Washington Insider -- Tuesday

Investor-State Dispute Settlement

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

RMA Seeks Input on Issues Relative to Double Cropping and Crop Insurance

Several issues have been raised on the matter of double cropping and how it relates to eligibility for the federal crop insurance program, prompting USDA's Risk Management Agency (RMA) to seek comments on items relative to double cropping and expanding/growing farm operations, historical planting requirements and accounting for production at times when both conventional and double-cropped production are co-mingled.

RMA said in a manager's notice that they will take comments on the matter for 45 days after the Oct. 30 notice.

Double Cropping and changes in farm sizes: Current double cropping requirements do not recognize changes in growing farm operations or for added land.

Proposed Alternative: Consider a policy change to allow eligible double cropping acres to be based on either the greatest number of acres, or percentage of acres historically double cropped, rather than the greatest number of acres double cropped in two of the last four crop years in which the first insured crop was planted. This will address both when land is added to an operation and account for multiple crop rotations.

RMA further wants feedback on whether it is appropriate to modify the double cropping requirements, for added acreage to the farm operation and multiple crop rotations, to determine qualifying double cropping acres based on either 1) the greatest number of acres, or 2) a percentage of acres historically double cropped for two years.

Double Cropping History: RMA noted there appears to be confusion regarding the “two of the last four crop years” language and double cropping requirements. To qualify for double cropping coverage, the producer is required to provide double cropping history in two of the last four crop years in which the first insured crop was planted, or that show the applicable acreage was double cropped in at least two of the last four crop years in which the first insured crop was grown.

Proposed Alternative: Some have suggested that RMA consider a policy change to require that for the first year a producer qualifies for double cropping, the producer must be able to provide records of acreage and production showing that they planted and harvested two crops on the same acreage in the same crop year in “one of the four,” or “one of the three” crop years instead of the current “two of the last four crop years” requirement.

Double Cropping and Comingled Production: Some producers have found challenges keeping separate records of acreage that was and was not double cropped because they harvest both first/second crop production at the same time.

Proposed Alternative: Consider a policy change to incorporate the clarification that has been done administratively.

Practical to Replant: Concerns have been raised regarding the definition of “practical to replant” and the difficulty and inconsistency that can occur in the administration of the practical to replant provisions of the crop insurance policy.

Proposed solution: RMA plans to revise the last sentence of the definition to provide a clear, known deadline for which the replanting of the crop is considered to be practical and if not replanted, coverage will not be provided for the initial crop. This also provides necessary allowances for adverse weather conditions that would either prohibit the physical replanting of the crop, or impact the viability of the crop seed germinating, emerging and forming a healthy plant.


Hatch: US May Need to Renegotiate TPP

The US may need to renegotiate intellectual property protections for biologic drugs in the Trans-Pacific Partnership (TPP) agreement, Senate Finance Committee Chairman Orrin Hatch, R-Utah, said.

With five years of data exclusivity and an additional three years of protections based on factors that Hatch said were “unclear at best,” TPP “looks to fall short” of the intellectual property requirements in the Trade Promotion Authority (TPA) law.

US law provides for 12 years of exclusivity — four years for data and an additional eight years for marketing — so the US “may need to go back to the negotiating table and try again,” Hatch said at the Global IP Summit hosted by the US Chamber of Commerce. After 12 years, biosimilars producers in the US can rely on the clinical test data of a brand-name manufacturers to show that their versions of the medicines are pure, potent and safe.

Hatch said that he was reserving judgment on the TPP pact as a whole.

The White House said it would “not be wise” to try to renegotiate provisions of the trade agreement, which was reached just a month ago after five years of talks among the 12 countries.

Hatch added that while intellectual property protections were the most important problem with the TPP deal, he said there were also problems with the labor provisions, market access for dairy, and the carve out of tobacco products from investor-state dispute settlement protection.

Washington Insider: Investor-State Dispute Settlement

One of the most controversial provisions in the TPP concerns Investor-State Dispute settlement (ISDS). Opponents say the provision would prevent them from protecting their public health, for example. Not so, says the US Trade Representative. The US interest is to promote trade and investment agreements and to insure that these are protected by the “rule of law,” but also to ensure that nations can “regulate in the public interest” as necessary.

The standard for this is to ensure that Americans investing abroad are provided the same kinds of basic legal protections provided in the United States to both Americans and foreigners.

USTR says in its analysis of the TPP draft that, “there are a lot of myths out there suggesting that ISDS somehow limits our ability, or our partners’ ability, to regulate in the interest of financial stability, environmental protection, or public health. Some have even suggested that a company could sue a government just on the grounds that the company isn’t earning as much profit as it wants. These assertions are false," USTR says.

This kind of legal protections is not new, USTR says. “Over the last 50 years, nearly 3,200 trade and investment agreements among 180 countries have included investment provisions, and the vast majority of these agreements have included some form of ISDS.” The United States entered its first bilateral investment treaty in 1982, and is party to 50 such agreements now. The United States has been a leader in developing carefully crafted ISDS provisions to protect the ability of governments to regulate, to discourage non-meritorious claims, and to ensure a high level of transparency,” USTR asserts.

Our approach to ISDS has helped establish higher global standards and strengthen arbitration procedures through clearer legal rules, enhanced safeguards, and transparency throughout the ISDS process.

As a country that plays by the rules and respects the rule of law, the United States has never lost an ISDS case, USTR says. The key purpose of the provision, USTR notes, is to provide basic legal protections for American companies abroad that are based on the same assurances the United States provides at home. They provide investment protections to prevent discrimination, repudiation of contracts, and expropriation of property without due process of law and appropriate compensation, as is provided in the US.

These protections are necessary because “not all governments protect basic rights at the same level as the United States.”

One of the frequently heard challenges too ISDS is that it vacates the right of governments to regulate in the public interest—but, this is not true, USTR says. “Our investment rules preserve the right to regulate to protect public health and safety, the financial sector, the environment, and any other area where governments seek to regulate. Rather than lower trading partners’ levels of regulation, the TPP would require partners to effectively enforce their environmental and labor laws and to take on new commitments to increase environmental and labor protections.

Under our Constitution and laws, investors frequently exercise their rights in US courts. For example, the US government has defended hundreds of cases in US courts under the Constitution’s “takings clause,” which requires compensation for expropriations. State and local governments have likewise defended many such claims.

By contrast, the United States has only been sued 17 times under any US investment agreement and has never once lost a case. In some instances, compensation has been awarded for having had to defend against a case in the first place. In any dispute arising under our trade agreements, the federal government assumes the cost of defending the United States, even if the case focuses on state and local issues, USTR says.

USTR also takes aim at the charge that the proposal would provide a legal basis to challenge laws just because they hurt a company’s profits. Again, not true, USTR says. “Our investment rules do not in any way guarantee a firm’s rights to any profits or to its projected financial outcomes. Rather, they only provide basic rights, like non-discrimination and compensation in the event of an expropriation, that are already consistent with US law. The proposed rules “seek to promote standards of fairness, not protect profits.” USTR says.

Probably the strongest argument for the provision is its common acceptance in existing trade deals, and, the serious problems with other countries experience in the absence of such protections. However, it is an article of faith among many trade critics that the ISDS will hamstring their local policies, and that argument probably will not go away no matter how many t’s are crossed and i’s dotted. It looks to be that kind of a debate in spite of its importance for US producers, Washington Insider believes.

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