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Reuters: “The [U.S.D.A] Package Would Propose a New Approach to Farm Supports — So-Called Revenue Assurance That Protects Farm Income.”

I. U.S.D.A. Farm Bill Proposal
II. Trade-Doha
III. T.P.A- Farm Bill- Doha- Analysis of the Triangle
IV. Budget

I. U.S.D.A. Farm Bill Proposal

A recent U.S. Department of Agriculture news release stated that, “Agriculture Secretary Mike Johanns will report back to the people on the Bush Administration’s farm bill proposals. These proposals reflect the views heard during USDA’s 52 Farm Bill Forums held across the country. Webcast: January 31, 2007 10:00 a.m.

“WHO: Agriculture Secretary Mike Johanns

“WHAT: Discussion about Administration’s farm bill proposals

“WHEN: Wednesday, January 31, 2007 10:00 a.m. EST

“Please join us for the webcast at 10:00 a.m. EST – will require Windows Media Player. The link to the webcast can be found at http://www.usda.gov.”

Reuters writer Charles Abbott reported yesterday that, “The Bush administration plan to overhaul the U.S. farm program is too timid to meet its goal of producing 35 billion gallons a year of biofuels, said a Senate chairman briefed on the proposal on Tuesday.

“The package would propose a new approach to farm supports — so-called revenue assurance that protects farm income. Agriculture Secretary Mike Johanns was scheduled to unveil the package on Wednesday.

“By revising U.S. crop supports, the Bush administration could improve prospects for a world trade agreement as well as save money. Brazil won a World Trade Organization ruling against a U.S. cotton subsidy in 2004 and Canada challenged U.S. corn supports this month.”

President Bush discusses trade in a speech yesterday at Caterpillar in Peoria, Illinois.

Mr. Abbott indicated that, “[Senate Agriculture Committee Chairman Tom Harkin (D-Iowa)] declined to say if the administration would propose elimination of price support loans as part of its revenue assurance proposal. During an impromptu session with reporters, he repeatedly said more money was needed to develop biofuels.”

Concluding, Mr. Abbott added that, “Johanns seemed certain to propose elimination of the ban on growing fruits and vegetables on land eligible for crop subsidies, said one trade group official. It would be offset by more money for research and marketing promotion for fruit, vegetables, nuts and nursery crops.”

Jim Downing, writing in today’s Sacramento Bee, reported that, “In Washington, D.C., U.S. Secretary of Agriculture Mike Johanns is expected to propose a policy shift that would cut traditional subsidies for Midwestern commodity crops like corn and soybeans, and boost support for research, marketing and conservation programs that would benefit California’s huge produce industry.

“‘We are really looking forward to what the secretary outlines in his talk,’ said Barry Bedwell, president of the California Grape and Tree Fruit League and a founding member of the nationwide Specialty Crop Alliance, a lobbying group formed in 2005 to push the fruit, nut and vegetable agenda in the nation’s capital.

“But while Bedwell and other California farm leaders are counting on strong support from Johanns and the Bush administration, policy experts caution that today’s announcement is only the first volley in what is likely to be an eight-month struggle over the 2007 farm bill — the rewriting of national farm spending policy that Congress undertakes roughly every five years.”

Mr. Downing explained that, “Bedwell and other members of the Specialty Crop Alliance are not asking for direct payments to their members. Instead, they are seeking federal support for programs that they say will help keep their industry internationally competitive.

“Those programs range from marketing efforts, to research aimed at combating plant diseases and increasing food safety, to conservation grants to reward farmers for adopting environmentally sound practices.”

The Bee article noted that, “Daniel Sumner, an economics professor who directs the University of California Agricultural Issues Center at the University of California, Davis, said that while Johanns’ proposals will set the stage for the debate, the real power in crafting the farm bill historically has resided in the House and Senate agriculture committees… Still, Sumner said, several issues this year — including stronger-than-ever international pressure from the World Trade Organization to cut commodity subsidies — could turn the debate in unexpected ways.”

II. Trade-Doha

On a separate yet related track, this week the Bush Administration is also highlighting general trade issues while focusing specifically on the renewal of trade promotion authority (T.P.A.). Many observers have noted that a successful completion of the Doha Round of W.T.O. trade talks will be difficult to achieve without a Congressional extension of T.P.A.

But the interaction of T.P.A. extension and the Doha talks appears to go both ways: A factor weighing on a potential T.P.A. extension is a sign of movement or significant momentum in the Doha negotiations. The timing of the release of the Administration’s Farm Bill proposal, which comes right after the World Economic Forum meetings in Davos, could be interpreted as a signal that the executive branch is serious about agricultural reform and is hoping to sustain movement in the Doha negotiations.

Simultaneous focus on T.P.A. and the Farm Bill could be seen as two sides of the same coin, a conjunctive strategy to achieve three goals: T.P.A. extension, farm policy reform and a successful completion of the Doha round.

