Washington Insider-- Wednesday

COOL Fight Spins On

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

New Online USDA System to Aid US Exporters Connecting with International Buyers

USDA unveiled a new free-of-charge online system by the Foreign Agricultural Service (FAS) to connect exporters of US food and agricultural products with potential international customers.

Under the new Trade Lead System, US exporters will be able to access information on potential foreign sales opportunities. International buyers, in turn, can search for potential suppliers of US farm and food products. FAS international offices will review potential sales leads and distribute them.

“US suppliers can select the types of leads they wish to receive, and can respond to the purchase requests in several ways,” Christian Foster, FAS deputy administrator, Office of Trade Programs, said in a statement. “They can correspond directly with the customer, work through their trade association, or receive support from one of 96 international FAS offices, which are ready to assist with translation and other services.”

Users will be able to search leads by one or more product names or by Harmonized Tariff Schedule codes.


New Wheat Export Tax Proposed by Russia’s Ag Ministry

Russia proposed new curbs on wheat shipments only 10 days after formally ending a previous levy, saying it needs to protect livestock farmers from rising feed costs. The tax may apply from July 1 if approved by the Cabinet, Agriculture Ministry spokeswoman Yekaterina Popova said on May 25.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

The tax would be at least 1 ruble per metric ton and might be higher if free-on-board contract prices rise above 11,000 rubles ($220) a metric ton, she said. Russian wheat prices should be limited to no more than that level in order to protect the country’s animal-breeding industry, Agriculture Minister Alexander Tkachev said.

Prime Minister Dmitry Medvedev on May 15 ended the previous tax on wheat exports a month-and-a-half earlier than planned after the country’s inflation slowed, easing concern over soaring bread costs. The tax was designed to rein in food prices after the ruble collapsed last year and the economy buckled under plunging oil prices and international sanctions over the conflict in Ukraine.

Russian grain exports dropped 25% between February and May 20 compared to the same period last year, the Agriculture Ministry said on May 25, as a wheat export tax took its toll on the market.


Washington Insider: COOL Fight Spins On

If you want to examine a confusing set of arguments, take a look at the COOL. What has happened now is that a World Trade Organization dispute panel plans to adopt its recent country of origin labeling report at a special May 29 meeting of the Dispute Settlement Body (DSB). After that, the US, Canada and Mexico will discuss the next steps in the dispute, including potential retaliatory trade tariffs against the US.

The dispute body ruled May 19 that USDA’s revised COOL rules, which require meat producers to indicate on retail packaging where each animal was born, raised and slaughtered, favor domestic products in violation of the WTO trade rules that the United States negotiated and is committed to support.

Since the United States has been found in violation of its agreement, Canada and Mexico are expected to seek authorization for retaliatory trade measures--if the US does not comply with the report’s recommendations. Canada is expected to announce quickly its updated estimates of the impact of the COOL policies on its markets and producers.

In the meantime, the US House is expected to vote to repeal COOL quickly, but some Senate COOL proponents still hope for a policy change other than repeal, in spite of the fact that such a strategy seems costly and futile.

A major part of the problem with US efforts to define useful meat labels has been the lack of understanding on the part of the press and others about trade policies and rules—what they are, and how they work. For example, Jim Spencer of the Minneapolis Star Tribune wrote last week that the WTO is killing US trade rules and threatens US sovereignty—in spite of the fact that the WTO rules themselves were negotiated by the United States and approved by Congress.

Spencer points to the Congressional support for COOL, and a court ruling on a procedural issue as a basis for blowing the whistle on the WTO— although it is not. So the “dicey debate” he claims to see is nothing of the kind. The repeated findings by dispute panels that US policies have discriminated against Mexican and Canadian products has been upheld repeatedly in international forums in four recent cases and cannot be ignored if we are to hold those important markets.

Still, somehow a lot of politicians and press folk seem to be quite willing to claim a threat to US sovereignty when what is being required is merely fair play.

One of the most blatant misstatements of the issue is the assertion the Star Tribune made that “questions linger about what power the country sacrifices” in trade agreements—along with the assertion that the recent ruling provides “a powerful example of how outside organizations can undermine US policy." These are amazing statements considering how WTO obligations are negotiated and approved—and how extensively COOL rules have been found to violate those agreements.

Spencer, in his article, conceded that many trade observers regard global trade deals not only as good, but necessary if the US economy is to grow. He cites Heritage trade policy analyst Bryan Riley, as concluding that “there will be cases where decisions under a trade agreement will go against you,” and notes that the WTO “certainly put pressure on the US to change,” he acknowledged. “But it’s important to remember that it is the same process that has forced China and other countries to change policies.” Riley did not share the concerns of some that the WTO had usurped the power of US courts which determine “whether something is permissible under the US Constitution,” he said. “It has nothing to do with our trade obligations.”

While the United States has been a strong global leader in building market access in the past, but protectionist efforts like the COOL policy and recent fights with Mexico over sugar and truck access have brought its leadership into sharp question. There still seems to be a chance that the Congress will push the administration to pay expensive sanctions to Mexico and Canada rather than repeal its protectionist COOL policies. That likely would prove not only expensive but damaging over the longer term, and should be watched carefully by producers as the debate proceeds, 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 and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the U.S. Ag Policy, U.S. Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@telventdtn.com

(GH/CZ)

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x600] M[320x50] OOP[F] ADUNIT[] T[]