Washington Insider-- Wednesday

US Questions China and India about Ag Policies

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

Senate Ag Panel Punts Work on Child Nutrition Bill Due to Lingering Issues

Failure to get an a bipartisan, budget-neutral agreement on child nutrition programs, the Senate Agriculture Committee will not hold a markup session on that topic as planned for Thursday but instead will mark up bills that would reauthorize livestock price reporting and grain standards laws.

The Livestock Mandatory Price Reporting Act and US Grain Standards Act affecting farmers, ranchers and agribusiness will expire on Sept. 30, as do child nutrition programs like the National School Lunch Program.

Senate Agriculture Chairman Pat Roberts, R-Kan., said he is negotiating with ranking member Debbie Stabenow, D-Mich., to get an accord on child nutrition reauthorization.

“We’re nearly at the finish line,” Roberts said in a Sept. 14 statement, adding that he will reschedule the markup soon. “My goals remain the same — craft a reauthorization package that is bipartisan, increases efficiency and effectiveness, has flexibility so all schools may achieve success in their meal programs, and addresses program integrity, high error rates, and improper payments within the programs.”

If lawmakers do not complete a rewrite of the child nutrition law before the end of September, most policies are likely to continue as is. That might mean Republicans, backed by the School Nutrition Association, won’t see nutrition standards for sodium content and whole grains relaxed despite their concerns that schools are overburdened. The House has not released legislation or scheduled a markup yet.

Regarding the grain standards authorization, the Senate Agriculture panel in May unveiled its version (S 1417), but has not yet officially unveiled a proposal on livestock price reporting. The House in April passed legislation (HR 2051, HR 2088) that would reauthorize both programs.

Both the Senate and the House included contingency plans in their respective grain standards bills to avoid disruptions in inspection of grains destined for foreign markets. The Senate bill would fortify the USDA secretary’s role in addressing disruptions and resuming inspections, while the House version would allow US grain companies to call in inspectors from another state agency supervised by the Department of Agriculture if the agency is unable to restore service within a certain time frame.

The livestock price reporting law requires meatpackers to report to USDA the purchase and sale of cattle, swine, lambs and meat products, which producers say creates a transparent market.

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Two US Senators Urge South Africa to Resolve Remaining Issues Blocking US Poultry Trade

Remaining issues blocking the resumption of US poultry exports to South Africa should be resolved, Sens. Johnny Isakson, R-Ga., and Chris Coons, D-Del., urged in a letter to South African President Jacob Zuma.

South Africa has imposed dumping duties on US “bone-in” chicken products for some 15 years, and more recently has banned US poultry as a result of avian influenza outbreaks in the US.

The senators’ letter called for implementation of a recent US-South Africa agreement aimed at restoring normal trade. The agreement allows an annual quota of 65,000 metric tons of US bone-in poultry products to enter South Africa without antidumping duties. There is a formula that allows the quota to grow as South African poultry production and consumption increase, the senators wrote. However, several lingering issues are hindering the successful implementation of the bilateral agreement, according to the letter.

Isakson and Coons said that it is their understanding that there are two processes that need to be completed in South Africa. According to the senators’ letter: “First, a rebate facility must be created to legally exempt the annual quota amount from antidumping duties. Second, the rules for allocation and administration of the quota must be developed through a transparent legal process.”

The senators also voiced disappointment in the lack of progress made in addressing South Africa’s complete ban on US poultry due to avian influenza. The senators said it was important for South Africa to follow World Organization for Animal Health guidelines and implement a policy of regionalization for avian influenza. “Without these issues being addressed and in place,” the senators wrote, “US companies cannot ship product, regardless of the other terms of the Paris agreement being reached.”

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Washington Insider: US Questions China and India about Ag Policies

Ahead of the WTO Ag Committee meeting Sept. 24-25, the United States has asked China and India to explain how their respective cotton policies do not distort international markets.

These subsidies have been much on the mind of US producers because they are large. For example, the focus in China is on its nearly $6 billion direct cotton subsidy and its 11.6 million metric ton cotton inventory that represents 57% of the global stockpile, the International Cotton Advisory Committee says.

Indian interventions are also under the microscope following its boost in minimum support prices for cotton in 2015 at the same time falling import demand in China, falling world prices and near record Indian production of cotton were reported. Now the United States is urging India to take steps to ensure that the release of its cotton stocks does not further weaken international cotton markets and avoid exporting cotton at below the cost of procurement.

Members plan to discuss China’s and India’s cotton policies, among a host of other agriculture issues, at a two-day WTO Agriculture Committee meeting scheduled this fall in Geneva.

The US queries come as WTO members seek to advance their decade-long effort to reduce and eventually eliminate trade-distorting domestic support and export subsidies for trade in cotton products.

The negotiations have since languished recently as WTO members failed to agree to reductions in cotton subsidies and trade barriers at their last ministerial conference in 2013. Last month, the outgoing chairman of the WTO Committee on Agriculture in Special Session, ambassador John Adank, said “there can be no doubt that cotton will need to be part of any outcome” at the WTO’s mid-December ministerial conference in Nairobi, Kenya.

Earlier, the United States delegation resubmitted several questions that it said China had failed to respond to during the last WTO Agriculture Committee meeting in June, including why it continued to “significantly under-fill the substantial” tariff-rate quotas for wheat, corn and rice that it established in its WTO accession package.

The US reiterated its concern that the Chinese government was not being transparent in its WTO notifications because it did not include market price support calculations for corn, soybeans, and rapeseed in 2009. The US also asked China to revise its “incorrect” calculation of market price support for rice.

In addition, the US asked China to detail all of its major agricultural infrastructure programs related to the government’s Agricultural Comprehensive Development Program and to clarify how they adhere to the WTO’s Agreement on Agriculture—especially its “substantial” increase in its natural disaster relief payments between 2005 and 2010 and to justify the expansion of China’s environment program expenditures.

At the same time, the US delegations has been on the lookout for “gimmicks” such as China’s definition of “negative” market price support in its product-specific aggregate measure of support declarations represented a “a serious concern and should be reported as a zero.”

There are also substantial questions for India, especially regarding a new export subsidy program in 2014 for a number of agricultural products under the Merchandise Export from India Scheme. The United States asked for specific details about the government’s expenditures under the MEIS program and what products it targeted.

These lingering issues seem to raise questions about the WTO’s capacity to complete multilateral negotiations with teeth—and, US producer groups are actively defining the important subsidies and their potential impacts on global markets and domestic producers. These are leading to significant questions about the WTO’s capacity to define and enforce major ag deals in the future, especially those involving developing countries, Washington Insider believes.


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(GH/CZ)