Key Senate health-care vote today as McCain returns | Boehner on ObamaCare | Omnibus or minibus? | FDA user fee | FOMC | U.S.-Brazil beef trade | Brazil and FMD | SNAP/food stamps | Biofuels | Venezuela | EU-U.S. trade/sanctions friction | KORUS | Sugar imports | Trump states
— Senate today takes a procedural vote on health care bill as McCain returns. The Senate is expected to take a key procedural vote on health care legislation. Although Majority Leader Mitch McConnell (R-Ky.) said he would move ahead with a bill that narrowly passed the House in May, the content of the legislation has yet to be determined. Sen. John McCain (R-Ariz.), who was diagnosed with brain cancer last week, is coming back to the Senate today for the vote and to work on defense authorization and sanctions bills. A Russia, Iran and North Korea sanctions bill is expected to be passed by the House today. The bill, HR 3364, includes language sought by the U.S. energy sector that would allow companies to participate in projects as long as sanctioned Russian firms do not have a controlling interest or more than a 33% stake in them.
— Boehner predicts Republicans will ‘never’ repeal and replace ObamaCare. Former House speaker John Boehner (R-Ohio) told a business gathering last week that Republicans are “not going to repeal and replace Obamacare” because “the American people have gotten accustomed to it.”
“Here we are, seven months into this year, and yet they’ve not passed this bill. Now, they’re never — they’re not going to repeal and replace ObamaCare,” Boehner told a private crowd in Las Vegas, according to video footage obtained by the Washington Post. “It’s been around too long. And the American people have gotten accustomed to it. Governors have gotten accustomed to this Medicaid expansion, and so trying to pull it back is really not going to work.” Boehner said the Republicans’ best hope in the coming months is to peel away aspects of the law, such as some tax provisions and regulations, and to end health insurance mandates. “When it’s all said and done, you’re not going to have an employer mandate anymore, you’re not going to have the individual mandate,” Boehner said. “The Medicaid expansion will be there. The governors will have more control over their Medicaid populations and how to get them care, and a lot of ObamaCare taxes will probably go.”
— House GOP considers omnibus spending bill instead of minibus. House Republicans on Monday night moved ahead with work on a four-bill appropriations package even as they discussed trying to complete a 12-bill omnibus before the August recess. If so, that would likely mean the House would remain in session into their normal summer recess.
— FDA notice allows Senate more time on user fee bill. The Food and Drug Administration (FDA) will delay issuing furlough notices to employees whose salaries depend on congressional action renewing the agency’s fee-collection authority, Commissioner Scott Gottlieb announced. Gottlieb’s announcement effectively gives Congress until Sept. 30 to pass a bill that would provide the agency with about $1.4 billion in annual funding through fiscal 2022 from the prescription drug and medical device industries.
— FOMC meeting starts today. The two-day Federal Open Market Committee (FOMC) meeting starts today in Washington. No one expects a rate change – or at least the odds for no change in interest rates Wednesday are nearly 97 percent, according to the CME Fedwatch tool. The odds remain around 90 percent for the September and November meetings and the no-change expectation is just over 51 percent for December with 43 percent expecting a quarter-point rise at the session.
— U.S. rejects Brazil timeline for reopening beef trade: USDA’s Perdue. Brazil Agriculture Minister Blairo Maggi’s suggestion that beef sales to the U.S. may resume within 60 days was “clearly aimed at a different audience,” USDA Secretary Sonny Perdue says Monday in an interview with Bloomberg. Meeting U.S. concerns on Brazil’s inspection system is “very challenging” within Maggi’s proposed timeframe because of depth of U.S. concerns and Brazil’s lack of resources, Perdue said. “We will not allow food in this country that we believe not to be in the best compliance,” Perdue commented. “We spoke very directly,” Perdue said of talks in Washington last week with Maggi, who he said he has known since 2004. “There has been a compromise of some inspection systems down there. We want to make sure that is rooted out.”
