U.S. takes on China at WTO | Biodiesel trade decision | Tax reform options | Immigration reform | Debt ceiling hike | NAFTA 2.0 | OPEC | Solar eclipse
— U.S. next week to push corn, wheat, rice cases against China at WTO. The World Trade Organization’s Dispute Settlement Body next week will see the U.S. requesting panels on several ag trade issues with China, including how Beijing administers tariff-rate quotas on rice, wheat and corn. The U.S. will continue pushing a case launched by the Obama administration against China’s alleged illegal subsidies for its rice, wheat and corn producers.
China’s administration of its tariff rate quotas limit opportunities for U.S. farmers to export high-quality grains to China. U.S. rice, wheat and corn exports produce an estimated $70 billion in economic activity and support 200,000 U.S. jobs, USTR said during the Obama administration. China agreed to allow 2,660,000 metric tons (MT) of short- and medium-grain rice; 2,660,000 MT of long-grain rice; 9,636,000 MT of wheat; and 7,200,000 MT of corn to enter China at lower duty rates through its tariff rate quotas, USTR said in December. USTR said China’s administration of its tariff rate quotas for rice, wheat, and corn “is not transparent, predictable or fair.”
In addition, China “appears to have breached” trade obligations by maintaining impermissible import restrictions and failing to provide notice of the total quantities permitted to be imported. The WTO has already set up a panel to probe U.S. allegations that China provided more than $100 billion in illegal government subsidies for producing rice, wheat, and corn.
— Biodiesel trade decision on Argentina, Indonesia likely today. The U.S. Commerce Department today is expected to release its preliminary decision on whether to impose import duties on Argentine and Indonesian biodiesel. The National Biodiesel Board (NBB) and 15 biodiesel producers brought the case, arguing that the two countries unfairly subsidized biodiesel feedstock and undercut U.S. producers. NBB asked Commerce to add retroactive duties on biodiesel imports going back to May.
— Some options mulled for cutting individual and corporate tax rates. Options include capping the mortgage interest deduction for homeowners; scrapping people’s ability to deduct state and local taxes; and eliminating businesses’ ability to deduct interest (exemptions for some like agriculture), while also phasing in full expensing for small businesses that allows them to immediately deduct investments like new equipment or facilities.
— GOP leaders have different ideas re: tax reform. Senate Majority Leader Mitch McConnell (R-Ky.) suggested that House Ways and Means Chairman Kevin Brady (R-Texas) and Senate Finance Chairman Orrin Hatch (R-Utah) would have “the same starting point” in terms of a chairman’s mark for the committee work on a tax bill.
Responding to a question about the future of the treatment of carried interest as part of a tax code overhaul, he said that almost everything in the current law needs to be on the table to lower rates. “I think there are only two things that the American people think are actually in the Constitution: The charitable deduction and the home mortgage interest deduction,” McConnell said. “So, if you’re worried about those two, you can breathe easy. For all the rest of you, there’s no point in doing tax reform unless we look at all of these preferences, and carried interest would be among them.”
McConnell also said that a revenue-neutral bill was where he thought “we’re likely to end up.” He said discussions were ongoing.
— Immigration deal being pushed by some in White House. Some White House officials want President Donald Trump to reach a deal with Congress that offers Dreamers protection in exchange for legislation that pays for a border wall and more detention facilities, curbs legal immigration and implements E-verify, an online system that allows businesses to check immigration status. But some sources say the wall funding addition would never clear top congressional Democrats.
— McConnell: ‘Zero chance’ Congress won’t raise debt ceiling. Senate Majority Leader Mitch McConnell (R-Ky.) declared without hesitation Monday that Congress will raise the debt limit come September. The Treasury Department has been employing cash-conservation measures since March, when the previous suspension of the debt limit expired and the new ceiling was set at nearly $20 trillion.
— NAFTA 2.0 talks move to Mexico. NAFTA renegotiation talks held Aug. 16-20 in Washington covered more than two dozen topics. Discussions included rules for review and acceptance of biotech or genetically modified crops and changes to the investor-state dispute settlement process that allows companies to take challenges to government policies that affect business operations to a three-lawyer private arbitration panel.
Second round of talks will be Sept. 1-5 in Mexico. Canada is slated to hold talks in late September with the fourth round of negotiations coming back to the United States in October. There reportedly will be seven rounds of talks before year’s end.
Mexico wants to finish NAFTA talks before its July 2018 presidential election. President Enrique Pena Nieto cannot run for a second six-year term, but his party, the Institutional Revolutionary Party, wants to win the election and keep control of the government. Pena Nieto’s party is concerned about potential challenger Andres Manuel Lopez Obrador of the National Regeneration Movement, who is running on a populist message fueled in part by Mexican outrage against President Donald Trump’s statements that the U.S. will force Mexico to pay for a border wall.
Canadian Foreign Affairs Minister Chrystia Freeland said Canada does not support changing NAFTA rules of origin to require nation-specific content levels. “Canada is not in favor of specific national content in rules of origin,” Freeland said Wednesday.
Mexican Economy Minister Ildefonso Guajardo Villarreal told Reuters that setting nation-specific content rules would be “impossible,” echoing comments he made earlier this year that such requirements are not included in any existing trade agreement.
— OPEC will debate whether to “extend or terminate” the OPEC and non-OPEC production cut at a meeting in late November, according to Kuwait Oil Minister Essam al-Marzouq, who is “optimistic” about finding an agreement. According to Dow Jones, compliance with production cuts fell to 94% in July from 98%, due to higher production by Iraq and the United Arab Emirates.
— Solar eclipse spectacle causes traffic jams, shipping moves. Enough Americans watched the solar eclipse from inside or near their cars for the aftermath of the phenomenon to show up on national traffic maps. National traffic patterns on Google Maps shows a series of traffic jams following the path of the event across the U.S.
Meanwhile, transportation companies rerouted drivers and shifted deliveries for cargo ranging from furniture to construction equipment, the Wall Street Journal reported. Some truckload carriers pulled their trucks from the roads. “For transportation operators, the eclipse was similar to rough weather that can hit a region, except this time it spread from coast to coast, leaving truckers and their customers to play catch-up for a couple of days,” the WSJ noted. “It’s not something that you can plan for really well because it just hasn’t happened before,” John Paiva, chief operating officer at Estes Final Mile, told the WSJ regarding trucking networks preparations for Monday’s solar eclipse.