Peter Baker, writing in today’s Washington Post, reported on President Bush’s trip yesterday to Peoria, Illinois, home of the Caterpillar Corporation.

Mr. Baker stated that, “He focused here on trade, promoting his record at a time when lawmakers are considering whether to extend his authority to negotiate agreements that are subject to ‘fast-track’ up-or-down votes in Congress without amendment. Every president in modern times has enjoyed such power, but it expires this summer, and with Democrats now in charge of Congress, Bush faces a tough time getting it extended. He has completed trade pacts with Panama, Peru and Colombia that are awaiting congressional approval, and he is negotiating with South Korea and Malaysia. He also wants to jump-start stalled global trade talks.”

But Peter S. Goodman, in a separate Washington Post article, also published in today’s paper, reported that, “As President Bush was out in Peoria touting the virtues of foreign trade and asking for fresh authority to promote it, newly ascendant Democrats on Capitol Hill signaled just how tough it’s going to be for the president to get what he wants.”

Mr. Goodman then provided this synthesis of the key inter-related issues: “The hearing took place as President Bush visited the Illinois headquarters of Caterpillar, the construction-equipment giant and a highly successful exporter. There, the president asked Congress to extend his so-called trade promotion authority — his legal right to negotiate trade pacts that he can submit to lawmakers for a simple up-or-down vote. It expires at the end of June, and without it, trade deals stand little chance of getting through Congress as individual legislators pick them apart to protect jobs in their districts.

“The administration is intent on gaining an extension in hopes of restarting talks aimed at lowering tariffs around the world. Those talks, known as the Doha round of trade negotiations, have been stalled for months over American and European unwillingness to pare farm subsidies and over claims from India and other poor countries that they will not benefit enough from opening their markets further to foreign goods.

“In recent days, trade ministers have been meeting at the World Economic Forum in Davos, Switzerland, to try to jump-start the talks. Though most analysts assume the prospect of a breakthrough remains dim, U.S. Trade Representative Susan C. Schwab offered tempered optimism yesterday.”

And Reuters writer Doug Palmer reported yesterday that, “Trade has been one of the most divisive issues in Congress since Bush took office in January 2001, with Democrats generally pushing for stronger labor and environmental provisions in trade agreements than Republicans have been willing to include.

“[House Ways and Means Committee Chairman Charles Rangel (D-NY)] said he hoped to restore a bipartisan consensus to trade and move the two parties out of ‘divorce court.’

“The top Republican on the Ways and Means panel, Rep. Jim McCrery of Louisiana, said he believed the constructive tone of Tuesday’s hearing already showed ‘we are out of divorce court and moving into counseling.’”

III. T.P.A- Farm Bill- Doha- Analysis of the Triangle

Reuters news reported yesterday that, “US lawmakers say they want a new global trade agreement, but it’s unlikely they will support any deal they believe sells farmers short, especially as a new US farm bill hangs in the balance, trade analysts said on Monday.”

The article added that, “Dave Salmonsen, who follows trade for the American Farm Bureau Federation lobbying group, said a Doha deal would be judged on whether it provided US farmers with meaningful access to new markets.

“‘We know there’s going to be lower spending limits on the domestic support programs … but we need to have the balance as far as looking for how producers will be affected,’ he said.”

Reuters also provided this perspective, “Analysts said they don’t believe the recent developments on Doha would sway lawmakers — some of whom are fiercely protective of agricultural subsidies — one way or the other.

“The farm bill debate will ‘move rapidly on its own steam and in its own direction unless and until something’s coming from Geneva and the Doha Round which pushes it in a different direction,’ said Sherman Katz, a trade analyst at the Carnegie Endowment for International Peace.”

“Senior lawmakers like Minnesota Democratic Rep. Collin Peterson, who chairs the House Agriculture Committee, are adamant that they won’t allow US farm policy to be dictated by the World Trade Organization,” the article noted, while adding that, “Sallie James, a trade expert at the Cato Institute, agreed farm bill debate will roll ahead until US negotiators can show Congress new offers from other countries on market access.”

Forrest Laws, writing yesterday at the Delta Farm Press webpage, provided more detail on Chairman Peterson’s thinking with respect to the Farm Bill.

According to Mr. Laws, “Unless the Bush administration can win major concessions in a revival of the Doha Round negotiations, it shouldn’t look to the House Agriculture Committee for help in passing a new WTO agreement.

“That’s the impression a group of 200 or so farmers took away from a town hall meeting in Pine Bluff, Ark., Jan. 25, which featured House Agriculture Committee Chairman Collin Peterson as a special guest and speaker.

“‘There’s pressure on us to change the farm bill because ‘that’s the only way we can get a trade deal,’’ said Peterson, a Minnesota Democrat. ‘Now, I’m sorry, but I’ve had enough of these trade deals. And unless we can get something good out of, I don’t give a darn if we get one.’”

