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Climate Regulation; WTO Cotton Case; and Doha
Climate Regulation
Recall that Jennifer A. Dlouhy reported earlier this week in the San Francisco Chronicle that, “Carbon dioxide will soon be declared a dangerous pollutant – a move that could help propel slow-moving climate-change legislation on Capitol Hill, the head of the Environmental Protection Agency said Monday.
“EPA Administrator Lisa Jackson told reporters that a formal ‘endangerment finding,’ which would trigger federal regulations on greenhouse gas emissions, probably would ‘happen in the next months.’”
The Chronicle article explained that, “The EPA kick-started the regulatory process in April when it proposed declaring carbon dioxide and five other greenhouse gases as pollutants that jeopardize the public health and welfare. EPA scientists believe the greenhouse gases contribute to global warming by trapping heat in the Earth’s atmosphere.
“The EPA can formalize the finding anytime, now that it has closed a 60-day public comment period that netted more than 300,000 responses.
“A formal endangerment finding would obligate the agency to regulate greenhouse gas pollution under the Clean Air Act – even if Congress doesn’t pass a final climate-change bill.”
Similarly, an item posted recently at FoxNews.com noted that, “In April, the EPA released its proposed finding that man-made pollution is a cause of global warming, triggering a 60-day comment period before the agency issues a final decision.
“The finding was prompted by a Supreme Court ruling two years ago that said greenhouse gases are pollutants under the Clean Air Act and must be regulated if found to be a human health danger.”
The FoxNews article added that, “Congressional aides, however, say the EPA likely will issue its final ruling [in September] when Congress reconvenes and its first proposal will be to blame auto vehicles for the emissions.”
“President Obama has said he prefers that Congress act to pass the legislation rather than address climate change through administrative action. He said he wants a bill that utilizes market-based solutions to reduce carbon pollution and transition to a clean energy economy that creates millions of green jobs. The EPA is unable to use market solutions and lacks the authority to tax,” the article noted.
With this background in mind, an update posted yesterday at the National Corn Growers Association (NCGA) Online stated that, “Earlier this week, the U. S. Environmental Protection Agency sent a draft rule to the White House that would establish strict greenhouse gas emissions permitting requirements for entities that emit 25,000 tons per year. The National Corn Growers Association is committed to working for regulations that do not harm farmers and target American agriculture.
“The EPA’s proposed regulation will cover approximately 13,000 facilities and around 85 percent of all U.S. emissions. It is likely not to include an exemption for agriculture, which was a high priority for NCGA in the Waxman-Markey bill.”
The NCGA item added that, “‘Now that both Congress and the EPA have GHG emissions reductions proposals, NCGA will work on both fronts to minimize the impact to growers,’ NCGA President Bob Dickey said. ‘We will consider all options to ensure the best possible outcome for our members.’
“While the Senate debates the climate change legislation that was passed by the House of Representatives in June, the EPA proceeded with the rule as the outcome of the current legislation is uncertain.
“One major difference between the draft rule and the legislation is that the rule is not likely to include an environment for farmers to trade or sell offsets on a carbon market.”
As executive branch action regarding climate regulation moves forward, political observers note that climate momentum in the Senate has been stymied by the debate over health care legislation.
Peter Brown indicated yesterday at the Capital Journal Blog (The Wall Street Journal) that, “The health care fight is the center of attention as Congress and the president return to the fray. One casualty appears likely to be the climate change legislation that narrowly passed the House of Representatives this spring.
“Its fate in the Senate was always dicey, to be sure. But the extreme polarization shaping up on Capitol Hill over health care makes it even less likely that the climate bill can corral the necessary support in the Senate, where only 41 of the 100 senators can stop a bill in its track with a filibuster.”
Mr. Brown added that, “Senate consideration of the legislation had been scheduled for mid-September in one Senate committee. But it was postponed this week until the end of the month, and who knows when it will actually go before the full panel, much less get to the Senate floor.
“Supporters are trying to push through the legislation before global-climate change talks convene again in December, this time in Copenhagen.”
In a related article, Jonathan Martin reported yesterday at Politico.com that, “With hope for Senate action on the energy bill dimming, advocates are aiming to prod reluctant senators with a new survey taken in swing states showing strong support for the legislation.
“In a poll obtained by POLITICO of likely 2010 voters in 16 states, many of them home to targeted senators, 63 percent of those sampled said they supported the energy bill while only 30 percent said they opposed the measure.”
