Monday, February 26, 2024

Ag talks in focus as MC13 kicks off

Delivered every Monday by 10 a.m., Weekly Trade examines the latest news in global trade politics and policy.
Feb 26, 2024 View in browser
 
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By Ari Hawkins

With help from Doug Palmer and Kelsey Tamborrino

QUICK FIX

— With the WTO's 13th Ministerial Conference underway in Abu Dhabi, the United States is hoping to negotiate India’s public stockholding demands and chart out broader agricultural discussions for the coming years.

— British trade minister Greg Hands told POLITICO that the ministerial won’t be a success unless WTO economies agree to continue a nearly 26-year-old moratorium on collecting duties on e-commerce.

— Michigan Rep. Dan Kildee is leading a group of House Democrats in calling on the Treasury Department to revise guidance under the Inflation Reduction Act to better support U.S. solar manufacturing amid competition with China.

It’s Monday, Feb. 26. Welcome to Morning Trade! I'm not ashamed to admit that I spent a total of eight hours over the weekend listening to Reesa Teesa's 50-part series on TikTok about her marriage to “the United Nations of red flags.” Absolutely captivating.

Got some trade news to share? Reach us at: ahawkins@politico.com, gbade@politico.com and dpalmer@politico.com. You can also follow us on X: @_arihawkins, @gavinbade and @tradereporter.

 

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Driving the day

The headquarters of the World Trade Organization.

The headquarters of the World Trade Organization stands on Dec. 11, 2019 in Geneva, Switzerland. | Robert Hradil/Getty Images

U.S. TO PUSH FOR BROAD WTO AG TALKS: The United States hopes to persuade India this week that New Delhi’s demand for a permanent solution on its public stockholding food security concerns can only be accomplished in the context of a broader agricultural negotiation at the World Trade Organization, a U.S. official told reporters.

India clung to its tough agricultural demands in the run-up to the ministerial conference in the United Arab Emirates, and is pushing for a standalone deal that would shield its public stockholding program from a legal challenge under WTO rules.

But that me-first approach faces such strong opposition from agricultural exporters, that “I hope we can get them to agree that position has failed,” the U.S. official said, speaking on condition of anonymity to discuss ongoing negotiations.

The United States has said “for many, many years we're willing to reform on the domestic support side, but we also need others to agree to reform on the market access side,” the U.S. official said, referring to a potential trade-off between U.S. farm subsidies and foreign tariffs.

“We're not asking everybody to take the same level of commitments on everything. But you know, we need to look to move the conversations holistically.”

A draft text circulated earlier this month in Geneva calls on countries to launch comprehensive agriculture negotiations, with the goal of reaching agreement on key elements of a deal as early as the WTO’s next ministerial conference in two years. However, that timetable is just one of many undecided elements in the text.

House Ag Caucus speaks: Meanwhile, the newly launched House Agriculture Trade Caucus, in one of its first acts, is urging “the Biden Administration to make agriculture a priority in its trade agenda” by reducing tariff and non-tariff barriers for American agricultural exports.

“Specifically, USTR and USDA must work to secure agreements that lower tariffs, ensure sanitary and phytosanitary (SPS) regulations are science-based, transparent, and consistent, and eliminate the abuse of geographical indicators in the food sector,” the bipartisan group wrote in a letter to U.S. Trade Representative Katherine Tai and Agriculture Secretary Tom Vilsack.

PRESSURE MOUNTS WITH MC13 IN MOTION: U.K. Trade Minister Greg Hands told Doug that this week in Abu Dhabi won’t be a success unless countries agree to continue a nearly 26-year-old ban on collecting duties on digitally-traded goods and other electronic transmissions. “We think it would be a very retrograde step to end the moratorium,” he said.

The fate of the e-commerce customs duties moratorium is one of several issues still up in the air as members gather today in Abu Dhabi, such as a new agreement to curb harmful fishing subsidies and a work plan for the new agricultural negotiations.

On TRIPS waiver: GOP Reps. Michelle Steel (Calif.) and Darin LaHood (Ill.) also called on the Biden administration to reject a proposal to waive intellectual property protections for Covid-19 therapeutics and diagnostics ahead of the ministerial.

