Washington Insider-- Wednesday

Lighthizer to be US Trade Representative

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

US Trying To Reach Agreement with South Korea on Egg Shipments

U.S. trade officials are urgently seeking an agreement with South Korea that would allow imports of American eggs so farmers can cash in on a shortage caused by the Asian country's worst-ever outbreak of bird flu.

The two sides are negotiating over terms of potential shipments after South Korea lifted a ban on imports of U.S. table eggs that it imposed when the U.S. confronted its own bout of bird flu, according to USDA. If an agreement is reached, U.S. shipments could bring some relief to South Koreans who have faced soaring egg prices and rationing since the outbreak there began last month.

The egg shipments also would help U.S. farmers cope with an oversupply that is depressing prices.

About 26 million birds, more than a quarter of South Korea's poultry stock, have been culled to control the outbreak, and most of the birds have been egg-laying hens. The U.S. produced 7.44 billion table eggs in November, up 11.5% from a year earlier, and there were 312 million hens laying table eggs on December 1, up 8% from a year before, according to USDA.


Commodity Credit Corporation Interest Rates Rise

Commodity loans disbursed during January will carry an interest rate of 1.875%, up from 1.75% in December, according to USDA's Commodity Credit Corporation (CCC).

This is the highest since December 2008 when it was 2.25%.

Interest rates for Farm Storage Facility Loans approved for January are as follows: 1.5% with three-year loan terms, up from 1.125% in December; 1.875% with five-year loan terms, up from 1.375% in December; 2.25% with seven-year loan terms, up from 1.75% in December; 2.375% with 10-year loan terms, up from 2% in December and; 2.5% with 12-year loan terms, up from 2% in December.

The interest rate for 15-year Sugar Storage Facility Loans for January is 2.625%, up from 2.125% in December.

Producer use of the price support loan program has increased as growers have opted to utilize the loan program for cash flow to keep from having to sell their crops until prices improve.

However, the loan program use, while up from levels seen earlier this decade, still pales in comparison to the 1990s and before when sometimes billions of bushels would end up under loan.


Washington Insider: Lighthizer to be US Trade Representative

The press is widely reporting that president-elect Trump will to nominate lawyer Robert Lighthizer as U.S. Trade Representative (USTR). The Associated Press calls Lighthizer an experienced trade official but also one who has questioned other conservative’s commitment to free trade.

Lighthizer served as deputy USTR under President Ronald Reagan, and is expected to play a key role in Trump's trade agenda. The president-elect has vigorously opposed the 12-nation Trans-Pacific Partnership pact, but recently has called for one-on-one trade deals with individual countries. At the same time, he frequently signals a tough stance on trade with China, including levying a hefty tariff on Chinese imports.

The president-elect said Lighthizer has extensive experience striking agreements that protect some of the most important sectors of our economy and “has repeatedly fought in the private sector to prevent bad deals from hurting Americans.”

Lighthizer played a senior role during Bob Dole's 1996 campaign, and has more recently worked on trade issues as a lawyer, representing manufacturing, agricultural and high-tech companies. Lighthizer's bio also states that he focused on "market-opening trade actions on behalf of U.S. companies seeking access to foreign markets," AP says.

AP also notes that in 2008 he openly questioned GOP presidential nominee John McCain's position on trade in a New York Times opinion article. "Mr. McCain may be a conservative. But his unbridled free-trade policies don't help make that case," Lighthizer wrote at the time, suggesting that free trade had long been popular among liberals.

"Moreover, many American conservatives have opposed free trade. Jesse Helms, the most outspoken conservative in the Senate for three decades, was no free trader. Neither was Alexander Hamilton, who could be considered the founder of American conservatism," he wrote.

It is not entirely clear what the incoming administration will rely on Lighthizer to do as USTR. The president-elect has already indicated that he plans to spread work on his trade policies beyond USTR, especially to billionaire investor Wilbur Ross, Trump's nominee to head the Commerce Department, who is expected to “play a lead role on trade.”

The president-elect has also named economist Peter Navarro to a newly created White House National Trade Council and indicated Tuesday that Lighthizer would work "in close coordination" with Ross and Navarro.

Lighthizer strongly declared his allegiance to Trump's approach on trade again this week.

Trump has appointed essentially a White House manufacturing and trade czar position by naming Peter Navarro to head a newly created National Trade Council. Navarro’s title is Assistant to the President, Director of Trade and Industrial Policy, and some observers expect he will be the head trade policy person, much like past US Trade Representatives have played. He has written extensively on what he argues are America’s trade problems.

At the same time, Wilbur Ross, president-elect Trump’s pick for Commerce secretary, is also a vocal critic of NAFTA who has made renegotiation of the deal a top trade priority. Ross and Peter Navarro have been tapped to lead the newly created White House National Trade Council. They co-authored a paper in September criticizing the use of “backdoor tariffs” they argue give Mexico a competitive advantage. “It is thus not surprising that U.S. corporations want to move their factories offshore and then export their products back to the US,” the paper said.

So, while the new trade team appears to be increasingly well defined, it is not yet clear what the main focus of the administration’s trade policies will be, whether they will continue to develop overseas markets for U.S. products, or work to increase US isolation from growing markets in developing countries as some observers suggest.

This question is increasingly important to agriculture, which has frequently worked closely with USTR in the past and has invested large amounts of producer money in the development and expansion of many of these markets. Attention to these and other trade related concerns will be high on the agenda of any newly appointed Secretary of Agriculture, as well as to powerful ag committees in the new Congress and should be watched closely by producers as it emerges, Washington Insider believes.


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