Meanwhile, Jake Caldwell of the Center for American Progress, noted yesterday that, “The sudden burst of enthusiasm among the world’s leading trading powers to complete the long-stalled Doha Round of multilateral trade negotiations within the next several months is welcome news. Equally encouraging are signs that the Bush administration’s 2007 Farm Bill, which is expected to be unveiled shortly, will contain laudable recommendations, including a boost to biofuels research and a potential increase in the number of farmers eligible for benefits.

“Nonetheless, numerous questions remain as to whether the Bush administration is truly committed to doing the hard work in the 2007 Farm Bill and in the final push of the Doha Round. The administration needs to transform its rhetoric into reality to produce real change down on the farm and in world trade. Without creative and sustained leadership by the United States at home and abroad, we will miss a unique opportunity to move both our nation’s farm and trade policy forward together and complete a final trade and development pact that all members of the World Trade Organization can sign.

“The United States has the ability in the next few months to make key policy making decisions at home that could well spur our trading partners to make similar efforts. Agricultural tariffs and subsidies are the main sticking points to a final trade accord–obstacles that the Bush administration, in league with congressional leaders on both sides of the political aisle, can overcome with creativity and nerve.”

Edward Alden, in an item published in yesterday’s Financial Times, stated that, “Without a TPA renewal, Mr Bush’s legacy on trade will be thin, composed of a hodge-podge of bilateral agreements with small countries that account for a tiny fraction of US exports and imports. However, with Democrats controlling the Congress, Mr Bush will have to pay heavily to get what he wants. A shaky coalition of Republicans and a smattering of Democrats gave Mr Bush victory by a single vote on TPA the last time it came before the House of Representatives, in 2001. That coalition was shattered by the November election. In particular, more than three dozen new Democratic members – dubbed the ‘Lou Dobbs Democrats’ after the CNN broadcaster who rails against free trade, outsourcing and illegal immigration – see in their election a mandate to change direction on trade policy.”

Mr. Alden also provided this historic context on trade, “The last time the stars were similarly aligned was in 1988, when Republican President Ronald Reagan faced an identical dilemma. Import competition from Japan had hurt the US motor, steel and semiconductor industries, Democrats had regained control of the Senate in 1986 and Mr Reagan needed an extension of fast track to complete the Uruguay round of trade talks. The outcome troubled many free traders. In particular, the Democratic Congress created the infamous Super 301 provision requiring the administration to use the threat of unilateral trade sanctions to force countries to open their markets to US goods.

“The debate this year is likely to cause similar consternation. At the very least, Congress will insist on measures to allow US companies to block imports from their Chinese competitors if they can demonstrate that such products were unfairly subsidised by the Chinese government. It will also try to hit back against recent World Trade Organisation dispute panel decisions that have weakened the US ability to restrict imports it considers unfairly dumped. Congress is also certain to insist on tougher labour and environmental standards in future trade agreements and to increase assistance for workers displaced by import competition.”

IV. Budget

Lyndsey Latyon reported in today’s Washington Post that, “House and Senate Democratic leaders agreed yesterday to a $463 billion spending plan for the remainder of the fiscal year that would freeze many federal agencies at 2006 levels but include more money for veterans’ health, education, scientific research, HIV programs and public parks, among other things.

“In an unusual move, the congressional leaders stripped the spending bill of all earmarks, or narrow, special-interest provisions. The measure had to be cobbled together now because Congress did not finish its work last year and failed to pass nine of 11 spending bills.

“Four months into the current fiscal year, the federal government has been running on a temporary budget that is set to expire Feb. 15. The House is scheduled to vote on the spending package today, while the Senate will take it up in the coming week.”

The Washington Wire Blog (The Wall Street Journal) added yesterday that, “Democrats put the final touches on a $463.5 billion spending bill designed to keep the government operating for the rest of the fiscal year and bridge the gap left by the collapse of the budget process last fall.

“Never before in modern times has Congress attempted this type of streamlined funding resolution on such a large scale.”

Recall that a Congressional Research Service Report published last month (“Agricultural Issues in the 110th Congress,” by Ralph M. Chite) noted that, “A number of issues of interest to U.S. agriculture are expected to be addressed by the 110th Congress. At the top of the agenda, Congress will be considering the unfinished business of FY2007 funding levels for U.S. Department of Agriculture (USDA) programs and activities in the annual agriculture appropriations bill.”

The C.R.S. report added that, “These funding decisions for FY2007 might intersect with congressional consideration of the FY2008 budget and appropriations, which begins shortly after the release of the Administration’s budget request in early February 2007. Of interest to agriculture is the FY2008 budget resolution, whereby Congress will establish a blueprint for all federal spending over a multi-year period, which could set the fiscal parameters of the next omnibus farm bill, to be debated in 2007.”

In addition, a separate C.R.S. report published in January explained that, “It will be the CBO baseline published in early 2007, in conjunction with the FY2008 budget resolution, that likely will serve as the guide for determining the spending authority included in a 2007 farm bill.”

-Keith Good