More USDA nominees announced | Infrastructure council | NAFTA 2.0 | OMB regulatory update | Frosty U.S.-China talks re: steel trade | Sen. McCain | House budget resolution | Trump blasts off in NYT interview | Drink issues at fast-food chains in U.K. | Self-driving cars | Canada-U.S. lumber deal near?
— White House announces more USDA top position nominees... Last night, the White House announced the nominations of Indiana Agriculture Director Ted McKinney to become undersecretary for trade and foreign agricultural affairs, and Sam Clovis to be undersecretary for research, education and economics, both names previously mentioned as likely for the position. McKinney spent most of his career working with Dow AgroSciences and Elanco, a subsidiary of Eli Lilly. Clovis served as chief policy adviser on the Trump campaign and has been working as a senior White House adviser at USDA since President Trump took office.
USDA Secretary Sonny Perdue comments. In a statement, Perdue said Clovis, an Air Force veteran, “was one of the first people through the door at USDA in January and has become a trusted advisor and steady hand as we continue to work for the people of agriculture. He looks at every problem with a critical eye, relying on sound science and data, and will be the facilitator and integrator we need.”
For the trade post, Perdue said, “I have always said that I want someone who wakes up every morning asking how we can sell more American agricultural products in foreign markets. Ted McKinney is that person.”
Iowa Agriculture Secretary Bill Northey is the likely nominee as undersecretary for farm and conservation programs.
Sen. Debbie Stabenow (D-Mich.) comments on the nominees. The ranking member of the Senate Ag Committee said, “While Steve Censky and Ted McKinney stand out as experienced candidates to serve in USDA leadership roles, I have strong concerns that Sam Clovis is not qualified to be USDA Undersecretary of Research, Education, and Economics, which dually serves as the Department’s Chief Scientist. This nominee seems to lack the necessary agricultural science and research qualifications that are required by the Farm Bill. I also have many questions about his troubling views on climate change and providing public investment in crop insurance and education. “Over the past six months, there have been too many vacant leadership positions at the USDA. Our farmers, ranchers, and rural communities deserve strong and experienced leaders at the Department to make sure their voices are heard in this administration. I intend to take a close look at each nominee to ensure they are up for the task.”
Meanwhile, the Senate Ag Committee plans to schedule a confirmation hearing on deputy secretary-nominee Stephen Censky once it goes through “all the proper protocols,” said press secretary Meghan Cline. Trump announced on July 14 the nomination of Censky, who has been CEO of the American Soybean Association for the last 21 years.
Perdue also named a former House staffer to run USDA’s nutrition agency. Brandon Lipps, who helped implement $8.6 billion in food stamp cuts in the 2014 Farm Bill, is the new administrator of USDA’s Food and Nutrition Service (FNS), which oversees food stamps, school lunch and other public nutrition programs. Perdue announced the appointment of Lipps and two senior nutrition officials a day ahead of a trip today to a summer meal site for school-aged children. Lipps was previously a lawyer for the House Agriculture Committee. “While there, he led the nutrition policy team in developing the first reforms to, and fiscal savings from, the Supplemental Nutrition Assistance Program (food stamps) since the welfare reforms of 1996,” said USDA. Since July 2014, Lipps has been chief of staff for the chancellor of the Texas Tech University system.
Maggie Lyons will be chief of staff and Kailee Tkacz will be policy advisor for Lipps, said Perdue. Previously, Lyons was a lobbyist for the National Grocers Association and Tkacz worked for the Corn Refiners Association.
— White House unveils infrastructure council... President Trump is forming a council to advise his administration on the best ways to improve the nation’s infrastructure. The council will be run out of the Commerce Department and will include 15 members from various segments of the economy. While agriculture is not yet represented, the executive order says more sectors could be added.
The council’s charge: “study the scope and effectiveness of, and make findings and recommendations to the president regarding, federal government funding, support, and delivery of infrastructure projects in several sectors, including surface transportation, aviation, ports and waterways, water resources, renewable energy generation, electricity transmission, broadband, pipelines, and other such sectors as determined by the council.”
The panel would be dissolved at the end of 2018 unless Trump extends it. Or it will disappear no more than 60 days after it offers a report on its conclusions to Trump.
