Washington Insider - Monday

USDA and the Ag War for Trade Policy Leadership

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

EPA Sends 2014 Final Renewable Fuel Standard to OMB for Review

The White House Office of Management & Budget (OMB) is finally reviewing EPA’s final Renewable Fuel Standard (RFS) volume requirement rule for 2014, the agency confirmed this morning. EPA sent final rule to the OMB for interagency review on August 22, typically the last step before rule is published in the Federal Register.

EPA said it has received 340,000 comments on the rulemaking.

While some sources say the final rule will not likely come until after November elections, some are not ruling out a September announcement, after OMB has about a month to review EPA’s proposal. EPA Administrator Gina McCarthy on June 24 said the rule would be released “soon”, while Sen. Al Franken, D, Minn., following a meeting with White House officials on July 25, said he was told the rule was “imminent.”

The initial proposed EPA rule met with a lot of controversy as it only proposed 13.01 billion gallons for corn-based ethanol for 2014, and 1.28 billion gallons for biodiesel. Sources since then have signaled the final corn-based ethanol volume could be at or around 13.6 billion gallons, with biodiesel at or around 1.48 billion gallons.

Rep. Collin Peterson, D-Minn., who recently said he does not believe the final rule will be release until after the elections, said it will be important to see what methodology EPA used to come up with the final 2014 RFS volume requirements because “that will signal volume requirements for other years.”

EPA had a statutory duty to complete rule by Nov. 30, 2013, but missed that deadline.

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WTO Rules Against Argentina Re: Import Restrictions

The World Trade Organization (WTO) ruled that several import restrictions imposed by Argentina in recent years violated global trade rules.

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The 170-page ruling was released on August 22 and largely focuses on the case brought by the EU, US and Japan in 2012. The measures included requirements that all imports are balanced by exports and accompanied by investments into the country. Argentina imposed limits on the volume and price of imports and bans on foreign companies repatriating funds to their home countries as well.

US Trade Representative Mike Froman called the August 22 decision by the WTO a victory for “fairness” and “openness” in the global economy. “This is a big win,” he said.

Karel De Gucht, the EU’s trade commissioner, said the case sent an “important signal that protectionism is not acceptable... I call on Argentina to move quickly to comply with the ruling of the WTO panel and remove these illegal measures, and open the way for EU goods to compete fairly on the Argentinian market,” he said.

A US trade official said the US was in discussions with Buenos Aires over how to resolve one of those cases, which deals with US lemon exports. The US, the official said, is still awaiting a ruling on another case involving alleged US barriers to imports of Argentine beef.

Argentina has 60 days to decide whether to appeal the WTO ruling. Economy vice-minister Emanuel Alvarez said the South American country will “immediately appeal” the ruling as Argentina’s borders are “not closed to commerce but carefully cared to protect businesses... Every measure we take is to protect importers and benefit the country,” Alvarez told reporters during a radio interview. “The WTO usually just asks for some adjustments,” he clarified and insisted Argentina will appeal the ruling.

However, if for some reason Argentina does not appeal and keeps its current trade legislations the plaintiffs could ask the WTO to apply monetary sanctions.

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Washington Insider: USDA and the Ag War for Trade Policy Leadership

One of the provisions of the new farm bill is a requirement that USDA establish a new position of Under Secretary for Trade and Foreign Agricultural Affairs, which is to take the lead in a reorganization of the international trade functions within USDA. Further, the law requires the Secretary, in proposing the reorganization and creating the Under Secretary position, consider how the new post “would serve as a multi-agency coordinator of sanitary and phytosanitary issues and nontariff trade barriers” in agricultural trade.

While it is not clear just how all of the aspects of the new position and the reorganization will be developed, it is clear that this effort is a continuation of the decades-long fight between agricultural interests and the rest of government. In general, the aggies have long believed that the stripy pants guys at the State Department do not look after US ag interests well--and, they are not much more impressed with the performance of the US Trade Representative.

USDA has been involved in one or other aspects of this battle so long it is hard to remember when it did not have its own powerful Foreign Ag Service, which often resists the Department’s efforts to impose budget and policy directions. FAS Ag Attaches were boosted in rank in the late 1970s to increase the visibility of their mission in a victory over the then-current embassy structure and a General Sales Manager has been added, along with several programs to boost exports. And, USDA personnel attached to USTR now play a number of important roles in trade negotiations. The recent Act clearly intends to boost those roles further.

At the same time, reorganizing USDA along trade lines would certainly be a messy business. For example, the Animal and Plant Health Inspection and Agricultural Marketing Services, which are under the Under Secretary for Marketing and Regulatory Programs, and the Food Safety and Inspection Service which report to the Under Secretary for Food Safety, all manage critical regulatory market functions as well as in trade matters. As the reorganization proceeds, it has the potential to affect many organizations.

The Secretary has 180 days from the date of the farm bill’s enactment to report to Congress with a detailed proposal for reorganizing the trade functions. Given the number and depth of bureaucratic approvals required for a reorganization of this scope, that deadline seems highly optimistic.

So, there was considerable attention paid last week to the nomination of Janet Nuzum as Associate FAS administrator, responsible for overall trade policy coordination within USDA. She will, at least for now, report directly to the FAS administrator.

Nuzum is well known for her work on international trade policy as Vice Chairman of the US International Trade Administration and, earlier, on the staff of the House Ways and Means Committee’s Trade Subcommittee. She also was the Committee’s point person on farm bills and liaison with the agriculture committees--all valuable experience for her future role in trade negotiations.

It is not clear, however, how well her experience will qualify her for a role in what is seen by many as yet another inter-agency, intra-administration fight for prominence on trade issues. And, some observers believe her appointment will turn out to be an effort to undercut the Farm Act’s requirement for a reorganization effort within USDA.

In fact, few would be surprised if the Nuzum appointment signals the start of a new home-grown US trade fight. Clearly, there is plenty of evidence that trade development has received very little attention by this administration, or by the Congress, for that matter. And, while a bitter intra-administration squabble probably would help no one, it might build a fire under USTR that could highlight some agricultural issues that appear to be languishing in the current negotiations, Washington Insider believes.


Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products, on the News Menu on Farm Dayta, and on the News and Analysis Menu of DTN’s newest Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com.

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