Washington Insider --Wednesday

Turkey Launches WTO Dispute Over Trump's Metal Tariffs

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

US, China Trade Talks on Tap

The U.S. and China will hold two days of trade talks starting today in Washington. The sessions will take place between U.S. Treasury Undersecretary David Malpass and Chinese Commerce Vice Minister Wang Shouwen.

Expectations from the talks vary, with China expressing hope that the sessions will at least bring some progress. "We certainly hope that a mutually beneficial and acceptable solution could be reached through friendly consultations on the basis of reciprocity, equality and good faith," Chinese Foreign Ministry spokesperson Lu Kang said. "This is the right thing to do, not only for the consumers and business communities of the two sides but also for the international community."

However, President Donald Trump downplayed the potential for any major developments to emerge from the sessions. Trump told Reuters he did not "anticipate much" to come from the sessions, saying also he had "no time frame" for ending the dispute with China.

Trump was also non-committal about meeting with President Xi Jinping in November during international events the two are scheduled to take part in.

Meanwhile, the talks in Washington also unfold as the U.S. has said it will deploy tariffs on another $16 billion in Chinese goods on Aug. 23 and China has said it will respond in-kind with tariffs on that amount of U.S. products.

Plus, the Office of the U.S. Trade Representative is holding six days of hearings that run through Aug. 27 on imposing tariffs on another $200 billion in Chinese goods.


Release of Glyphosate Data Urged By Senate Democratic Leader

Senate Minority Leader Chuck Schumer, D-N.Y., is calling on FDA to release the results of its two-year study looking at glyphosate residues in foods.

The urging came in response to media coverage of the Environmental Working Group's report finding very low-levels of the popular herbicide in oatmeal as well as cereals.

"Simply put, the FDA must not only weed out the facts on glyphosate, but they must update the public on their progress," Schumer said. "I have full confidence in their ability to effectively continue this study, but we are here to send them a message: get going.”

FDA said that between 2016 and 2017 it began "preliminary testing" of samples of soybeans, corn, milk and eggs. The agency said it completed this preliminary testing in fiscal year 2017 with plans to expand testing to other foods in fiscal year 2018. “Preliminary results for glyphosate testing showed no pesticide residue violations for glyphosate in all four commodities tested (soybeans, corn, milk, and eggs)," FDA said.

The agency plans to include its results for glyphosate testing in future reports on pesticide residues.

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Washington Insider: Turkey Launches WTO Dispute Over Trump’s Metal Tariffs

It is widely known by now that the administration’s metal tariffs are widely unpopular and that trade relations between the U.S. and Turkey are worsening rapidly for several reasons. Thus, it was not much of a surprise when Bloomberg reported this week that Turkey was filing a World Trade Organization dispute against the U.S. — the ninth — alleging that levies on steel and aluminum violate rules of international commerce.

The dispute filing, which was published Aug. 20, alleged the tariffs violated the WTO Safeguards Agreement that governs the use of temporary trade restrictions.

“WTO rules apply to all countries. We will protect our exporters’ interests at every turn and will use all available options to halt the baseless attacks against our economy,” Turkey’s Minister of Trade Ruhsar Pekcan said.

This development is seen as increasing the odds that the WTO will ultimately be called upon to determine whether Trump’s steel and metal tariffs are permissible under the WTO’s national security exemption.

The U.S. has already claimed its Section 232 tariffs are exempt under the WTO’s national security exemption, which permits governments to take “any action which it considers necessary for the protection of its essential security interests.”

If a WTO dispute settlement panel agrees with the US argument, it could encourage other WTO members to enact new trade restrictions under the guise of protecting their national security. Such a situation would effectively sideline the WTO’s ability to arbitrate international trade disputes and lead to a spiral of tit-for-tat trade restrictions, Bloomberg says.

Earlier this year, President Trump imposed the levies of 25% on steel and 10% on aluminum in the name of protecting U.S. national security.

Eight other WTO members — Canada, China, the European Union, India, Mexico, Norway, Russia, and Switzerland — also have filed complaints about the U.S. tariffs.

The complaint — a request for dispute consultations — marks the first stage in the WTO dispute settlement process. If the U.S. and Turkey can’t resolve the matter after 60 days, Turkey may then ask a WTO dispute settlement panel to investigate the matter and issue a ruling.

Trade relations between the U.S. and Turkey have deteriorated in recent weeks due to Turkey’s economic crisis and a row over the Turkish detention of an American pastor named Andrew Brunson, Bloomberg said.

On Aug. 10, the administration doubled its tariffs on imports of Turkish steel and aluminum to 50 percent and 20 percent respectively. The President tweeted Aug. 10 that the move was necessary to respond to the depreciation of the Turkish lira against the US dollar. “Our relations with Turkey are not good at this time!” Trump said.

In response, Pekcan said the tariffs were “groundless when they were announced in June, and remain so now.”

Turkey has already imposed tariffs of $266.5 million on $1.8 billion worth of U.S. goods in retaliation to Trump’s levies on steel and aluminum imports. Total goods and services trade between U.S. and Turkey was $22.4 billion in 2016, Bloomberg said.

So, we will see. A storm of criticism is emerging against the Office of the U.S. Trade Representative this week in a long series of hearings on the administration’s proposed tariff boost against China, and on even larger proposed tariff increases. While the administration says it will hold fast to its “get tough” policies, the parade of CEOs who describe in detail the damages the policy has caused and is attracting widespread attention in many quarters.

Trade rules are highly complex and difficult to appraise, experts say, but concerns about potential negative impacts on overseas ag markets appear to be growing so the ongoing trade discussions with China and others should be watched closely by producers as the season advances, Washington Insider believes.


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