Washington Insider-- Tuesday

California Water Consumption Rules: Round 2

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

Congress Likely Will Need to Address Country of Origin Labeling

The World Trade Organization is expected by May 18 to issue a decision on appeals by the United States, Canada and Mexico of previous WTO rulings on the U.S. country of origin labeling (COOL) law. Should the coming decision go against the United States, congressional sources say the votes are in the House to repeal the mandatory COOL regulations and replace them with a voluntary labeling program. But these same sources say they are unsure whether enough votes can be found in the Senate for outright repeal.

The sources said that it may take the imposition of multi-billion-dollar sanctions by Canada and Mexico to get the attention of senators before the Senate would have enough votes for repeal.

Other options such as a possible "North American label" are said to be a political solution to an economic and trade-distorting problem, and something that does not have enough support within various U.S. meat industry groups. Agriculture Secretary Tom Vilsack last week said that if the United States loses this latest appeal, Congress will need to either repeal COOL or modify it in a way that would allow labels to be generic.

The ball is likely to be back in Congress's court by Memorial Day, a result that few members will find to be agreeable.

***

Canada, U.S. Continue Standoff on Dairy, Poultry Trade

U.S. trade negotiators are expressing frustration over what they see as a lack of flexibility by their Canadian counterparts when it comes to increasing U.S. access to Canada's dairy and poultry markets. U.S. Trade Representative Michael Froman last week said he hasn't seen the kind of engagement on market access in Canada that the administration needs to successfully complete the Trans-Pacific Partnership (TPP) free trade agreement.

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

Froman said that before Canada joined the TPP negotiations, the two countries had a series of consultations, and the United States made it clear that access to Canada's dairy market –– among other issues not addressed in the 1994 North American Free Trade Agreement (NAFTA) –– had to be addressed.

Exports have become in recent years far more important to the U.S. dairy industry, with the value of exported dairy products now running at about $6.5 billion annually. That being the case, expect Ambassador Froman and other Obama trade officials to continue hammering on Canada for a slice of that market.

***
Washington Insider: California Water Consumption Rules: Round 2

Everything about California's long drought is fascinating to the press, especially what is regarded as bureaucratic fumbling in the face of a real shortage of a fundamental resource.

Clearly, the state is involved in a difficult and challenging process. Over the weekend, it first delayed and then moved forward with a new draft of an enormous community-by-community water reduction plan intended to cut urban potable water use by 25% statewide. The latest version followed a review by the State Water Resources Control Board of some 250 comments complaining about the first rationing proposal. This time around, the plan attempts to credit communities that had a record of conservation while increasing pressure on big water users.

The original set of four tiers, with cuts ranging from 10% to 35%, has now been expanded to nine, with cuts ranging from 4% to 36%. The amount of water that communities would have to conserve was reduced for some, like Los Angeles and San Francisco, and was slightly increased for others, like Beverly Hills.

In the first proposal, communities were ranked on the basis of water use in September 2014. In response to criticism that this standard was too rigid, the benchmark measure now will be usage in July, August and September last year.

State officials told the press they intend to adopt a final order by the beginning of May, with enforcement — which includes possible fines of up to $10,000 a day — kicking in by the middle of July. The state wants to have the new rules in place by California's summer high consumption period that is driven in large part by outdoor watering.

Felicia Marcus, head of the board said the latest draft reflects an attempt to incorporate responses to comments from water companies, communities, businesses and residents. Local water agencies had complained bitterly and often about what they perceived as the state's failure to credit their past conservation efforts; that it had not taken into account the particular demands of various communities, such as high industrial users or business agriculture; and that the four-tier system was too confining.

A major irritant in the earlier plan was its exclusion for agriculture, which accounts for most of the state's use. Leaders of the board, who have been criticized for putting so much of the conservation burden on urban users, defended the ag exclusion on the grounds that farms had already experienced deep cuts in their water supply and were likely to be hit again in the months ahead.

The 25% target was based on water use reductions this year compared with 2013. The state estimates the new regulations would save 1.3 million acre-feet of water. "Many communities around the state have been conserving for years," the latest draft regulations noted, and some have achieved remarkable results with residential use now approaching the statewide target for indoor water use. Still, "everyone must do more." The greatest opportunities to meet the statewide 25% conservation standard are in those areas with higher water use," the board said.

In the revised regulations, the lowest tier, with a requirement for a 4% cut, would apply to the handful of communities that have enough surface water to last for several years and have had above-average rainfall. So far, no communities fall into that tier, the board said.

San Francisco, which was originally required to make a 10% cut, would now have to reduce its usage by 8%. Los Angeles, which has a strong record of water conservation, would now have to reduce its use by 16%, compared with 20% in the first regulations. For some of the biggest users like Beverly Hills the required cut would be raised 36%, up from 35%, the board noted.

Of course, one of the key attractions to this process for the press is simply how controversial and difficult mandated conservation efforts are — and, how unpopular some of the assigned cuts have already become.

In addition, press coverage is drawn by the long duration of the drought and the likelihood that the climate is changing significantly — trends could affect the rest of the United States as well. In addition, with regard to the California conservation process, this week's adjustments likely will not be the last and that painful process is one that should be watched carefully as it 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[]