Washington Insider -- Thursday

Europe Expands Global Alliances

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

White House Push on Trade Continues

The White House said it is prepared to see China retaliate beyond simply imposing tariffs, but offered reassurances to U.S. firms this week, stating that China has more to lose in a trade war.

"President Trump has given China every chance to change its aggressive behavior," White House trade adviser Peter Navarro said. "China does have much more to lose than we do." The White House view there is couched on the fact that China exports nearly four times as much to the U.S. as the U.S. sends to China.

“This president will have the back of Americans, whether they are here on a farm in Iowa or in Shanghai trying to operate there," Navarro said.

A new report, authored by Navarro, calls out China on "economic aggression” and attempts to lay out President Trump's argument for tariffs. "How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World," the report does not offer any new policies beyond those already under consideration or announced on trade and investment restrictions.

Even though Chinese leaders view Navarro as an irritant, his report will likely get attention at the highest levels in the Chinese government.

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House Energy & Commerce Subcommittee Advances Precision Ag Broadband Bill

A new task force aimed at meeting the broadband needs of precision agriculture would be created under legislation – the Precision Agriculture Connectivity Act of 2018 (HR 4881) – cleared by the House Energy and Commerce Subcommittee on Communications and Technology June 15.

The bill was authored by House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection Chairman Bob Latta, R-Ohio, and Rep. Dave Loebsack, D-Iowa. It would direct the Federal Communications Commission (FCC) and USDA to form the task force to come up with the best ways to meet the broadband needs of precision agriculture.

Rural broadband has received increased attention in recent years from USDA and from state and federal agencies. Improving infrastructure, including expanding rural broadband, was a key recommendation in USDA's Agriculture and Rural Prosperity Task Force report released late last year.

In the past, some state funding to expand and improve rural broadband has been diverted to other programs. Observers have previously suggested spot checks on any funding directed for rural broadband to make sure it is being used for the purposes targeted.

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Washington Insider: Europe Expands Global Alliances

Bloomberg is reporting this week that in response to U.S. tariff proposals, Europe and other nations are increasingly banding together. The group reported that Europe is now building new alliances to counter an increasingly isolationist America, “as President Trump recasts the US economic relationship with the world.”

The European Union opened free-trade negotiations with Australia this week, Bloomberg said, representing one of more than a dozen deliberations currently being conducted by the bloc. This comes on the heels of the U.S. imposition of tariffs on imports from some of its most solid allies -- including the EU, Canada, Mexico and Japan -- in the name of national security.

The report criticized the President’s aggressive foreign-policy stance, which has included leaving the Trans-Pacific Partnership and the Iran nuclear deal, moves that have offended some of the closest US partners. In response, EU President Donald Tusk is vowing to stand up to this “capricious assertiveness,” and has raised the prospect of a shift in alliances among world powers as they seek to preserve the global trade system.

All the trade deals being concluded are sending a message that “the EU and its partners are coming together,” European Trade Commissioner Cecilia Malmstrom said in a speech in Canberra this month, adding they were shaping globalization and standing up for open trade. “And we need many allies to help us in pursuing these goals,” she said.

Still, President Trump doubled down on his efforts to recast Washington’s trade relationships this week, threatening tariffs on another $200 billion in Chinese imports after already identifying $50 billion in products to hit with levies. The U.S. measures have created unlikely allies among nations, with both China and the EU calling for adherence to the multilateral trade system.

Bloomberg noted that “this comes after Trump threw a Group of Seven meeting into chaos,” rejecting a joint statement upon hearing Prime Minister Justin Trudeau say Canada would be forced to respond to the US decision setting tariffs on Canadian steel and aluminum.

European leaders have heavily criticized Trump, with French President Emmanuel Macron’s office saying “international cooperation cannot be dictated by fits of anger and insults,” and Norway’s prime minister saying “the U.S. isn’t the same driving force as it used to be.”

“The Atlantic has gotten wider under President Trump,” German Foreign Minister Heiko Maas said in a June 13 speech in Berlin. “Trump’s isolationist policy has opened a huge worldwide vacuum. Therefore, our common response today to ‘America First’ must be ‘Europe United.'"

The EU is already Australia’s second-largest trading partner after China, and an accord including New Zealand could boost the bloc’s gross domestic product by 4.9 billion euros ($5.7 billion) by 2030, according to European Commission estimates. Sectors likely to be included in discussions will be machinery, cars, electronic equipment, chemicals and metals.

The talks with Australia come a year after the EU inked accords with Mexico and Japan and the provisional passage of a trade agreement with Canada, which took seven years to complete.

“I look forward to adding Australia to our ever-expanding circle of like-minded trade partners,” Malmstrom said in a statement. “In challenging times, it is heartening to see that Australia shares our commitment to a positive trade agenda, and to the idea that good trade agreements are a win for both sides.”

Despite the historical relationship the US has with Europe and the American role in developing the trans-Atlantic partnership, EU leaders are concerned that Trump’s actions may undermine the global system.

“What worries me most, however, is the fact that the rules-based international order is being challenged,” Tusk said during the G7 summit in Charlevoix, Canada. “Quite surprisingly, not by the usual suspects, but by its main architect and guarantor: the U.S.”

The current anti-trade policies that are being imposed are attracting widespread criticism among trade groups, supporters in Congress and even from inside the administration, observers say. And while Republicans in Congress were recently seen as backing away from confrontation with the President Trump over trade, the recent four-fold increases in tariffs proposed for China have gotten very wide attention, as has talk of additional tariffs for other trading partners.

So, we will see what happens. Clearly, the risks of the administration’s increased protectionism are serious, and are leading to growing criticism in numerous economic sectors. Ag producers have large stakes involved in overseas markets, and clearly should watch this debate closely as it proceeds, Washington Insider believes


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(GH/BAS)