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.

TTIP Talks on Hold Until After November

The United States and European Union have agreed to delay substantive negotiations toward a Transatlantic Trade and Investment Partnership until after the U.S. mid-term elections and the installation of new leadership in the European Commission, both of which occur in November

EU Trade Commissioner Karel De Gucht told the press that while no major political-level decisions will be made in the next couple of months, U.S. and EU negotiators will hold another round of talks in Washington Sept. 29 to Oct. 3 to do "ground work" toward a deal.

In addition to the transitions in the United States and EU, substantive TTIP talks also are on hold because the EU is not happy with the offers the United States has made regarding market access. The EU also wants more transparency from the United States when it comes to services talks. Although the EU made a proposal on industrial tariffs that went "far beyond the United States" offer, it has not seen a similar offer from the United States, DeGucht claimed.

From the beginning, no one thought TTIP negotiations would be easy or quick. Some speculate about completing work on the negotiations by the end of 2015, but given the pace of talks so far, that schedule looks far too optimistic.

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Highway Safety Groups Sue U.S. Seeking Better Training for Beginning Truckers

A coalition of highway safety organizations has sued the U.S. Federal Motor Carrier Safety Administration seeking to force the agency to issue stiffer rules for training entry-level truck drivers. According to the lawsuit, FMCSA regulators have missed multiple deadlines set by two laws passed by Congress since 1991 and the plaintiffs wants a judge to force the agency to propose regulations establishing minimum entry-level training requirements for commercial vehicle operators within 60 days.

FMCSA issued a rule in 2004 that requires 10 hours of classroom work on topics including driver wellness and hours of service. According to the complaint, the rule is inadequate because it doesn't require training for entry-level drivers on how to operate commercial vehicles.

U.S. lawmakers also are considering ending federal rules governing the work and rest schedule of long-haul truck drivers. Fatalities in large-truck crashes have increased in recent years, despite a drop in total motor vehicle deaths, the safety advocacy group said.

It is disconcerting to see regulators and legislators easing up on driver safety rules and laws while at the same time many of them continue to complain about alleged safety issues regarding trucks and drivers from Mexico. That fight has been going on for more than 20 years, with U.S. critics of cross-border trucking implying that they can tell whether a truck is safe to operate on U.S. highways by looking at its registration, rather than by inspecting the truck. It is an argument that by this time should be thoroughly discredited.

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Washington Insider: OECD and U.S. Sugar Market Interventions

The United States routinely catches heavy duty criticism over its interventionist sugar program from consumer groups who complain about higher costs from the "no net taxpayer cost" sugar policies. But recent criticism has come from another source: the Organization for Economic Cooperation and Development that includes many of the world's developed economies.

Earlier this month, OECD criticized USDA actions in 2013 when it intervened in sugar markets to help domestic producers avoid loan defaults. The organization said that action also contributed to trade distortions by sheltering these businesses from international competition.

The Paris-based organization made the assertion in its Agricultural Policy Monitoring and Evaluation 2014 report, which urged the 34 OECD member countries to do more to "break links" between farm support and production, and ensure supports focus more directly on improving agricultural productivity and sustainability.

The report drew modest amounts of attention when it was first released earlier this month because it noted that OECD countries' government support for agriculture dropped slightly in 2013, to 18% of gross farm receipts and remained well below levels of two and three decades earlier. In addition, U.S. supports were well below the average of the OECD.

At the same time, it noted that USDA's Commodity Credit Corporation took several actions that contributed to trade distortions in global sugar markets. The agency was cited for increasing flexibility and licenses under the Refined Sugar Re-Export Program to temporarily increase processors' ability to use domestic, rather than imported, raw sugar for refining for export, for example.

Then, in July 2013, the CCC purchased refined sugar from U.S. processors that it then exchanged for import access credits under the Re-Export Program, which permits imports of raw sugar to be refined for re-export onto the global market, and for Certificates of Quota Eligibility under the U.S.-Colombia Free Trade Agreement. In August, the CCC purchased refined sugar under the Feedstock Flexibility Program to be sold at a loss for ethanol production.

When some loan forfeitures happened despite its previous actions, in September 2013, the CCC traded its inventory of sugar for further import access credits under the Re-export program and, in November and December it sold the remaining sugar inventory for ethanol and animal feed production, the report said.

"While actions taken by the Commodity Credit Corporation in 2013 to address the sugar surplus in the U.S. market have been successful in avoiding forfeitures, they accentuate economic distortions and shelter domestic sugar producers from international competition," OECD said.

Observers note that USDA continues to be under enormous political pressure to manage sugar markets to protect established domestic prices at levels well above world levels, and that it sometimes relies on interventions that are seriously frowned upon by the OECD. In addition, the industry now is pressing the U.S. International Trade Commission to take actions against Mexican sugar sales in the United States — even though those rules were negotiated long ago in the North American Free Trade Agreement.

The U.S. sugar industry is highly organized politically and has worked effectively to protect its markets and price supports, so other commodities and even the federal agencies involved tend to walk softly on sugar market issues. However, both the sugar programs and the industry's efforts to force sugar market limits on hard-fought trade deals have the capacity to lead to widespread trade sanctions on other U.S. products in Mexico, and possibly elsewhere. Thus, OECD's criticism of U.S. administrative actions is important as are the ITC's findings in the Mexican sugar case. Because these have the potential to affect other commodities, they should be watched closely by producers as this case is litigated, Washington Insider believes.

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