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.

New House Panel to Give Extra Scrutiny to Administration's Environmental Policies

Congressional Republicans have made it clear over the past several years that they are no fans of the Obama administration's approach to environmental and energy issues. In the House, this dislike has become so intense that Rep. Jason Chaffetz, R-Utah, who will chair the House Oversight and Government Reform Committee in the next Congress, says he plans to create a new subcommittee that will focus solely on the environmental and energy activities of four federal agencies: the Department of Energy, Department of the Interior, the Environmental Protection Agency and USDA.

Rep. Cynthia Lummis, R-Wyo., will serve as chairman of the newly created subcommittee.

In the current Congress, oversight of environmental and energy issues was split between the Energy Policy, Health Care & Entitlements Subcommittee and the Government Operations subcommittee. With these issues now given over to one subcommittee, 2015 will likely see an increase in both the number of hearings and the number of administration officials called upon to provide details of the administration's policies.

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IRS Says It is Ready for the 2014 Tax Filing Season

There have been questions raised about whether the Internal Revenue Service would be able to begin processing tax returns for 2014 in January given that Congress waited until the last minute to extend retroactively a package of tax credits that had expired at the end of 2013. Not to worry, says IRS Commissioner John Koskinen.

Koskinen says the congressional delay is unlikely to postpone the start of the coming tax filing season and that IRS likely will be announcing relatively soon the date taxpayers can start filing returns. However, he added, budget cuts imposed by Congress mean refunds might be delayed. He also acknowledged that taxpayers will still have a tough time getting agency help on the telephone.

Koskinen also indicated that the budget cuts could lead to employee furloughs involving an agency shutdown for one or more days, but he added that this would be a last resort. To sum up: IRS in 2015 will have fewer employees to process and audit returns, a result that some in Congress will welcome. However, the agency also will be unable to provide assistance to taxpayers or issue refunds in a timely fashion, something that most in Congress will criticize.

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Washington Inside: More Sugar Supply Management

On Friday, the Department of Commerce announced that the U.S. and Mexican governments had agreed to a deal to suspend the ongoing antidumping and countervailing duty investigations of sugar from Mexico. Press reports suggested that this had ended a months-long sugar dispute that “threatened to escalate into a broader trade battle.”

Still, the end of this particular fight almost certainly will not end the dispute. The immediate confrontation had led to a Commerce Department decision last summer to begin charging “hefty” cash deposits from importers against expected future anti-dumping and anti-subsidy duties — which had effectively “dried up” imports, Reuters reported on Friday. The new settlement suspends those duties.

The deal was criticized bitterly by many in the industry, including refiners, who argued that it would crimp supplies and threaten their survival — and that it provides increased protections to an already heavily protected industry.

The deal also is somewhat vague. It raises the U.S. floor prices for both refined and raw sugar, but still allows Mexico to meet 100 percent of remaining U.S. demand “after U.S. producers and other countries with fixed quotas have exhausted their supply.” The implication is that someone, likely USDA, will define these “first call” supplies and how they are to be calculated, but it will be surprising if those definitions are widely accepted.

In addition, it seems clear that the deal means reduced access to U.S. markets that Mexico negotiated under the North American Free Trade Agreement, and that it has had since 2008. The United States and Mexico have been squabbling over the sweetener import issue since late March, when a group of petitioners, largely groups representing U.S. sugar growers, asked the U.S. government to investigate the “dumping of cheap, subsidized sugar from Mexico.”

While sugar producer spokesmen were happy with the settlement, sugar users reacted bitterly.

“With the stroke of a pen, these agreements dismantle the unrestricted free trade of sugar between the U.S. and Mexico since 2008 and undermine the core principles of the North American Free Trade Agreement,” said the Sweetener Users Association, which represents sugar-using companies. “While sugar is but one commodity traded between our two countries, these suspension agreements set a horrible precedent by undoing trade flows that have been established over two decades after NAFTA was first negotiated.”

The agreement had been widely expected and Commerce Department spokesman Paul Piquado seemed pleased with the work as he announced the agreements on behalf of the United States. “I am pleased that we were able to resolve this matter,” he said. He emphasized that the deal “contains provisions to ensure there is not an oversupply of Mexican sugar that could cause price declines that threaten the U.S. industry and farmers. The agreements will also prevent imports from being concentrated during certain times of the year, limit the amount of refined sugar that may enter the U.S. market, and establish minimum price mechanisms to guard against undercutting or suppression of U.S. prices.”

It seems strange that the government would attempt to ensure against any price “declines,” but that seems to be the case.

However, critics were quick to point out that the agreement may lead to Mexican retaliation against other U.S. products, including high fructose corn syrup, among many others.

In addition, critics of U.S. agricultural policies are increasingly pointing to a series of Obama administrations trade policy decisions that appear to be moving away from U.S. leadership in reliance on open competition to boost U.S. access to growing developing country markets. These include the new appeal of the World Trade Organization’s country of origin labeling decision against the United States and the U.S. buy-down of the Brazil cotton case award, among others.

Now, the apparent pullback of a part of the NAFTA agreement can be expected to lead to still greater criticism of these policies, Washington Insider believes.

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(GH/CZ)

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