Ag’s big chance to boost TPP
With help from Doug Palmer, Helena Bottemiller Evich and Brian Mahoney
AG’S BIG CHANCE TO BOOST TPP: It’s no secret that the agriculture community is one of the biggest supporters of the languishing Trans-Pacific Partnership agreement, and today it gets a high-profile opportunity to try to build some momentum for the pact — courtesy of a hearing set by House Ways and Means Trade Subcommittee Chairman Dave Reichert.
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The panel will hear testimony from five witnesses, including two from Reichert’s home state of Washington: Dale Foreman, a past chairman of both the Washington Apple Commission and the U.S. Apple Association, and Heather McClung, co-owner of Schooner EXACT Brewing Company and president of the Washington Brewers Guild.
Three powerful national farm groups, which have endorsed TPP, also will testify — the American Farm Bureau Federation, the National Pork Producers Council and the National Milk Producers Federation. The Farm Bureau has estimated that passing the agreement would boost U.S. annual net farm income by $4.4 billion.
NPPC President John Weber will highlight how the pork industry has benefited from past trade agreements and stress the need to pass TPP, according to his prepared remarks. “Economically and geopolitically, the United States cannot afford to walk away from the fastest-growing region of the world,” he will tell the panel.
Weber will also call for the elimination of all tariff and nontariff barriers to the European Union as part of the proposed Transatlantic Trade and Investment Partnership, which is still under negotiation. That includes the EU’s tariff-rate quota restrictions on pork imports, its ban on the use of ractopamine, and other restrictive food safety measures that the U.S. pork industry believes are not based on sound science.
IT’S TUESDAY, JUNE 14! Welcome to Morning Trade, where we don’t see too much that’s notable on the trade front in House Republicans’ regulatory agenda. Got anything more exciting for a trade reporter? Let me know: email@example.com or @vtg2.
TPP WARNINGS: Testifying for the Farm Bureau at the hearing, Minnesota Farm Bureau President Kevin Paap will warn about the effects of failing to approve TPP. “We have seen time and again that U.S. agriculture loses market share in important export markets when our competitors have trade agreements in place and we do not,” Paap says in prepared remarks.
Meanwhile, U.S. Trade Representative Michael Froman will be at the Hyatt Regency hotel on Capitol Hill this morning to tout the importance of TPP to the agriculture community in a speech to the National Council of Farmer Cooperatives. In the afternoon, he will take part in a discussion at The Wall Street Journal’s CFO Network meeting on “the ramifications of failing to lead on trade,” his office said.
U.S. AG EXPORTS EXPECTED TO DROP: In related news, the USDA’s Economic Research Service is forecasting that the value of all agricultural exports will be down this year. Fiscal year 2016 exports are forecast to be worth $124.5 billion, which is down more than $15 million from FY 2015. ERS cites a couple of factors that explain the decline, including lower commodity prices, a “relatively weak” global economy and a strong U.S. dollar.
Imports are forecast to be up by $800 million over FY 2015, getting up to $114.8 billion (a record). That all comes out to be a forecasted $9.7 billion trade surplus — down significantly from $16 billion last year and the lowest level since FY 2006, according to ERS. Interactive graphics on ag exports from ERS can be found here.
LABOR DEPARTMENT TOUTS TAA: As rumors continue that TPP might move alongside some sort of improvement to trade adjustment assistance, the Labor Department provided an annual update on how the TAA program is functioning.
The top-line number in the report is an impressive one: 74 percent of workers displaced by foreign trade get back to work three months after getting Labor Department benefits through the TAA program. After six months, 92 percent remain employed, the report said.
A big caveat: The report probably doesn’t include all the workers who could be eligible for TAA. A historical analysis of TAA shows significant weaknesses. Only about half of the 4.8 million workers deemed eligible for retraining benefits over the past 40 years have received them, the Labor Department reported in 2013. To catch up on the flawed TAA program, read this POLITICO piece from last year’s big TPA battle.
GE LOOKS TO FRANCE FOR EXPORT FINANCING: With the U.S. Export-Import Bank’s board still handicapped from approving large projects, GE on Monday announced that France’s export credit agency, COFACE, will help provide financing for the company’s gas turbine projects in countries like Saudi Arabia, Mexico and Brazil. “As a result, GE will invest €35 million to develop 60 hertz heavy duty gas turbine manufacturing capabilities in Belfort, France,” its press release says.
The move is a confirmation of sorts of the commencement speech GE CEO Jeff Immelt gave last month in which he bemoaned anti-globalization sentiments.
“We will always be a strong American manufacturer,” Immelt said. “But we also have built factories all around the world. We have learned to manage through extended supply chains and developing small business. For every GE job, there are eight in the supply chain. We are not pursuing low wages; we are using a manufacturing strategy to open markets.”
