Washington Insider -- Thursday

Ag Establishment Becoming Impatient

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

Commerce's Ross: NAFTA Talks Likely to Begin Later in 2017

Formal talks between Mexico, Canada and the U.S. regarding renegotiation of the North American Free Trade Agreement (NAFTA) will not likely get underway until "the latter part of this year," Commerce Secretary Wilbur Ross said Wednesday.

"I would like the results tomorrow, but that is not the way the world works," Ross said in an interview with Bloomberg TV, adding that he hoped discussions would not take "substantially longer than a year."

NAFTA is now "an old treaty. Our economy is very different from what it was when that treaty was entered into. You didn't have the whole digital economy," Ross said. "Services were not nearly as important as they are now. And further, we've now had decades of experience with the treaty. It's very hard to get a several- thousand-page document right at inception. And there were some things in it that were missed. And there were some things in it that were not done correctly to begin with. And a lot of things that might have been okay back then, but don't work now. So, there is a lot to fix."

Ross said that "several" chapters need to be added to the decades-old trade pact with Mexico and Canada because of the digital economy and other developments. Rules of origin will be a big topic in the talks, Ross said. Rules of origin are the criteria needed to determine the national source of a product. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.

The Trump administration is already having "preliminary" discussions with lawmakers about NAFTA, but they have yet to give Congress formal notice that it will be reopening the 23-year-old pact, Ross said.

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Consumer Group Filing Complaint to Congress Re: Carl Icahn

The biofuels battle continues as Public Citizen, a consumer advocacy group, is filing a complaint to Congress that billionaire Carl Icahn is violating lobbying rules by pushing White House officials to alter the Renewable Fuel Standard (RFS). Link to complaint.

The group charges that Icahn, his company Icahn Enterprises and the CVR oil refining company he owns failed to register as lobbyists, yet pushed the White House to change the EPA's biofuel rules — a move that would save Icahn's company hundreds of millions of dollars. Icahn is a White House special adviser for regulatory reform, a position President Donald Trump announced in December (link). But Icahn, the White House said at the time, would "not be serving as a federal employee or a special government employee and will not have any specific duties."

Icahn owns an 82% stake in refiner CVR Energy Inc, which along with other refining companies, have urged the Environmental Protection Agency (EPA) to shift the RFS blending obligation away from them.

According to the Public Citizen complaint, he submitted a proposal to the White House on Feb. 27 to overhaul the RFS program and shift the burden for complying with the rules to fuel wholesalers. The letter to the secretary of the Senate and the clerk of the House calls for an investigation into whether Icahn and CVR's activities constitute lobbying of the White House for changes to the program. The complaint also cites Icahn's work in helping select EPA Administrator Scott Pruitt, and the proposed language he and fellow oil refiner Valero Energy submitted to the White House for a memo that would direct EPA to make the change.

"All of this has occurred with no record of any [Lobbying Disclosure Act/LDA] filings by or on behalf of Mr. Icahn, Icahn Enterprises or CVR Energy," the complaint noted. Individuals spending more than 20% of their work time on preparation, research and other activities to facilitate lobbying must register as lobbyists. They also have to satisfy other conditions, including certain level of expenditures and at least one lobbying contact with a covered official. While Icahn is unlikely to have spent more than 20% of his time lobbying, the Public Citizen letter said it "is unlikely that all these activities occurred without some individual or entity being obligated to report lobbying activity under" Lobbying Disclosure Act


Washington Insider: Ag Establishment Becoming Impatient

As predicted, the ag establishment is demonstrating more and more impatience over the delays in confirmation of Governor Sonny Perdue to be Secretary, as well as other key officials.

Senate Ag Committee Chair Pat Roberts, R-Kan., told Bloomberg bluntly, "Congress and the Trump administration better get moving pretty quick" to put ag and trade officials in place to help support agriculture exports. He worries that top administration trade priorities, like renegotiating the North American Free Trade Agreement or taking a tougher position on trade with China, would heavily impact the farm economy.

NAFTA members Canada and Mexico, as well as China, are top importers of U.S. agricultural goods. Roberts said U.S. trade policy should boost agricultural exports to help offset low commodity crop prices in the U.S.

Roll Call also noted that the administration's pick to be U.S. Trade Representative (USTR), Robert Lighthizer, is scheduled for a nomination hearing in the Senate Finance Committee March 14, but that other senior USTR posts, like deputy USTR, chief agriculture negotiator and deputy chief of staff, remain vacant. If confirmed by the Senate, Lighthizer is expected to bring a strong enforcement focus to the agency. He has advocated for a "significantly more aggressive approach" toward dealing with China.

Lighthizer's nomination must overcome the hurdle of getting a waiver from Congress of requirements in the Lobbying Registration Act of 1995. His previous work in Brazil and China required him to register as a foreign agent and the act stipulates that such agents cannot serve as the USTR. However, Senate Finance Committee Democrats recently joined Sen. Joe Manchin, D-W.Va., in pushing a bill that would shore up benefits for retired coal miners as a bargaining chip for the waiver.

Roberts said he is trying to convince Lighthizer "to be a champion for agriculture," adding that the administration needs to begin sending farmers "a green light that we are going to do trade deals."

The holdup on Perdue is that he still has not completed background and disclosure documents that are needed before the Senate Agriculture Committee can announce a confirmation hearing. Roberts told Bloomberg that he and ranking member Debbie Stabenow D-Mich., "would have to get the paperwork, which I'm very hopeful we'll get this week. Then both sides "have to make sure everything's in order."

The New York Times reported Wednesday that Perdue is facing problems because of ethical complaints filed against him when he was governor of Georgia. The report stated the State Ethics Commission "on two occasions ruled that the governor had violated state ethics laws. The commission took the unusual step of fining Mr. Perdue while he was governor."

Roberts said he was not sure what was causing the delay, but stressed the need to have someone representing agriculture interests as the White House crafts major trade policies like a NAFTA renegotiation. "We need to get him down there; we need a strong champion for agriculture inside the Cabinet," Roberts said.

Amid all the proposals and counter proposals on taxes and trade policies, a sophisticated voice from a large agribusiness exporter also was published this week by Bloomberg.

Samuel Allen, CEO of Deere and Co., the world's largest tractor maker said President Trump should use caution on trade policy, "especially the border adjustment tax, so that it doesn't harm American businesses or workers."

Allen said he would advise "caution" because such a tax adjustment could become a "barrier" that causes others to "retaliate against us…If traditional trading partners were to retaliate against the border-adjustment tax, it certainly would be difficult for American Farmers," he said.

Our three largest countries we export ag commodities to are China, Canada and Mexico and if they were to retaliate and not take our ag exports, that would really be bad for our customers and in the end would be bad for us, Allen said.

Given the discussions of possible trade policy shifts in the US and among trading partners, it is not surprising that the ag establishment is anxious as it awaits — and awaits — the confirmation of its chief policy spokesman. The administration has repeatedly assured the sector that the confirmation is on the way, and still strongly supported and it can be expected to be particularly upset if major policy changes are implemented while the sector is without one of its major supporters, Washington Insider believes.


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