“We believe that this proposed ‘waiver’ would abet and embolden the [Chinese Communist Party’s] efforts to acquire and exploit U.S. technology at the expense of our economic and national security,” they wrote in a letter, which is addressed to the president and dated Friday.

Doug and Camille Gijs have more on what to expect as MC13 kicks off.

CONGRESSIONAL CORNER

Representative Dan Kildee, a Democrat from Michigan, speaks during a hearing in Washington, D.C.

Representative Dan Kildee, a Democrat from Michigan, speaks during a hearing in Washington, D.C. | Rod Lamkey/CNP/Bloomberg via Getty Images

DEMS ASK FOR CHANGES TO BOOST SOLAR MANUFACTURING: Ten House Democrats, led by Michigan Rep. Dan Kildee, are calling on Treasury to revise guidance and promulgate a rule for the domestic content bonus tax credit under the Inflation Reduction Act to better support U.S. solar manufacturing in the face of China’s continued hold on the supply chain.

Recall: The initial outline for the bonus credit drew mixed reviews last year, with some solar manufacturers criticizing the notice for not incentivizing the U.S. manufacturing of enough components of a solar panel, including polysilicon and wafers, where China leads in global production.

The Democrats wrote in a new letter that the wave of solar manufacturing investments announced since the IRA passed do not do enough to “meaningfully” onshore the solar supply chain. “Treasury’s current guidance is the equivalent of claiming an apple pie is American if the pie is baked in the U.S., but the apples and all other ingredients are from China,” they wrote.

They argue that Congress intended for the bonus credit to provide additional support for U.S. solar production and ask the administration to update the guidance to allow U.S.-made polysilicon and wafer production to count.

SENS PUSH FOR CRACK DOWN ON DE MINIMIS: Sens. Sherrod Brown (D-Ohio) and Rick Scott (R-Fla.) are pushing the president to take executive action to restrict the number of packages from China that enter the country duty-free. The United States is unable to compete with low-cost competitors, which are bolstered by forced labor and state subsidies, the lawmakers said in a letter on Friday.

SANCTIONS CORNER

TAKING AIM AT PUTIN’S WAR ECONOMY: The United States announced Friday more than 500 sanctions targeting Russian financial and defense sectors, as the Russian economy rebounds amid a historic slew of penalties from Western powers.

The bulk of the sanctions were already in the works for the second anniversary Saturday of Russia’s invasion of Ukraine, though a few were added to target those involved with the death of opposition leader Alexei Navalny.

The European Union also announced sanctions on several foreign companies over allegations that they have exported dual-use goods to Russia that could be used in its war effort, and penalties for individuals involved in the kidnapping of Ukrainian children.

Enforcement woes: The announcements come as the Russian economy continues to rebound despite expansive and coordinated penalties from multiple countries, and as the Kremlin moves to deepen its trade ties with China and other sympathetic nations.

Third-party problems: Legal, financial and even military resources are required to enforce the various punishments, but the countries pursuing the campaign don’t always have the same focus, finances or rules, making enforcement lopsided across allies.

ICYMI: Nahal Toosi, Koen Verhelst, Gabriel Gavin, Kyle Duggan and Ari have more on where Western sanctions fall short.

 

Don’t sleep on it. Get breaking New York policy from POLITICO Pro—the platform that never sleeps—and use our Legislative Tracker to see what’s on the Albany agenda. Learn more.

 
 
International Overnight

— The Alliance for American Manufacturing said in a new report that the United States should restrict the import of low-cost autos from China and parts from Mexico.

— The Coalition of Trade Ministers on Climate released a “Communiqué” and “Menu of Voluntary Actions” that WTO members may consider to help address the climate crisis.

— The U.S. and the U.K. hit 18 Houthi targets in Yemen on Saturday in response to a recent surge in attacks by the Iran-backed militants on ships in the Red Sea and the Gulf of Aden, per Pierre Emmanuel Ngendakumana.

— From a proposed 60 percent or higher tariff on Chinese goods to a possible effort to kill the electric car, POLITICO reports 10 ways Trump’s second term could be more extreme than the first.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and ahawkins@politico.com. Follow us @POLITICOPro and @Morning_Trade.

 

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Doug Palmer @tradereporter

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Emily Cadei @emilycadei

 

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