Washington Insider -- Monday

Looking at Alternatives to the WTO

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

Senate Confirms Ross as Commerce Secretary

The Senate Monday evening as expected confirmed Wilbur Ross to be Commerce Secretary and is on track to consider two more of President Trump's Cabinet picks this week.

However, some Cabinet posts still awaiting action, including USDA Secretary nominee Sonny Perdue, Energy Secretary nominee Rick Perry and Alexander Acosta, nominated Feb. 16 to be Secretary of Labor.

Following Ross's confirmation on a 72-27 vote, the Senate voted 67-31 for cloture on the nomination of Rep. Ryan Zinke, R-Mont., to be Interior Secretary. Zinke is expected to be approved later in the week.

Also said likely to advance is the nomination of Ben Carson to head Housing and Urban Development.

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Trump Signals 'Big' Announcement on Infrastructure in Address to Congress

President Donald Trump hinted that he will be making a "big" announcement on infrastructure during his joint address to Congress on Tuesday.

"We're going to make it easier for states to address their infrastructure, and I'm going to have a big statement tomorrow night on infrastructure," Trump told governors visiting the White House on Monday. "We're going to start spending on infrastructure big."

The only hints about how the administration intends to tackle the issue have come from a white paper that was floated on the campaign trail. That blueprint would offer $137 billion in federal tax credits to private companies that back transportation projects.

Trump, however, emphasized Monday that fixing the country's infrastructure remains an urgent priority for him. "And it's not like we have a choice. It's not like, 'Oh gee, let's hold it off,'" Trump said. "Our highways, our bridges are unsafe. We have tunnels in New York where the tiles on the ceiling, you see many tiles missing... and you see all this loose material that's heavy." He added that, "Every time I drive through, I wonder how many people are hurt or injured when they are driving 40 or 50 mph an hour and a tile falls off?"

Reuters reported that the Trump administration has received a "wish list" from governors of more than 400 projects that could use federal assistance. The National Governors Association has not made the list public. According to Reuters, California is interested in money for high-speed rail, Kansas is hoping for funding for interstate work and Virginia and South Carolina would like support for port deepening.


Washington Insider: Looking at Alternatives to WTO

The Financial Times is reporting this week that administration officials are considering major changes in U.S. links to the World Trade Organization. FT says the U.S. plans to remain a WTO member but that "USTR officials have been asked to draft a list of unilateral trade sanctions the United States could impose."

The administration is exploring alternatives to taking trade disputes to the World Trade Organization "in what would amount to the first step away from a system that Washington helped to establish more than two decades ago," FT said.

Incoming officials at the U.S. Trade Representative's office have been requested to draft a list of steps that could be taken against China and other countries. Their goal, FT reported, is to find ways that the new administration could circumvent the WTO's dispute system.

FT says that this move reflects the skeptical view many of them have of an institution they see as a plodding internationalist bureaucracy biased against U.S. interests. It said the development "illustrates how Donald Trump, who has vowed to pursue an 'America First' foreign policy, is setting out to test a global economic order that his predecessors helped to build and defend."

The administration already has pulled the U.S. out of the Trans-Pacific Partnership trade pact in what Steve Bannon, a senior White House adviser, described last week as: "one of the most pivotal moments in modern American history."

In addition, there is growing frustration that this WTO system alone is not enough to get countries to honor their trade commitments," said John Veroneau, USTR's general counsel during the administration of George W Bush, according to the FT article. "It is clear that the Trump administration is sympathetic to this view."

The White House refused to say whether it remained committed to the WTO, the FT noted. "We aren't going to comment on trade policy until we have a USTR in place," said Lindsay Walters, deputy press secretary. "It would be premature to say that the administration is 'committed' to any specific policy until that point."

Still, observers note that the administration request should be regarded as "outlining possibilities" at this time, and that it certainly is coming "sooner than expected." It is clear that the administration trade team is aggressive, but that there are numerous policy players on trade across the government and in various parts of the economy, and that the "full vetting" of far reaching policy changes often "find unintended consequences" as could happen in this case.

And part of the reason for caution regarding the FT report is that any confirmation of an openly anti WTO domestic policy would at likely increase the odds of severe and growing trade policy frictions around the world.

In addition, if the FT report stands scrutiny, it would be expected to mean additional complications as well as added layers for administration to pursue bilateral trade agreements, particularly those with countries that had been part of TPP. In any case, the report suggests that a far-reaching shift in U.S. trade policy may be already underway, one that producers should watch closely as it emerges, Washington Insider believes.


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