“We will produce for the U.S. in the U.S., but our exports may decline,” he added. “At the same time, we will localize production in big end-use markets like Saudi Arabia. And countries with effective export banks, like Canada, will be more attractive for investment.” Click here to read the GE release.
CHINA INSURANCE REGS UNDER FIRE: The United States and other World Trade Organization members expressed concerns on Monday about draft Chinese insurance regulations that they said appear to unfairly favor home-grown technologies over those of foreign producers.
The proposed measure raises concerns about China’s broader investment climate since it could be seen as giving priority to the use of local hardware equipment, software products and encryption technology, the United States said at a meeting of the WTO Committee on Trade-Related Investment Measures, according to a diplomatic source in Geneva.
The European Union also asked whether the provisions represent a ban on foreign technology and discriminate against foreign companies, arguing that any security requirements should be “geographically neutral” and focused on genuine security concerns, the diplomatic source said. Canada said China’s approach will weaken cybersecurity, while Japan said the measure could be inconsistent with WTO rules depending on how it’s implemented.
The complaints echo a letter industry groups sent to China Insurance Regulatory Commission Chairman Xiang Junbo earlier this month asking for the regulations to be delayed. In a set of questions submitted to the WTO, the United States also urged Beijing to confirm that it will not quickly move forward with the draft plan or unfairly discriminate against foreign firms.
RUSSIA ALSO FEELS THE HEAT: Several WTO members also expressed concern over Russian import-substitution proposals, the diplomatic source said, with the United States circulating a list of 13 measures that it said contemplate local content requirements for products like equipment, software and services in industries involving mining, oil and gas exploration, agriculture, automotives and high-technology goods.
Russia downplayed the concerns, saying each of the proposals will be examined to see whether they comply with WTO and international commitments before a final decision is made. It also urged members not to put too much weight on everything they hear in Russia’s internal debate over industrial policy, the diplomatic source said.
BUSY DISPUTE SETTLEMENT AGENDA AT WTO: In other Geneva news, the WTO’s Dispute Settlement Body will meet again June 22, when the U.S. will request a compliance panel in its challenge of Chinese trade remedy duties on American broiler chicken. Mexico will also make its second request for a compliance panel in its challenge of U.S. dolphin-safe labeling on tuna. And consultations between the U.S. and Canada over American anti-subsidy duties on Canadian supercalendered paper have apparently proven unsuccessful, with Ottawa scheduled to request a panel in that dispute.
The DSB chairman also will update WTO members on progress (or lack thereof) in selecting Appellate Body judges to replace Chinese national Yuejiao Zhang and South Korean national Seung Wha Chang. There is no consensus yet on who should replace Zhang, whose second term ended May 31, and given that the U.S. continues to oppose Chang’s reappointment, there will also have to be a new selection process to replace him, Geneva sources noted.
It’s unclear whether the nominees to replace Zhang will also be considered for Chang’s slot. Those nominees are: Ichiro Araki of Japan, Surya Subedi of Nepal, Zhao Hong of China, Yang Guohua of China, Daniel Moulis of Australia, Muhamad Noor Yacob of Malaysia and Yusuf Caliskan of Turkey.
EU GROUPS GIVE THUMBS-DOWN TO FINANCIAL DATA FIX: Two European public interest groups aren’t fans of the Treasury Department’s plan to expand a prohibition on data localization in trade agreements to include financial data. In an open letter to European Trade Commissioner Cecilia Malmström, BEUC and European Digital Rights say it’s just one more reason why the European Commission shouldn’t try to negotiate data flows in the Trade in Services Agreement and TTIP.
“It is impossible to address the issue of data flows when the data protection regimes in the United States and the European Union are starkly different and unbalanced,” the two groups argue in their letter, citing some “legitimate protections for personal data.”
Treasury’s plan would broadly prohibit data localization requirements for financial services companies in future trade deals as long as “financial regulators have access to information stored abroad.” The plan also would add a new “movement of information” obligation that would bar parties to future trade agreements from preventing the transfer of information across borders for licensed financial services transactions.
“We urge the European Commission to [publicly] state that it will not agree to such provisions in the context of trade agreements,” the letter says.
TISA ROUND: MARK YOUR CALENDARS: Speaking of TISA, the next round of talks is set for July 8-18, according to a summary of the most recent round released by the European Commission. In the document, the commission also made an apparent reference to its pledge to offer something close to its market opening under the EU-Canada deal.
“The EU made clear that it would now be ready to go an additional mile if everybody joined forces to make TiSA an ambitious 21st-century agreement,” the EU said.
Cuba made its first soybean purchase in five years this month, according to Reuters.
Pork exports to China have doubled this year, in part due to Chinese appetite for pig snouts and other parts Americans don’t eat, Bloomberg reports.
Undersecretary of State Cathy Novelli raised the possibility that Cambodia could join TPP during a visit to the country, Voice of America reports.
The Treasury Department summarizes the most notable pledges from China at this year’s Strategic and Economic Dialogue.
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