Washington Insider: US and Europe in New China Fight

Much of the world is focused on the administration’s tax proposals just now, and these are certainly the economic and political headliners. However, another battle deserves attention, the New York Times says. It is reporting that the United States has filed arguments to the World Trade Organization in a looming dispute over China’s future role, and says that the outcome of this fight could shape the global trading system for decades to come.The Times said that senior United States officials reported on Wednesday that they had filed a brief to the WTO as a third party in a case that China has brought against the European Union. The brief argues that China does not deserve the designation of a “market economy,” a distinction that would entitle it to preferential economic treatment under the WTO.However, the move is likely to ratchet up trade tensions with China, which the White House has called one of the world’s biggest trade offenders. And if China is awarded the designation against the wishes of the United States, it could test the Trump administration’s willingness to remain in the WTO, an international body for establishing trade rules and settling disputes. The administration has previously called the organization a “disaster.”China is now classified as a nonmarket economy, which allows the United States and other countries to use a special framework to decide whether it is “dumping” its products in other countries at unfairly low prices. This framework allows the United States to add an extra duty on some Chinese products.China argues that the United States and other WTO members promised to award it the market economy label in 2016, the 15th anniversary of its accession to the WTO. But the United States and the European Union are opposing that, claiming that China has failed to hold up its end of the bargain by curtailing the state’s role in the economy. United States officials say the Chinese government’s heavy hand distorts costs and prices in the country and harms competitors abroad.Last December, China challenged both the European Union and the United States at the WTO, saying that it was merely protecting its lawful rights. The case with the EU is proceeding and could serve as precedent in China’s challenge against the United States, which a WTO panel will consider next.If China succeeds in this case, that would weaken the ability of European and American officials to levy anti-dumping duties against it. It could also strengthen the resolve among top Trump administration officials in their claims that the WTO has been ineffective in defending the interests of Americans abroad — and perhaps lead to the organization’s demise altogether.Those officials include Robert Lighthizer, the United States trade representative, who in his confirmation hearing before the Senate in June described China’s challenge against Europe and the United States as “the most serious litigation matter we have at the WTO right now.”Lighthizer said that he had “made it very clear that a bad decision” on China’s status “would be cataclysmic for the WTO” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, said Lighthizer’s statements called into question whether the United States was looking for a reason to withdraw from the WTO.The WTO and its predecessor, the General Agreement on Tariffs and Trade, have been led for decades by the United States and other relatively developed and open economies. As other countries joined, the presumption was always that they were seeking to become more market-driven economies like the United States.But the rise of China has called this into question. Since beginning to open up to world trade in the 1980s, China has maintained an economy that melds market capitalism with state control. Some analysts argue that the state has taken a bigger role in the economy in the last few years, under the leadership of President Xi Jinping.The Trump administration has identified recalibrating trade with China as one of its defining challenges. The president repeatedly referenced China on the campaign trail, and his message that cheap Chinese imports decimated American manufacturing resonated with voters.The Trump administration says it is preparing a range of trade actions that could affect China, including investigations into imports of steel and aluminum, as well as China’s violations of intellectual property.Members of Congress on both sides of the aisle have proposed tighter restrictions on Chinese purchases of American companies and technology.On Wednesday, United States officials said that China’s behavior violated the language of the agreement China signed when it joined the WTO 15 years ago, as well as the text of the WTO’s precursor, the General Agreement on Tariffs and Trade, which calls for using market-determined prices in calculations.Clearly, this effort will be extremely important to the WTO, and to U.S. trading partners. The extent to which China’s support for state-owned enterprises can be limited is singularly important to U.S. producers and should be watched closely as the WTO processes unfold, Washington Insider believes. 

Nearly $1 Billion of Administration's Disaster Request For USDA

Almost $1 billion out of the $44 billion in disaster aid requested by the Trump administration would be earmarked for USDA, with around $465 million for the Farm Service Agency (FSA) and $500 million for the Natural Resources Conservation Service (NRCS).Of the amount for FSA, around $375 million would be for the Emergency Conservation Program, $50 million for the Emergency Forest Restoration Program and $40 million for Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish program, according to USDA acting deputy undersecretary for farm production and conservation Rob Johannson told House appropriators. 

