not only that their commitments will draw others in the business community to join the effort, but also help blunt criticism from mostly GOP opponents of the Paris climate change deal.

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Washington Insider: Final Hurdles for the Trans Pacific Partnership

Press observers are hyperventilating over the final skirmishes of the Trans Pacific Partnership, first, over whether a deal can be struck, and then over the potential outcomes of the numerous highly sensitive negotiations. A gathering of top trade officials from 12 countries from around the Asia-Pacific region is scheduled for the island of Maui for a week of meetings starting Friday.

On the one hand, trade experts — including those in the administration — are suggesting that the negotiators are closer than ever to a breakthrough on the biggest trade deal in world history. The problem is, of course, that closing hurdles include some of the most delicate trade negotiations in history.

The administration has been pulling out all the stops ahead of these talks. Its top trade representative, Michael Froman, has visited four countries and met with most of the others in over the past several weeks, urging them to be prepared to close the deal. The Republican Congress has already given Obama special trade promotion authority, which would allow him to push through the deal with a simple majority vote.

Many of the main hurdles are in agriculture and many of those have resisted resolution for years. Canada wants to protect its dairy and poultry producers and Japan wants to protect its rice farmers. Also, U.S. drug companies want other countries to adopt strong U.S. protections on a new class of medicines called biologics, and U.S. automakers oppose giving Japan more market access. Canada and Malaysia are particular concerned because of difficult domestic politics that could make it more difficult for them to close in Maui, even if other countries are ready.

If talks slip into next year, election-year politics could undercut any momentum and relegate the pact to another administration.

"I think there's limited time to try to conclude a deal," said Tami Overby, senior vice president for Asia at the U.S. Chamber of Commerce. "I think there is a political drop-dead date although I don't know what that date is and won't speculate on it. And, I think probably the administration is very focused on that and has worked backward."

Timelines built into the new trade promotion authority law require Obama to give Congress 90 days' notice before signing any trade deal and to make the agreement public 60 days before signing. So the transpacific pact must be completed soon for Congress to vote on it before Christmas, which would be the administration's best-case scenario.

At the same time, it is true that U.S. trade officials have never closed a deal quite as complex as the TPP, which aims to establish the rules of trade for the coming century and anchor the United States securely in the fastest-growing economic region of the world rather than cede it to an ever-more-dominant China.

A few key hurdles include autos, especially the U.S. 2.5% tariff on cars and 25% tariff on trucks. By contrast, Japan has no tariffs on vehicles but does have a mix of regulatory and tax hurdles effectively make Japan the most protected and closed automotive market in the world.

In the field of agriculture, the negotiators are waiting for Canada to make its move on dairy policies, but that nation has not put a meaningful dairy market offer on the table, leaving U.S. producers to fear they could lose more from the final agreement than they gain. There is talk that the United States will refuse to support Canadian membership in the deal unless it proposes meaningful changes to its restrictive dairy policies. Australia and others also want greater access to U.S. sugar markets.

The 12 nations involved in the TTP talks are "doing close calculations on everything," observers told the press. "And with this chessboard being as complicated as it is, there are probably two or three people in [the Office of the U.S. Trade Representative] and the White House who know those moving parts and make those decisions."

Given the number and complexity of the outstanding issues, it seems nearly impossible that the deal will be struck in the next few days. Still, a very great amount of work has been done and the stakes are high for all negotiators. These are certainly talks producers should watch carefully as they proceed, Washington Insider believes.


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(GH/CZ)