Washington Insider--Wednesday

Overturning COOL

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

Most Trade Advisory Committees Back TPP

Nearly all of the president’s Advisory Committees on Trade Policy and Negotiations have come out in favor of the Trans-Pacific Partnership (TPP) trade deal – with the distinct exceptions being the committees made up of labor unions and their allies and one which represents the pharmaceutical sector.

The president’s Advisory Committees on Trade Policy and Negotiations are charged with reviewing each trade deal reached by U.S. negotiators and decide if they believe the deal is in the best interest of their respective sectors. There are 26 panels representing industrial sectors and other stakeholders including labor unions and each report their individual findings back in a report to the president.

The two groups which either didn’t support or actively opposed the TPP deal as written represent two of the more contentious parts of the deal, labor and pharmaceutical interests. Labor interests are opposed to the deal on the grounds that they believe it will result in the outsourcing of U.S. labor to lower-wage nations, while the pharmaceutical industry is concerned with intellectual property and data protection provisions of the deal for biologic drugs.

The committee representing the services and finance industries voiced concern with the prohibition of forced localization of servers and data storage, which specifically exempts the financial services sector, but still supports the deal on balance.

***

Republicans: Omnibus Talks Likely Won’t Be Completed This Week

The 12-bill omnibus spending package needed to fund the federal government beyond Dec. 11 is unlikely to be completed this week, meaning a new short term continuing resolution (CR) may be needed to keep the government open as talks progress, according to Republican lawmakers.

Omnibus appropriations as well as the details of the tax extenders package are the two primary outstanding issues in negotiations, according to lawmakers. “That’s what we’re working on this week and it might take us more than just this week to get these issues put together correctly,” House Speaker Paul Ryan, R-Wis., told a Wisconsin radio station.

Originally, House and Senate negotiators hoped to have a deal finalized and ready to file by Dec. 7, but a lack of resolution on key issues meant that deadline was missed. That is raising questions on the potential for the omnibus package to pass both chambers ahead of the Dec. 11 deadline.

Policy riders which seek to gut President Obama’s clean air and water rules may still be included in a final bill, though Democrats recently floated a proposal that would not include those policy riders in exchange for a provision which would lift the ban on crude oil exports, a Republican priority. It isn’t clear whether the President would sign a bill containing either the riders or the oil provision, both of which he has previously opposed.

The White House has also hinted that the President might not sign a short term CR to keep the government open past the Dec. 11 deadline if no final omnibus proposal was offered, according to White House Spokesman Josh Earnest.

***

Washington Insider: Overturning COOL

As expected, the World Trade Organization recently authorized Canada and Mexico to tax a number of U.S. exports to cover costs they have incurred over years as a result of the country-of-origin labeling rule. If the United States does not repeal the program, painful sanctions are expected on more than $1 billion worth of U.S. goods.

This has been a long, bitter fight and USTR now says the expected tariffs will hurt all three North American economies if they are imposed. In fact, the domestic meat industry concluded long ago that the policy provided little “measurable economic benefits” for American consumers while costing producers, packers, and retailers in the U.S. some $2.6 billion a year, according to a report sponsored by USDA’s chief economist and sent to Congress earlier this year. The report was mandated by the 2014 Farm Bill and was put together by a team of agricultural economists from Kansas State University and the University of Missouri, the Hill reported. Other, earlier studies have presented similar results.

So, now fingers are being pointed even as the threatened sanctions loom closer. For example, USDA Secretary Tom Vilsack has been criticized for not taking a more active stand against the program that was widely seen as “WTO illegal” from its earliest days. Still, he argues now that the WTO decision puts the ball clearly in the Congressional court.

In the meantime, Senate Agriculture Committee Chairman Pat Roberts, R-Kan., who has consistently opposed COOL rules, said that Congress has had plenty of warning and needs to complete a process begun in the House to repeal the rule. While he worries that his committee may lack the votes to push the repeal through, he “…will continue to look for all legislative opportunities to repeal COOL,” he said.

To no one’s surprise, the Canadian government wasted no time is putting the United States on notice that it intends to act promptly.

The COOL rule, which requires labels on meat to show where livestock were born, raised and slaughtered in order to qualify for the most preferred label, was first authorized in the 2002 and 2008 farm bills. The recent WTO decision essentially ends a seven-year dispute over the policy that affects beef and pork products, the Hill concludes.

“We have known for some time that the country-of-origin labeling law violates our international trade obligations,” said House Agriculture Committee Chairman Mike Conaway, R-Texas. The House voted 300-131 on June 10 to repeal COOL rules on beef, pork and chicken.

National Cattlemen’s Beef Association President Philip Ellis said that immediate action is needed by the Senate. While the program has been was supported by some livestock producers and by the Farmers Union, it has been generally opposed by the agriculture industry. Ellis said that the rule, “has been a failure on all accounts,” Ellis said.

Linda Dempsey, vice president of international economic affairs for the National Association of Manufacturers, also hates COOL. She thinks it “creates new barriers for our exports.” And, North American Meat Institute President and CEO Barry Carpenter called the rule “one of the most costly and cumbersome rules ever imposed on the agricultural sector.” He thinks many industries could pay the penalties for this “debacle created by some anti-trade organizations.”

The US Senate has debated mandatory COOL for nearly three decades, Roberts said, noting that he has opposed mandatory COOL from its inception, both in Committee and on the Senate floor and “has introduced legislation to repeal it and prevent retaliation.”

So, it is not entirely clear what will happen to the COOL program just now, but at least one more effort is expected to attach COOL rule repeal to the omnibus spending bill, perhaps even this week. Certainly, the billion dollar price tag on keeping it in place has people’s attention, even if the need to lead efforts to build better access to important ag markets did not, Washington Insider believes.


Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com

(GH/CZ)