— Brazil mulls changes on foot-and-mouth disease vaccines. Brazil may change the formula of its foot-and-mouth disease (FMD) vaccines and lower the dosage as it contemplates actions to help reopen the US market to fresh Brazilian beef. Veterinary product manufacturers made a formal request to reduce the dosages to 5 milliliters (ml) to a level of 2 ml and remove the compound saponin from the vaccine, according to a statement from the group Sindan sent to Reuters. Changes will be tested to make sure quality of the vaccines is maintained and the situation is still being analyzed. The planned changes, which the group said would be reading for the November round of vaccinations, were announced during the sixth extraordinary meeting of the South American Commission for the Fight Against Foot-and-Mouth Disease (Cosalfa) in Brasília in July 20-21.
— House Freedom Caucus continues to push work requirements for SNAP. Rep. Mark Meadows (R-N.C.), leader of the House Freedom Caucus, on Monday reiterated the group’s support for stricter work requirements for able-bodied adults without dependents for them to receive SNAP benefits. “We believe there should be a work requirement for able-bodied adults with non-dependent children,” Meadows said, when asked about SNAP cuts at a National Press Club luncheon. “We’ve got to put the value back in work once again. It’s not fair to the American taxpayer for us to continue to give benefits if someone could work.” Regarding the coming farm bill debate, Meadows recalled that he voted for the last farm bill because agriculture is a major driver of the economy in his North Carolina district. “Are there some good things in the farm bill? Yes. The less government involvement that we have generally the better off we are,” he said.
— Two House Science subcommittees today will discuss biofuels policy. A hearing will examine “federal funding of biofuels projects and how it affects the private market.” Witnesses include representatives from Oak Ridge National Laboratory and University of Michigan’s Energy Institute, as well Growth Energy’s CEO Emily Skor and the Heritage Foundation’s Nicolas Loris.
— Trump administration is considering slapping sanctions on Venezuela that will include a ban on importing crude oil from the nation. The move is seen as benefiting Canadian oil producers. The U.S. imported 673,000 barrels of oil per day from Venezuela last month.
— EU mulls retaliation against U.S. over new Russia-sanctions plan. The European Union said it would be prepared to retaliate against the U.S. should Washington hit Russia with new sanctions that affect EU-based energy companies, risking a trans-Atlantic split over economic and security policies. The draft U.S. measures would prohibit American businesses from being involved in energy projects that include Russian companies, including ventures outside Russia. Separately, the commission is preparing for possible retaliation against the U.S. over a threat by Trump to curb steel imports on national security grounds. In June, EU Trade Commissioner Cecilia Malmström said she was “extremely worried” about the possibility of such American trade restrictions, saying they could trigger protectionist reactions around the globe.
— U.K. trade secretary blasts British media’s chicken ‘obsession’. U.K. International Trade Secretary Liam Fox accused the British media of trivializing preparations for free-trade talks with the U.S. by simply focusing on whether London would open its market to U.S. poultry that has been treated with a chlorine solution to kill pathogens. Following comments at the American Enterprise Institute, Fox was asked by a British reporter if he was prepared to eat “chlorine-washed chicken” and thereby signal his acceptance of a U.S. industry practice banned in the EU. “In a debate which should be about how we make our contribution to global liberalization and increase the prosperity of both the U.K., the U.S. and our trading partners … the British media are obsessed with fully washed chickens,” Fox said. He said the issue would only be addressed at the “very end stage” of free-trade talks with the U.S., which cannot formally begin until the U.K. completes it exit from the EU in two years.
— South Korea responds to U.S. push on reopening KORUS. South Korea’s newly installed trade minister reacted to the Trump administration’s request to convene a meeting in Washington on possible amendments to the Korea-U.S. (KORUS) free trade agreement, writing in a letter to U.S. Trade Representative (USTR) Roberts Lighthizer on Monday that the two countries should first examine the bilateral trade deficit — and its causes — before looking to make changes to the deal. South Korean media reported that South Korea’s new minister of Trade, Industry and Energy Paik Ungyu also suggested the talks be held in Seoul, not Washington, “at an appropriate date in the near future.” The letter comes after USTR recently wrote to Seoul with a formal request to make changes to the five-year-old agreement, with a focus on reducing the trade deficit.