Ethanol Applauds EPA RVO Announcement, Biodiesel Disappointed

The Environmental Protection Agency Thursday finalized a rule that establishes the required renewable fuel volumes under the Renewable Fuels Standard program for 2018, and biomass-based diesel for 2019. The agency set a total renewable fuel blending obligation of 19.29 billion gallons next year, maintaining the statutory requirement of 15 billion gallons of conventional biofuel such as corn-based ethanol and 4.29 billion gallons of advanced biofuel, including 288 million gallons of cellulosic biofuel, a slight increase from earlier proposals. The 2019 biodiesel amount is set for 2.1 billion gallons. American Coalition for Ethanol CEO Brian Jennings says, “ACE members are very pleased” that EPA set the RVO for ethanol at the statutory level of 15-billion gallons, as other industry groups applauded the announcement. However, the National Biodiesel Board noted that the EPA recommended only 4.29 billion gallons of advanced biofuels and 2.1 billion gallons of biomass-based diesel, a reduction and a flatline, respectively, from last year. Doug Whitehead of the National Biodiesel Board says: “EPA Administrator Scott Pruitt has disappointed the biodiesel industry for failing to respond to our repeated calls for growth.”

Ontario Proposes 10 Percent Ethanol Mandate

The government of Ontario is proposing changes to biofuels regulations, including increasing the current five percent ethanol mandate to ten percent in 2020. Advanced Biofuels Canada notes that a 10 percent ethanol mandate is likely to see sales of E15 and higher blends to meet the new average. The organization says the proposal will create expanded job and growth opportunities for Ontario’s agricultural, forestry, and waste sectors. Growth Energy CEO Emily Skor says if finalized, the proposal will be “a win for Canadian consumers.” In March, Growth Energy filed comments to Canada’s Ministry of the Environment and Climate Change, focusing on including ethanol in the development of Ontario’s fuel standard. The comments claimed that the easiest way to reduce greenhouse gas and other harmful emissions is to increase ethanol blended gasoline at a minimum of ten percent.

South Korea To Hold KORUS Public Hearing

South Korea will hold a second public meeting regarding the U.S.-Korea Free Trade Agreement, known as KORUS. The meeting was announced after the first public meeting was disrupted by angry farmers and livestock breeders, according to the Korea Herald, a Korea-based newspaper. The second public hearing taking place Friday (today) allows Policymakers, trade experts and citizens to take part in the talks to discuss issues related to the five-year-old deal. Farmers criticized the November 10th hearing, claiming the gathering did not reflect the damage they had suffered. In the earlier hearing, the ministry unveiled an economic feasibility study that claimed a possible amendment to the KORUS FTA is not likely to have a visible impact on the South Korean economy because the two countries have already scrapped tariffs in many sectors. The study didn't disclose detailed figures on each sector due to worries it would reveal South Korea's strategies before entering full-fledged renegotiations with the US.

Crawford Renews Calls to Open Ag Trade with Cuba

Arkansas Representative Rick Crawford is renewing his call to open agricultural trade with Cuba. The Republican says his proposal is an alternative to repealing the Cuban trade embargo, allowing the U.S. to tap into Cuba’s $2 billion agricultural market, according to Politico. Crawford first proposed the bill in January that would cut back restrictions on U.S. financing for agriculture exports, allowing Cubans to purchase U.S. products with credit. Current law allows U.S. producers to legally export agricultural products, but they must be paid in cash and cannot offer credit. The bill is backed by a bipartisan group of 62 lawmakers, along with companion legislation in the Senate sponsored by North Dakota Democrat Heidi Heitkamp and Arkansas Republican John Boozman. Cuba currently imports largely from China, Spain, Brazil and Canada. 

EPA is proposing to delay the effective date of the 2015 rule defining waters of the United States WOTUS

The Environmental Protection Agency (EPA) is proposing to delay the effective date of the 2015 rule defining waters of the United States (WOTUS) until two years after the regulation is finalized and published in the Federal Register.Implementation of the 2015 WOTUS rule, which re-defines the scope of federal jurisdiction under the Clean Water Act, is on hold due to a federal circuit court stay and the Supreme Court’s pending decision on whether the court of appeals has jurisdiction to review challenges to the rule. The Supreme Court held oral arguments Oct. 11, 2017, and could issue a decision resolving the appeals court jurisdiction question anytime, EPA said.Concurrent with the court review, EPA said it is engaged in a two-step rulemaking process to reconsider the WOTUS rule. The first step proposes to rescind the definition of “waters of the United States” and re-codify the previous definition. In step two, EPA and the U.S. Army Corp of Engineers are working to “substantively reconsider” the definition of waters of the United States, EPA said.A two-year extension of the effective date of the WOTUS rule would ensure that the scope of CWA jurisdiction will be administered as it is now and that there is sufficient time for reconsidering the definition of WOTUS in the regulatory process, the agency said.The proposed rule amending the effective date was published in the Federal Register last week, and the public comment period closes on Dec. 13, 2017.