Washington Insider -- Friday

By DTN's Washington Insider

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

House Members to Lighthizer: No Ag In US-EU Talks 'Unacceptable'

Headwinds for U.S.-European Union (EU) trade negotiations are building on both sides of the Atlantic, with U.S. lawmakers demanding agriculture be included in talks and European members of parliament voicing anger over U.S. steel and aluminum tariffs.

Not including agriculture in trade negotiations between the U.S. and European Union (EU) would be "deficient, seriously jeopardizing" support for any agreement in Congress, a bipartisan group of 114 House lawmakers wrote in a March 14 letter to U.S. Trade Representative (USTR) Robert Lighthizer.

Among the lawmakers spearheading the letter were Reps. Jackie Walorski, R-Ind., Ron Kind, D-Wis., Virginia Foxx, R-N.C., and Angie Craig, D-Minn. "An agreement with the EU that does not address trade in agriculture would be, in our eyes, unacceptable," they wrote, noting such an agreement would face difficulty securing approval by Congress.

Inclusion of agriculture in USTR's negotiating objectives for U.S.-EU talks was encouraging the group said. "At the same time, we were deeply disappointed that the European Commission's (EC) draft negotiating mandates specifically excluded agricultural products and that Commission officials continue to state publicly that they will not discuss agriculture in the negotiations," they added.

Concern over the negotiations has also surfaced in the European Parliament (EP) – which like Congress must approve any agreement before it can be ratified. The body Thursday rejected the European Commission draft negotiating mandates amid anger over U.S. tariffs on steel and aluminum and President Donald Trump's threat to withdraw from the Paris Climate Agreement. While the vote is non-binding, it does suggest EP approval of any U.S.-EU trade agreement would face considerable challenges.

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Lighthizer Meets With Democrats on USMCA

Labor issues, not surprisingly, were one of the key topics raised by Democrats during their session Wednesday with U.S. Trade Representative Robert Lighthizer relative to the U.S.-Mexico-Canada (USMCA) agreement. Concerns that Mexico will not adopt more-stringent labor provisions linked to USMCA were evident, with several expressing doubt about Mexico putting in place those reforms.

"We are not there yet," said Rep. Bill Pascrell, D-N.J. "Mexico has to make some moves beforehand, to show good faith. We need that, first of all. If they do not act, there is no chance of getting the votes."

Lighthizer told lawmakers that the implementing legislation for the deal would be key in addressing the enforcement concerns also raised by Democrats. Plus, he also warned against reopening the trade deal as some lawmakers want, cautioning that the new administration in Mexico under President Andres Manuel Lopez Obrador could seek significant changes in areas of the pact that have already been agreed to.

Demands by progressive Democrats may also become an issue, according to House Ways & Means Committee Ranking Member Kevin Brady, R-Texas, referencing their call for biologic drug provisions to be changed, labor reforms, enforcement of labor provisions and concern over provisions allowing oil and gas companies to use an investor-state dispute settlement process for investments in Mexico.

Other Democrats hailed the fact Lighthizer was willing to meet with them, labeling him more accessible than his predecessors. Perhaps importantly, Rep. Rosa DeLauro, D-Conn., said Lighthizer was "listening" to Democrats and said "We want to get there" relative to USMCA.

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Washington Insider: Budget Sets Up Farm Bill Feud

Politico is reporting this week that the administration budget is likely to set up a future farm bill feud. The report says top Democrats on the House and Senate Ag committees were quick to bash the president’s new budget request as a “betrayal” of the 2018 Farm Bill he signed in December.

The new fiscal blueprint proposed shrinking USDA’s budget by 15 percent compared with spending estimates for FY 2019, including steep cuts to major farm bill programs the agriculture panels had spent months negotiating.

Like virtually all presidential budgets, most of Trump’s plan is going nowhere, Politico says. But key Democrats and some industry groups are still taking it like a jab in the eye — leading to a renewed clash between Congress and the White House in the months ahead of the Sept. 30 funding deadline.

“This budget was concocted by a bunch of ideologues who can’t see what’s clearly going on in the farm economy,” House Agriculture Chairman Collin Peterson, D-Minn., told the press. Senate Agriculture ranking member Debbie Stabenow, D-Mich., was similarly critical, noting the “economic instability and trade uncertainty” facing farmers and ranchers.

Politico highlights several “fissures.” For example, it notes that the administration targets popular conservation programs for $8.9 billion in spending cuts over a decade, including elimination of the Conservation Stewardship Program.

It also hammers crop insurance and commodity subsidies with some $28 billion in proposed cuts. A coalition of trade groups representing the crop insurance sector called it “short-sighted” in a statement, arguing the policies would become unaffordable for farmers.

And, the Supplemental Nutrition Assistance Program (SNAP) nutrition program is back in the spotlight with proposed cuts of nearly $220 billion cut over 10 years, driven by stricter work requirements and a revival of last year’s widely panned “Harvest Box” idea to replace some SNAP benefits with monthly deliveries of nonperishable foods.

Politico says that President Donald Trump and USDA Secretary Sonny Perdue were already butting heads with Congress over USDA’s proposed rule to clamp down on states issuing SNAP work waivers for able-bodied adults without dependents. The budget plan offers fresh ammunition for this fight and likely will be fully as controversial as it has been in the past.

At the same time, one area the President wants to boost is a competitive research grant program known as the Agriculture and Food Research Initiative. The White House requested $500 million, a bump of $85 million. The farm bill authorized up to $700 million annually for the initiative, but appropriators haven’t allocated the full amount.

House Agriculture ranking member Mike Conaway, R-Texas, praised the administration’s budget for boosting military and border spending, but even the Texas Republican appeared skeptical of the USDA proposal. “On agriculture, as the president knows, the farm safety net accounts for less than a quarter of one percent — a rounding error by Washington standards,” Conaway said. “So, when the chips are down we must keep our promise to farmers and ranchers and rural America made under the five-year farm bill, and I fully expect the president to be on board.”

Perdue, however, defended the cuts as necessary, given the $22 trillion national debt.

Politico thinks the White House blueprint won’t become law, but “will shape the budgetary battle among ag policymakers” and will potentially factor into the debate over farm bill implementation. In summary, it notes that members of the military, HIV testing and border security fare well; not so favored are health programs, farmers and food stamp recipients.

Certainly, the coming budget fights will be long and difficult, but will include a number of high-stakes items for producers and should be watched closely over the coming months, Washington Insider believes.

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