Washington Insider--Tuesday

By DTN's Washington Insider

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

EPA May Be Required to Revisit Earlier Approval of Glyphosate

The Natural Resources Defense Council (NRDC) last week filed a lawsuit against the Environmental Protection Agency in an effort to require the agency to conduct a new review of the widely used herbicide glyphosate and its effects on monarch butterflies. Specifically, the lawsuit calls on a U.S. district court to require EPA to respond to a 2014 petition from NRDC asking the agency to review glyphosate.

The organization's petition argues that glyphosate is having a devastating effect on North American monarch butterflies because overuse of the herbicide has greatly reduced the number of milkweed plants that the monarch's larvae rely on as their sole food source. Late last year, the U.S. Fish and Wildlife Service initiated a process to determine whether it should place the monarch butterfly on its endangered species list.

NRDC's earlier petition asked EPA to review glyphosate to look at whether the pesticide still is safe given the recent decline in the monarch's numbers. According to the council's lawsuit, EPA never responded to the 2014 petition, and the NRDC is now asking the court to force the agency to respond within 30 days.

There is no way to know how the court will rule on the case, but with glyphosate herbicides among the most widely used pesticides on the market, both manufacturers and farmers are viewing the legal action with some anxiety.

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U.S.-Cuba 'Normalization' Talks Continue to Advance

The United States and Cuba last week held their second round of talks aimed at normalizing relations after more than 50 years of estrangement. Government officials from both nations reportedly remain optimistic, with some going so far as to predict that the two sides may be able to wrap up the discussions by the end of April. For example, lead U.S. negotiator Roberta Jacobson told reporters she was hopeful that an agreement in principle can be completed before the Summit of the Americas in Panama that starts April 10.

However, Cuba continues to insist that it be removed from the U.S. list of "state sponsors of terrorism." That designation, which was first applied in 1982, has denied the Cuban government access to banks in the United States and made banks in other countries that have branches in the United States wary of doing any business with the Cubans because of the risk of being fined by U.S. authorities.

Many are hoping for normalized trade between the two countries, especially U.S. agricultural interests who see in Cuba a potential new major market for their crops and livestock a mere 90 miles from Key West. Others, however, believe there is a difference between sales and trade, and that true trade will involve new U.S. customers for Cuban agricultural products just as much as new Cuban customers for U.S. products. The two sides may be able to agree on normalized relations by the end of April, but agreements covering exports of farm commodities between the two are likely to take far longer.

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Washington Insider: USDA All-Out for Trade

Agriculture Secretary Tom Vilsack is now leading a big push for congressional approval of trade promotion authority, press reports indicate. The department has recently held high profile conference calls and has begun issuing data on benefits that trade would have for agricultural exports in an effort to court Democratic support.

Vilsack last week lined up eight former department secretaries to sign an open letter to Congress touting the importance of trade for U.S. producers, noting that 30% of all agriculture sales are export-related. In fiscal 2014, exports totaled more than $150 billion and resulted in a $43 billion trade surplus, according to USDA.

The secretary also reports he has been calling Democrats to answer questions about trade promotion authority and international trade deals. Last year, 151 Democrats signed a letter to the president opposing TPA. USDA is trying to whittle that number down significantly, but may be paying at least a modest price for lack of attention to trade issues over most of the recent farm bill debate.

Experts suggest that a good many of the central arguments against TPA are fairly easy to counter. An example is the so called "transparency" concern that is raised frequently by those who want to see Congress more involved in the negotiations. This criticism comes in spite of the fact that TPA already involves Congress in the definition of U.S. priorities for trade agreements and, as Secretary Vilsack frequently notes, many members and staff with special clearances have access to the TPP text as it is being discussed. However, TPA also would require Congress to refrain from amending a signed agreement during the approval process even though it would retain responsibility for the up-or-down approval vote.

At the same time, trade advocates argue that TPA does not cut Congress out of the process at all, and that once negotiating priorities are established, it is reasonable to provide certainty to trading partners who worry about "bait and switch" negotiations that have occurred in the past. Some U.S. commodity groups are reporting after foreign visits that without TPA, key trading partners will not back a deal — a central point that likely is well understood by all parties to the debate, but interpreted differently.

Vilsack also is making something of a new argument when it comes to the Trans-Pacific Partnership being negotiated among the United States and 11 other Pacific Rim nations. In Vilsack's view, if the United States doesn't write the rules on international trade in the Asia Pacific region, China will. "If we fail to get this done, it's not as if status quo remains," Vilsack said in the conference call. "China will fill the void. If we want high standards for agriculture, labor, the environment and a science-based dispute resolution system, the U.S. has to make those rules."

It is likely that USDA's new visibility on trade is administration driven, part of a series of executive actions to expand manufacturing in rural areas and to create new markets for small businesses. This is the "Made in Rural America" initiative, which the USDA supports.

Over all, the TPA debate has not been particularly enlightened. Opponents often characterize nearly all of the productivity growth across the economy in recent years as indicative of "trade driven job losses" and characterize trade agreements as "dangerous to jobs." USDA now is arguing that the facts do not support that view and that especially in countries like Chile, Colombia, Panama and South Korea, existing free trade agreements have expanded exports of food and agricultural products significantly. USDA is also emphasizing estimates of the growth of U.S. exports that could result under the proposed TPP.

For example, tariffs on U.S. beef run as high as 50% across the Pacific region and would be key targets under the agreement. The $1 billion dairy export sector also would be targeted for greater access, USDA says.

The department is reporting support for its campaign from a majority of the agriculture industry, especially the American Farm Bureau Federation, National Pork Producers Council and American Soybean Association. Opposition to the Pacific pact comes especially from a number of unions and their supporters, including the National Farmers Union which is traditionally skeptical of export market enhancement efforts.

In this context, Vilsack's comments about the importance of the trade deal in building better future relations with China deserves particular attention. It is supported by the recent comments of Kim Beazley, the Australian ambassador to the United States who recently predicted that if the negotiations among the current 12 countries are successful, China will be among countries to join in the next decade. He based his view on what he called Beijing's more positive attitude toward the rules of the global trading system along with an increased understanding that it must adjust to those rules.

Clearly, China with its centralist policies and support for state owned enterprises is a key unknown regarding the capacity of the United States to compete in the important Asian markets in the future. So, while it is far too early to attempt to interpret early signals from China in terms of future participation in the Pacific pact, such suggestions may well be among the strongest arguments Secretary Vilsack has made in favor of TPA and the trade negotiations.

It clearly is one that should be kept in mind by U.S. producers as the tough politics of TPA, especially, come more clearly into focus, Washington Insider believes.

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(GH/CZ)

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