— USDA adjusts fiscal 2017 sugar import quota program. Several changes to Fiscal 2017 sugar program adjustments are being made in order to ensure an adequate supply of raw sugar in the U.S., USDA announced Monday. The actions taken by USDA include:
- increasing the Overall Allotment Quantity (OAQ) for domestic sugar;
- reassigning beet sugar marketing allotments among processors;
- reassigning a surplus cane sugar marketing allotment of 870,000 short tons raw value (STRV) to imports; and
- increasing the US raw sugar tariff-rate quota (TRQ) by 269,724 STRV.
Mexico gets boost. USDA also requested that the U.S. Department of Commerce increase the fiscal 2017 Mexico export limit by 103,932 STRV and that the Office of the US Trade Representative (USTR) reallocate the expected shortfall in the Fiscal 2017 raw sugar TRQ of 95,344 STRV.
OAQ increase and reassignments: Law requires the OAQ is not less than 85 percent of domestic human consumption for the crop year. USDA today increased the Fiscal 2017 OAQ to 10,455,000 STRV, which is 85 percent of the 12,300,000 STRV estimate for domestic human consumption published in USDA’s July 2017 World Agricultural Supply and Demand Estimates report. Under the requirements of the sugar program, 45.65 percent (4,772,708 STRV) is allocated to cane sugar, and 54.35 percent (5,682,293 STRV) to beet sugar.
USDA has reassigned 870,000 STRV of the domestic cane sector supply shortfall to raw cane sugar imports. Of that:
- 28,932 STRV is reassigned to raw cane sugar imports from Mexico of less than 99.2 polarity;
- 75,000 STRV is reassigned to imports from Mexico of less than 99.5 polarity;
- 269,724 STRV is reassigned to an increase in the US raw sugar TRQ; and
- the remainder is assigned to imports already expected.
USDA also reassigned beet sugar marketing allocations from certain U.S. processors with inadequate supplies to other processors needing additional allocations. After this action, there was no surplus beet allotment to reassign to raw cane sugar imports.
The revised fiscal 2017 overall beet/cane allotments and allocations table can be found here.
Raw sugar TRQ increase: On May 6, 2016, USDA established the fiscal 2017 TRQ for raw cane sugar at 1,231,497 STRV (1,117,195 tonnes raw value), the minimum to which the U.S. is committed under the WTO. The action by USDA to increase the raw sugar TRQ by 269,724 STRV increase in the raw sugar TRQ, combined with the requested reallocation of the TRQ shortfall by USTR and the requested increase in the export limit for Mexico by the Commerce Department, is expected to yield a net increase in raw sugar imports of 414,000 STRV, since some shortfalls are expected.
With this increase, the overall fiscal 2017 raw sugar TRQ is now 1,501,221 STRV. Raw cane sugar under this quota must be accompanied by a certificate for quota eligibility. Sugar entering under this revised TRQ will be permitted to enter US Customs territory through October 31, 2017, a month later than usual, to increase the chances for supplying countries to fill their import quotas.
As USDA monitors the sugar market situation, they cautioned they may need to “make additional adjustments to imports or domestic marketing allotments to ensure an adequate supply for the domestic market, avoid forfeitures, and prevent or correct market disruptions.”
Market impacts: In New York, domestic raw sugar prices on ICE Futures for November delivery slumped 3.2% to 26.05 cents a pound Monday, the lowest for the contract since March 2016. U.S. prices continue to garner a major premium to international prices, however, reflecting the effects of the quota system. International futures in New York traded as high as 14.48 cents. The USDA sugar policy action will also mean more sugar carryin relative to the next marketing year.
— Trump’s stronghold states. After six months in the White House, President Trump’s job approval ratings are the lowest of any president in history. Yet this headline belies the fact that in certain places and within certain groups, Trump is enormously popular. An infographic from Statista shows average approval ratings from January to June, revealing the states in which the president has the most support.
West Virginia has the highest average at 60%, followed closely by North Dakota at 59% and South Dakota at 57%. Trump has been enjoying majority approval in a total of 17 states over the last six months. “It seems the president will always be able to rely on support from certain quarters,” Statista notes.
