Health-care reform fails in Senate | Russia sanctions bill | Beef & KORUS | Japan triggers frozen beef import tariff boost | CAFO | Cross compliance & crop insurance | RINs and CVR Refining | Steel import decision | Deputy USTR | Cotton AWP | Farm bill listening session added | STB wants rail problems fixed
— ‘Skinny’ health care plan fails. Three Republican Senators – Susan Collins (Maine), Lisa Murkowski (Ark.) and John McCain (Ariz.) – voted along with all Democrats to send the “skinny” healthcare reform package to defeat early Friday on a 49-51 vote. GOP leadership held a separate vote open for almost an hour as Vice President Mike Pence stood at McCain’s desk, making his case — to no avail.
“This is clearly a disappointing moment,” Senate Majority Leader Mitch McConnell (R-Ky.) said after the vote. “I regret that our efforts were simply not enough this time... It’s time to move on.”
House Speaker Paul Ryan (R-Wis.) had addressed concerns by some Republican senators that the House might simply take up the “skinny” bill and pass it, but l Ryan sought to ease their concerns, releasing a statement saying the House was willing to go to conference on the bill.
McCain comments. “While the amendment would have repealed some of Obamacare’s most burdensome regulations, it offered no replacement to actually reform our health care system and deliver affordable, quality health care to our citizens,” McCain said in a statement. “The Speaker’s statement that the House would be ‘willing’ to go to conference does not ease my concern that this shell of a bill could be taken up and passed at any time.”
President Donald Trump tweeted that “3 Republicans and 48 Democrats let the American people down” and that he still wants to “let ObamaCare implode, then deal.”
McConnell later called on Democrats to offer their ideas on fixing provisions of ObamaCare. As for the next steps forward, those are unclear except McConnell canceled a session scheduled for today and announced the Senate would take up the nomination of a federal circuit judge on Monday afternoon.
Senate Minority Leader Chuck Schumer (D-N.Y.) said he hopes Republicans are finally ready to drop the repeal effort and work with Democrats, saying McCain set a great example. In what he noted as a “good sign,” Schumer said he saw GOP Sen. Lamar Alexander (R-Tenn.), who chairs the Health, Labor, Education, and Pensions Committee, talking with staff to Democratic Sen. Patty Murray (D-Wash.), the panel’s ranking member.
— Senate overwhelmingly passes Russia sanctions bill, sends to President Trump. The US Senate approved the sanctions package on a 98-2 vote, sending the bill that was overwhelmingly approved by the House to President Donald Trump. The sanctions only kick in for energy projects in which a Russian company owns 33% or a controlling stake. The only no votes on the bill were Kentucky Republican Rand Paul and Vermont independent Bernie Sanders.
Unclear is what the White House will do as there have been mixed signals. The White House had initially been cool to the Russia sanctions package only to see a White House spokeswoman over the week declare they backed the plan. However, White House Communications Director Anthony Scaramucci on Thursday told CNN that Trump “may sign the sanctions exactly the way they are, or he may veto the sanctions and negotiate an even tougher deal against the Russians.”
Congress has shown they can easily override a veto if Trump takes that action.
Russia reacts. Russia did not wait to launch its reprisal, announcing this morning that it has ordered the U.S. to cut its diplomatic staff in the country, ousting the mission from properties in Moscow.
— Beef industry: Be careful in trying to renegotiate KORUS. The beef industry is warning the Trump administration to be careful in trying to renegotiate the U.S.-South Korea trade agreement (KORUS). In a letter to USDA Secretary Sonny Perdue and Trade Representative Bob Lighthizer, industry groups said they have seen an 82% increase in annual sales to South Korea since 2012, from $582 million in 2012 to $1.06 billion in 2016, making it the second largest export market.
“We would not support any changes in the terms of the KORUS that would jeopardize either our market share or the significant investment that has been made in rebuilding Korean consumer confidence in the safety, quality, and consistency of U.S. beef,” the letter said. Link to letter sent by top officials at the National Cattlemen’s Beef Association, North American Meat Institute and U.S. Meat Export Federation.
— Japan triggers frozen beef import tariff boost. Japan has invoked a safeguard measure on imports of frozen beef from the U.S. and other countries, increasing tariffs to 50% from 38.5%, effective Aug. 1. The increase will apply to countries that don’t have economic-partnership agreements with Japan, according to a document distributed by Finance Minister Taro Aso in Tokyo. That includes the U.S., Canada, New Zealand and the European Union members. It doesn’t apply to countries such as Australia, the largest beef supplier to Japan, or Mexico and Chile as they have EPAs with Japan.
Under the terms of Japan’s WTO membership, it instituted a safeguard that would trigger if the quarter import volume exceeded the previous corresponding quarter by 17%. Imports during the first quarter of Japan’s fiscal year (April 1-June 30) topped the threshold by just 115 tonnes, allowing the increased tariff to be applied for the remainder of Japan’s fiscal year – through March 31, 2018. About 45% of U.S. beef exports to Japan are frozen. This marks the first time the safeguard duties have been put in pace since August 2003. Japan’s imports of frozen beef in the three months through June 30 rose to 89,253 metric tons, exceeding the safe-guard threshold of a 17% increase from the same period last year, according to a statement from the Agriculture Ministry.
Imports from the U.S. jumped 19.6% to 28,404 tons last quarter, while shipments from Australia rose 11.2% to 49,855 tons. Purchases from Canada, the third-largest frozen-beef supplier to Japan, soared 71.8% to 5,096 tons.
