03-22-18 NFU: Trump Administration Unveils Trade Actions Against China

Trump Administration Unveils Trade Actions Against China

NFU Laments Administration’s ‘Bull in a China Shop’ Approach, Urges Tactful Process to Address Trade Woes

WASHINGTON – The Trump administration today unveiled trade actions against China that will likely spur significant retaliatory measures aimed at U.S. agricultural products. The move is in response to a U.S. Trade Representative office investigation on China’s violations of intellectual property rights.

National Farmers Union (NFU), a family farmer-led organization who supports aggressive efforts to fight unfair trade practices, lamented the administration’s apparent lack of a plan to safeguard the interests of family farmers. NFU President Roger Johnson released the following statement: Continue reading

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Perdue:  Administration Unlikely to Cap RIN Prices

An Agri-Pulse report says it appears that the Trump administration will not be putting a cap on the price of biofuel credits, known as Renewable Identification Numbers. Ag Secretary Sonny Perdue says the administration will more likely try to bring down the cost of RINs through a vapor pressure waiver that will increase demand for E-15. That’s the outcome favored by the ethanol industry. Perdue described the possible scenario at the National Press Club in Washington, D.C. Perdue says, “We will not see RIN prices capped, but market prices, affecting the RVP waiver, that allows E-15 to be sold year round, which we believe will increase RIN availability and drive down the prices.” The report says it’s important to remember that the uncertainty created by President Trump’s discussions on biofuel policy have already knocked down RIN prices considerably. It’s interesting to note that since the discussions began in October, when RIN prices were at 98 cents, they’ve now dropped to 38 cents as of last week. “The conversation has already been helpful in that area of driving RIN prices down,” Perdue adds.

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Trump Administration Formally Requests Fast-Track Extension

President Trump formally requested a three-year extension of trade promotion authority on Tuesday. Politico says the trade promotion authority allows the president to negotiate free trade agreements that he can submit to Congress under fast-track approval procedures. However, the request comes amid growing concerns in the Republican party over the direction of the administration’s trade policy. Trump’s message to Congress says, “I hope my administration can continue to work with Congress to pursue new and better trade deals for America’s workers, farmers, ranchers, and businesses.” Congress last passed trade promotion authority in 2015, during one of the biggest Congressional battles over trade in years. Now that the president has made the formal request, Congress has a three-month window to block renewal by passing a resolution of disapproval. Since Republicans control both the House and Senate, Politico says many viewed approval as a sure thing. But, Senate Finance Committee Chair Orrin Hatch of Utah tied the TPA renewal process to concerns that many Republicans have about the administration’s ideas on revamping the North American Free Trade Agreement.

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European Union Approves Bayer Takeover of Monsanto, with Conditions

German chemical company Bayer was given conditional European Union approval in its acquisition of Monsanto. A Dow Jones report says the takeover bid, which is worth more than $60 billion, was only approved after both companies agreed to divest themselves of assets worth more than $7.3 billion dollars, in order to ease antitrust concerns. As a large part of the divestiture, Bayer plans to sell company assets to BASF, including most of its global broad acre seed and trait business, as well as three lines of research for non-selective herbicides. Monsanto’s nematode seed-treatment assets will also be sold to BASF, which will also buy Bayer’s entire vegetable seeds business. The EU Competition Commission also says that Bayer and BASF will have to prove that BASF can be an active competitor of the merged company. The acquisition can only be finalized if and when the commission signs off on the BASF acquisitions. The Dow Jones report quotes the Competition Commission Chair as saying their decision ensures that there will be effective competition and innovation in seeds, pesticides, and digital agriculture markets after the merger is complete.

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U.S. Talking With Other Countries About Tariff Exemptions

The U.S. is currently discussing the possibility of steel and aluminum tariff exemptions with a handful of other countries. A Reuters report says America is currently in talks with the European Union, Australia, and Argentina. U.S. Trade Representative Robert Lighthizer testified before the House Ways and Means Committee today (Wednesday) that President Donald Trump will soon make a decision on imposing tariffs against China. Washington has accused China of stealing U.S. intellectual property. A separate Reuters report says the president may target up to $60 billion in imports from China, using a mixture of tariffs and investment restrictions. Lighthizer told the committee that, “We’re losing to China in ways that are not reflective of the underlying economics.” Brazil is also a possibility when it comes to discussing tariff exemptions. South Korea is an exemption possibility, but Lighthizer says those discussions would take place during the negotiations to update the U.S. trade agreement with South Korea, known as KORUS. The U.S. has already granted tariff exemptions for Canada and Mexico.

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John Deere Concerned About Trade Retaliation

The world’s largest maker of agriculture equipment, Deere and Company, is worried that possible trade tensions between the U.S. and other countries could affect its machinery sales. A Bloomberg report says the steel and aluminum tariffs on imports to America will have an impact on the company. But, Deere is much more worried about possible trade retaliation that could target American agricultural products. CEO Sam Allen says, “If China no longer buys U.S. soybeans or Mexico no longer purchases U.S. corn, that would be really bad for our customers and would be very impactful on us.” Allen says about one-third of U.S. agriculture is exported. He notes that trade flow could be interrupted if President Trump would follow through on threats to withdraw from the North American Free Trade Agreement, or if China imposes its own tariffs and quotas on American goods. When it comes to manufacturing their products, Deere says steel mills will be able to increase their prices significantly. Allen says the price of steel could legitimately rise up to 30 percent in a short period of time.

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NFU Concerned About Harmful Modifications to Section 199A

Congressional appropriators revealed an omnibus appropriations bill that includes significant and harmful modifications to an important tax break for farmers and agricultural cooperatives. The break is known as Section 199A, was included in last year’s tax overhaul, as a means of leveling the playing field between ag cooperatives and corporations who received a sizeable tax break in the legislation. The National Farmers Union opposed these changes to the tax provision. In responding to the omnibus language, NFU President Roger Johnson says, “We are deeply disappointed that Congress included harmful modifications to Section 199A in this must-pass legislation. Reverting back to Section 199, in light of double-digit corporate tax relief, leaves farmers and their cooperatives worse off than prior to the passage of the Tax Reform and Jobs Act.” He added that there were several bipartisan compromises to remedy challenges associated with 199A that ensured farmers and cooperatives wouldn’t be worse off. Johnson says, “Those compromises were disregarded in favor of corporate interests.”

SOURCE: NAFB News Service

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