— NAFTA 2.0 talks to begin Aug. 16. The initial round of negotiations among the U.S., Canada and Mexico to reopen NAFTA will take place Aug. 16-20 in Washington, D.C., the Office of the U.S. Trade Representative said Wednesday. John Melle, the assistant U.S. trade representative for the Western Hemisphere and a USTR veteran, will serve as the US’ chief negotiator. Melle, who joined USTR in 1988, has for decades overseen trade policy in the North American region.
Meanwhile, a Reuters report quoted Mexican officials saying the three countries had agreed to hold seven rounds of negotiations at three-week intervals — a timeline that, assuming talks were concluded by the end of the seventh round, would allow officials to complete Mexico’s stated goal of early 2018, before its presidential elections are well underway. The report also said the location of talks would alternate among the three countries, and that the second round is set for Mexico.
Melle’s counterpart in Mexico City — Undersecretary for Foreign Trade Juan Carlos Baker — will be at the helm for Mexico throughout the negotiations, and will also be working closely with Mexican Economy Secretary Ildefonso Guajardo.
Canada has appointed veteran trade negotiator Steve Verheul to head the team for Ottawa, according to Canadian media reports.
The meeting timeline came after the Trump administration outlined key goals that include improving access for U.S. goods exported to Canada and Mexico. That White House also wants much stronger labor standards in a new NAFTA an outcome that could raise labor costs in Mexico and change the economic measures manufacturers have used in shifting factory work from the U.S. to Mexico. That also could bring transportation issues to the table. Federal regulators have allowed a handful of Mexican truckers to continue to operate in the U.S. since a controversial test program called for under NAFTA ended in 2014, and some trucking companies and the Teamsters union may raise new objections to the provision.
Former U.S. Trade Representative Michael Froman said potential stumbling blocks to a deal include politics in Mexico and Canada or if the Trump administration insists on provisions that would be unacceptable to the other countries, according to comments July 19 on CNBC’s Squawk Box. “And in that circumstance, there is always a risk that President Trump goes back to the idea of withdrawing from NAFTA altogether,” he said. Froman wondered whether Trump trade officials had thought through potential difficulties in winning congressional approval of a new NAFTA. “I’m not sure there is a lot of enthusiasm in Congress for having a vote on NAFTA in the near future,” he said.
The Trump administration wants to go further than the Obama administration in several areas, Froman said. Regarding trade remedies, the Trump administration is seeking tools that can help restrict imports from Canada and Mexico more easily, he said. The objectives also show that reducing the trade deficit in goods is a central objective for the U.S., he said. “They don’t say how they are going to do that,” he said. The U.S. has a trade surplus in services and four out of five Americans work in the services sector, he said.
— OMB to unveil regulatory and deregulatory actions. The White House Office of Management and Budget this morning will release a compendium showing it has withdrawn or postponed many Obama-era regulations. “Government is using muscles it hasn’t used in a really long time, exposing and removing redundant and unnecessary regulation,” OMB Director Mick Mulvaney said in a statement. The “Unified Agenda” adds “deregulatory actions” to its name and details the Trump administration has shelved about 860 regulatory actions, either withdrawing them or moving them from “active status.”
— Steel issues forge limited U.S.-China meeting results. A spirited discord over how much China should reduce its excess steel production capacity dominated the first meeting of the U.S.-China Comprehensive Economic Dialogue on Wednesday, apparently blocking progress on other issues. China nixed U.S. pressure to agree to specific cuts in production capacity and U.S. officials did not move to other issues. Both countries canceled press conferences planned for the afternoon. The confab produced just one result: China’s acknowledgement “of our shared objective to reduce the trade deficit, which both sides will work cooperatively to achieve,” according to Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross’ joint statement.
Still awaited is a U.S. report led by Ross regarding a national security investigation that could lead to trade restrictions on steel imports, via Section 232 of the Trade Expansion Act of 1962. The report on whether steel imports pose a national security risk is the subject of a major and lingering debate within the Trump administration over the scope and nature of any trade action to be recommended to the president.
Market impact: Steel stocks rose across the board yesterday.
— John McCain diagnosed with brain cancer... Sen. John McCain (R-Ariz.), 80, has a brain tumor and may undergo chemotherapy and radiation treatment. The tumor was diagnosed after the longtime senator and war hero underwent surgery to remove a blood clot above his left eye at the Mayo Clinic Hospital in Phoenix. “Subsequent tissue pathology revealed that a primary brain tumor known as a glioblastoma was associated with the blood clot,” the Mayo Clinic said in a statement. A glioblastoma is a fast-growing tumor. His office would not put any timetable on his return to the Senate.
