Washington Insider-- Monday

By DTN's Washington Insider

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

Global Businesses Call for Government Leaders to Take Action on Climate Change

Republican opposition to President Obama’s climate change agenda may become less strident and perhaps even somewhat muted in the near-term future as more and more businesses abandon similar opposition.

Last week, a coalition of CEO’s representing 43 major businesses across 20 industry sectors issued an open letter that promised the public they would be moving their own businesses toward a low-carbon economy while calling on world leaders to complete a global agreement on curbing heat-trapping gases in December in Paris. The executives oversee companies with a combined $1.2 trillion in sales last year.

Meanwhile, a panel of international diplomats and regulators said during an energy conference last week that the U.S. economy is shifting decisively away from fossil fuels and toward renewable sources such as solar and wind, with private business and local governments leading the way. Nancy Sutley, a former White House environmental adviser under Obama, noted that clean energy is rapidly overtaking more polluting alternatives like oil and natural gas. For example, in 2013, the world added 143 gigawatts of renewable electricity capacity, compared with 141 gigawatts in new plants that burn fossil fuels. That shift is projected to accelerate in the next 15 years, analysts said.

Given the entrenched opposition to climate science among some member of Congress, a reversal of that position likely will take time. However, with more than 95% of climate scientists and a growing number of businesses now accepting the science and taking steps on their own to address the problem, politics dictate that at least some of these members will be convinced to switch sides.

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Obama Continues Campaign Pacific Trade Deal

President Obama, trying to convince free-trade skeptics among his own party members, said last week that if the United States is unable to come to terms on the Trans-Pacific Partnership (TPP) free trade agreement being negotiated with 11 other Pacific nations, China will step in to fill the void. Asia has the globe’s most populous and fastest growing markets and the United States needs to have access to sustain economic growth, Obama said at a White House news conference.

“If we do not help to shape the rules so that our businesses and our workers can compete in those markets, then China will set up rules that advantage Chinese workers and Chinese businesses,” he said.

Opposition to free trade deals among a significant number of Democrats has grown over the past few months, with the largest complaint being that free trade kills jobs for U.S. workers who cannot compete with low-wage workers overseas. To date, only 11 of the 188 House Democrats have indicated they plan to vote in favor of giving the administration Trade Promotion Authority. House Speaker John Boehner, R-Ohio, has made it clear that he needs Democratic votes to move the TPA legislation through the House. Hearings of the measure are scheduled to begin this week; votes in both chambers could come before the Memorial Day recess. (Also see longer item below.)

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Washington Insider: The Fight Over Fast Track

Congress appears to have made significant progress toward the passage of new “fast track” authority last week. A somewhat weird line-up of leaders agreed on Thursday on legislation in which the president and his administration are pushing against a broad coalition of Democrats.

In this case, party lines are badly blurred. Increasingly unions and environmentalists have taken up protectionist ideas while Republicans continued to support free-market, trade related measures and seem likely to have the muscle to put them into place with a new fast track provision. For the president, this fight is especially difficult because the Trans-Pacific Partnership (TPP) being negotiated could lead to an enormous, far reaching free trade deal with important geopolitical consequences across the region, and because the president’s trade policy credentials are frequently questioned.

Following last week’s leadership agreement, committee votes are planned this week with advocates on both sides pulling out the political stops for the coming fight. The argument is that the Trans-Pacific Partnership is a cornerstone of the remaining administration agenda, and that Trade Promotion Authority (TPA) is essential for completion of the TPP.

Last week’s deal was struck by Finance Committee Chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Ore., and House Ways and Means Chairman Paul Ryan, R-Wis. It includes significant concessions to trade skeptics and to the Congress.

The draft bill would give Congress the power to define key objectives to be negotiated and then to vote on passage once the deal is completed –– but would deny lawmakers any opportunity to “amend the deal to death,” allowing only an up or down vote. The TPP would be the largest trade deal since the North American Free Trade Agreement of 1994, which President Bill Clinton pushed through Congress despite similar opposition from labor and other Democratic constituencies.

The press and many anti-trade groups frequently argue that free-trade deals are oversold, although most experts suggest they have benefitted both consumers and the economy. This time, while the potential extended effects of the TPP are described somewhat hurriedly, the press does like to rank benefits, and several reports are indicating that the clearest winners under the TPP agreement would be American agriculture, along with technology and pharmaceutical companies. However, evaluations by the Office of the U.S. Trade Representative indicate substantial gains for insurers and many major manufacturers that would expect to see expanding U.S. exports, especially to the other 11 nations in Asia and South America that are involved.

President Obama embraced the legislation immediately and administration spokesmen have noted that the TPA language “would level the playing field, give U.S. workers a fair shot, and for the first time, include strong fully enforceable protections for workers’ rights, the environment and a free and open Internet.”

In addition, to win over the key Democrat, Sen. Wyden, Republicans agreed to stringent requirements for the deal including a human rights negotiating objective that has not existed on trade agreements.

The bill would allow the public to comment for 60 days on any final trade agreement before the president signs it, and up to four months before Congress votes. An additional new wrinkle gives Congress a chance to decide if the agreement as negotiated fails to meet the objectives it defined. If it does fail, Congress then would have an opportunity to close down “fast-track” trade rules and open the deal to amendment — although such a “call back” would face a high vote hurdle.

To further sweeten the deal for Democrats, the package includes expanding trade adjustment assistance (aid to workers whose jobs are displaced by global trade) to include service workers, not just manufacturing workers. Sen. Wyden also insisted on a four-year extension of a tax credit to help displaced workers purchase health insurance.

In all, the bill sets down 150 negotiating objectives, such as tough new rules on intellectual property protection, lowering of barriers to agricultural exports, labor and environmental standards, rule of law and human rights. Reflecting the modern economy, Congress would demand a loosening of restrictions on cross-border data flow, an end to currency manipulation and rules for competition from state-owned enterprises.

Trade observers suggest that there is little really new about this fight, since TPA legislation has typically been a heavy lift in recent years. Still, one thing that is different this time is the “sizable minority” of Republicans who are reluctant to give the president authority to do anything substantive. So, this is a bipartisan effort struggling to deal with equally bipartisan opposition. It promises to be one of the key policy fights of the year, one especially important to producers and which should watched carefully as it proceeds, Washington Insider believes.

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(GH/CZ)

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