The U.S. Meat Export Federation (USMEF) “recognizes that the safeguard will not only have negative implications for U.S. beef producers, but will also have a significant impact on the Japanese foodservice industry,” USMEF President and CEO Philip Seng said in a statement. “It will be especially difficult for the gyudon beef bowl restaurants that rely heavily on Choice U.S. short plate as a primary ingredient.” Link to USMEF release on the topic. Link to USMEF fact sheet. Link to analysis and charts.
The safeguard won’t apply to imports of Australian beef, which will continue to enjoy a lower tariff of 27.2% and not subject to safeguard tariffs per terms of a deal signed with Japan in 2015. The USMEF noted the Japanese food service industry prefers U.S. short plate, a belly cut, which accounts for a majority of U.S. frozen beef exports to Japan. But the meat group acknowledges the situation makes Australia’s position even more advantageous.
Impacts. As frozen beef represents about 20% of overall foreign beef supplied in Japan, the impact of the tariff-increase on consumers will likely be limited, Agriculture Minister Yuji Yamamoto said. Frozen beef is mainly used by Japanese restaurant-chain operators as a cheaper alternative to domestic meat, according to Shiro Ohashi, executive director at Japan Meat Traders Association.
— Meat groups push stay of CAFO reporting. The National Pork Producers Council (NPPC) and the U.S. Poultry & Egg Association are urging a federal judge to give EPA time to develop guidance for how livestock operations must report emissions, arguing that not doing so will create a haphazard “reporting fiasco.” The motion filed Thursday in the U.S. Court of Appeals for the District of Columbia Circuit follows an April decision of the same court overturning EPA’s exemption for animal waste emissions reporting requirements.
Environmental groups said the court should reject the stay since the agency had plenty of time to figure out how to enforce the rule on CAFOs. “EPA’s motion ignores that CAFOs have been reporting releases without any guidance for over a decade,” the groups argued. “And EPA has been collecting and analyzing emissions data, similarly, for over a decade, for the purpose of developing guidance — but guidance still has not issued.”
— Conservation compliance and crop insurance. A new report from USDA’s Economic Research Service found that ending conservation compliance requirements for crop insurance premium subsidies would mean a significant reduction of soil erosion prevention measures on farms. Link to report.
— CVR Refining says biofuel compliance costs in 2Q to be highest ever. White House advisor Carl Icahn has a majority stake in CVR Refining, which said it lost $19 million in the second quarter of 2017, citing the loss on spending $106 million on credits needed to comply with the Renewable Fuel Standard (RFS) The firm said it expects those costs to be $200 million to $250 million for 2017, up from a prior expectation of $170 million. CVR had a record $205.9 million in outstanding obligations in 2016, but deferred those costs to this year in hopes renewable identification numbers (RINs) would decline in value, according to its income statement released Thursday. Reuters had reported that Icahn had been holding fewer credits than needed on the expectation that RIN prices would drop, but prices have risen. “As I’ve said many, many times before, RINs continue to be an egregious tax on independent refiners and small retailers,” CVR CEO Jack Lipinski said on the earnings call. “RINs prices have been extremely volatile this year, which only proves the fact that the RINs market is manipulated... EPA continues to ignore this.”
— President Donald Trump’s plans to slap steel and aluminum imports with tariffs and/or quotas will be delayed, according to House lawmakers briefed Thursday afternoon by Commerce Secretary Wilbur Ross. Ross, speaking to members of the House Ways and Means Committee, “said that the current forums that we have — the WTO and the global steel forum — have not been adequate in addressing this over-dumping issue, and that he is hoping for some way to negotiate in a dialogue with these countries to resolve the problem,” said Rep. Judy Chu (D-Calif.).
Timeline adjusted. Ross previously was expected to deliver reports investigating the national security threats posed by steel and aluminum imports to the White House by the end of last month. But Trump told the Wall Street Journal earlier this week that “we don’t want to do it at this moment.” The president added that the administration would most likely take action “fairly soon.”
— Deputy USTR nomination sent to Senate. The White House on Thursday officially sent to the Senate its nomination of C.J. Mahoney for deputy U.S. trade representative (USTR). Mahoney’s nomination as deputy in charge of investment, services, labor, environment, Africa, China and the Western Hemisphere was announced last week.
— Cotton AWP rises. The Adjusted World Price (AWP) for cotton moved up to 66.29 cents per pound, effective today, up from 64.90 cents per pound and the highest level since the week of June 16 when it was 67.31 cents per pound. The AWP has only been at 65 cents or more two of the past six weeks.
— Another new farm bill listening session slated. An additional farm bill listening session, in conjunction with the Farm Progress show Aug. 30 in Decatur, Illinois, has been scheduled by House Ag Chairman Mike Conaway (R-Texas). The panel has three listening sessions planned next week, starting Monday in San Angelo, Texas, followed by others in Morgan, Minn., on Thursday, and Modesto, Calif., on Saturday. The first meeting was held June 24 in Gainesville, Florida.
— U.S. Surface Transportation Board (STB) called on CSX Corp. to fix the “very serious” service problems that have hit freight rail shippers. The STB Board on Thursday wrote to CSX’s chief executive, Hunter Harrison, asking that the company set up weekly calls with it to discuss performance issues and how they are being resolved. “We are very troubled by the apparent lack of communication with customers and urge your immediate attention to remedy this situation,” the regulator’s three board members wrote. A CSX spokesman said the company will provide the information requested and “will respond fully and factually to the STB complaint.” According to the letter, shippers have complained of longer and unpredictable transit times, railcars sitting in yards for days at a time and “inconsistent and unreliable” operations since Mr. Harrison began implementing his changes.
— Republican leaders abandoned the idea of a border adjustment tax, as part of an effort to present a united front for a broad tax overhaul. “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it,” Steven Mnuchin, Paul Ryan and Mitch McConnell said in a statement.