On Monday, McCain issued a statement from Arizona calling for going back to the drawing board on health care and for a bipartisan committee process to move forward.
McCain has represented Arizona for more than three decades and was the 2008 Republican presidential nominee.
— Fiscal 2018 budget resolution sent to House floor. Republicans pushed a fiscal 2018 budget resolution through the House Budget Committee late Wednesday, 22-14, on a party-line vote, advancing an effort with President Donald Trump to lower tax rates while boosting defense and cutting domestic spending. The budget still faces hurdles from some conservatives, which could mean changes before it can be passed on the House floor. Democrats are expected to oppose it. The timetable for House consideration is uncertain and could be delayed until after the August recess.
The budget plan proposes a defense discretionary spending limit of $621.5 billion, $73 billion above the statutory cap. The budget lowers the nondefense discretionary limit to $511 billion, $5 billion below the cap. It would allow up to $75 billion in war funding for the military and $12 billion for the State Department and other civilian agencies.
The vote reflected support from two members of the House Freedom Caucus — Reps. Dave Brat (R-Va.) and Mark Sanford (R-N.C.). However, votes for the package on the House floor are not as clear. Republicans can only afford to lose 22 Republicans and rumblings are that the number in opposition or at least not supporting the budget resolution could be double that level.
— Citing recusal, Trump says he wouldn’t have hired Sessions, according to a New York Times interview with President Donald Trump. Trump said on Wednesday that he never would have appointed Attorney General Jeff Sessions had he known Sessions would recuse himself from overseeing the Russia investigation that has dogged his presidency, calling the decision “very unfair to the president.” Link for details from the newspaper.
“Trump complained that Sessions’ decision ultimately led to the appointment of a special counsel that should not have happened,” according to the NYT. “‘Sessions should have never recused himself, and if he was going to recuse himself, he should have told me before he took the job and I would have picked somebody else,” Trump said.
Sessions today said he plans to stay on in his current job, even after Trump’s harsh criticism. “I plan to continue to do so as long as that is appropriate,” Sessions said at a Department of Justice press conference.
In the interview, Trump also accused James B. Comey, the FBI director he fired in May, of trying to leverage a dossier of compromising material to keep his job. Trump criticized both the acting FBI director who has been filling in since Comey’s dismissal and the deputy attorney general who recommended it. And he took on Robert S. Mueller III, the special counsel now leading the investigation into Russian meddling in last year’s election. Asked if Mueller’s investigation would cross a red line if it expanded to look at his family’s finances beyond any relationship to Russia, Trump said, “I would say yes.” He would not say what he would do about it. “I think that’s a violation. Look, this is about Russia.”
Meanwhile, reports have surfaced that former Trump campaign advisor Paul Manafort owed millions to pro-Russia interests. Financial records in the tax haven of Cyprus, where Paul Manafort had bank accounts, indicate that he had as much as $17 million in debt before he joined Donald Trump’s campaign last year. Link to New York Times account.
— Traces of fecal matter have been found in drinks at three of the world’s biggest fast food chains in the U.K. Investigators from the BBC consumer show, Watchdog, discovered the bacteria in ice served in drinks at McDonald’s, Burger King and KFC. Many of the samples were described as having “ssignificant” levels. Link to CNBC item.
— Self-driving vehicle regulation exemption. A U.S. House panel has approved a sweeping proposal by voice vote to allow automakers to deploy up to 100,000 self-driving vehicles without meeting existing auto safety standards and bar states from imposing driverless car rules. States could still set rules on registration, licensing, liability, insurance and safety inspections, but could not set self-driving car performance standards, under the proposal.
— Canada-U.S. softwood deal may come before NAFTA 2.0 talks. The lingering trade dispute over softwood lumber may be nearing a resolution, with Canada indicating it wants to settle the issue with the U.S. before the renegotiation of the North American Free Trade Agreement begins Aug. 16. “We’re going to continue to work very hard towards that,” Canadian Prime Minister Justin Trudeau said to reporters in Providence, Rhode Island. “I’m not going to speculate, but I will say this is an issue that Canadians and the American administration are taking very seriously, and there are constant back-and-forths on this issue.”
Canada is the world’s largest softwood lumber exporter and the U.S. is its biggest market. The U.S. lumber industry filed a petition asking for duties, alleging Canadian wood is heavily subsidized and imports were harming American mills and workers. The U.S. imposed punitive tariffs on Canadian shipments earlier this year.