One of the states in which the poll was conducted was Arkansas, home of Democrat Senator Blanche Lincoln, who is up for reelection in 2010. In a potential signal of how Sen. Lincoln is preparing to vote on key legislative issues, David M. Drucker reported yesterday at Roll Call Online that, “Sen. Blanche Lincoln (D-Ark.), still facing the prospect of a tough re-election in 2010, has reversed her position on the public insurance option, saying Tuesday she will oppose the measure as a part of health care reform after previously expressing support for the policy, the Arkansas News reported.
“Lincoln’s vote on a health care reform bill could be key as the Senate Democratic leadership looks to build a coalition of 60 Senators to pass legislation without using reconciliation. Reconciliation is a budgetary tool that would allow Democrats to clear a bill with just 51 votes.”
And with respect to the prospect of Sen. Lincoln making her way to the chairmanship of the Senate Agriculture Committee, which would require a domino effect in committee chairmanship changes predicated on a decision by Sen. Chris Dodd (D-Conn.) and whether he decides to take over chairmanship of the Senate Health, Education, Labor and Pensions Committee (HELP), Roll Call writer John Stanton reported yesterday that, “As the next in seniority on HELP, Dodd is widely expected to formally assume the chairmanship from [Ted Kennedy], his longtime friend.”
However, the article added that, “But one source familiar with Dodd’s deliberations said that it is still too soon to say whether he will choose to switch committees. According to this source, Dodd is undecided, and he is discussing the situation with his closest advisers and colleagues.
“This source speculated that Dodd may wait until Tuesday when the Senate reconvenes to make any announcement.”
Yesterday’s Roll Call article pointed out that, “Dodd, who faces the race of his career when he’s up for re-election in 2010, has remained mum on his plans, and Senate Democratic aides said he has not informed leadership of his next move. Nevertheless, Senate Majority Leader Harry Reid (D-Nev.) this week told the Reno Gazette-Journal that he expects Dodd to take over HELP.”
If Sen. Dodd took over as chairman of the HELP committee, then Iowa Senator Tom Harkin would then likely remain the Chairman of the Senate Agriculture Committee.
Meanwhile, the Senate Agriculture Committee announced yesterday that it would be holding a second hearing on climate legislation on September 9. The Committee’s first hearing on the issue took place back in July.
In a different angle regarding potential climate legislation, a debate over job creation, Jim Snyder reported yesterday at The Hill Online that, “The Energy Department fired back at a Spanish university study that found government subsidies to support renewable energy development in that country actually cost jobs.
“The National Renewable Energy Laboratory said the report from King Juan Carlos University in Madrid uses flawed methodologies and fails to account for the export potential of new green technologies and other positive economic impacts of government renewable-energy subsidies.”
Yesterday’s Hill article explained that, “The debate over jobs has emerged as a critical component in the larger fight over the climate bill. Critics of the cap-and-trade proposal have used the report from King Juan Carlos University to attack the administration’s contention that the legislation will not only protect the environment but will boost the economy and create thousands of new green jobs.”
In more specific news regarding climate change and agriculture, DTN writer Susanne Stahl reported yesterday that, “Overall, [methane] digester economics are challenging. The systems are expensive – [Wisconsin dairyman Gary Boyke's] cost $1.3 million — and come with added labor and maintenance costs, all of which limit their application. But climate legislation could help mitigate that.
“Digesters capture methane gas from decomposing waste — such as livestock manure — that can then be burned to produce electricity or heat, and because one ton of methane is equivalent to 25 tons of carbon dioxide, digesters could be worth far more than other ag offsets in a cap-and-trade program.
“Carbon credits on the Chicago Climate Exchange, one of the primary voluntary carbon markets, are trading well under 50 cents per ton of CO2. Prices on other carbon markets range from $6 to $10, brokers say, and that’s just a fraction of the $15 to $30 per ton of CO2 they could trade for once Congress mandates limits on greenhouse gas emissions.”
The DTN article indicated that, “‘When we talk about cap-and-trade legislation, we think of a methane digester (as) the golden offset,’ said Mary Knigge, manager of government relations and trade for the National Milk Producers Federation.
“‘It’s a proven technology. We absolutely know that it destroys methane,’ she said. And it’s permanent. ‘Once those gases are destroyed in a methane digester, they’re never coming back.’”
And from an international perspective on the climate issue, David Barboza reported in today’s New York Times that, “The United States’ new ambassador to China, Jon M. Huntsman Jr., on Wednesday laid out a vision of close engagement with China on a broad range of issues, including regional stability and the environment, and said that human rights must continue to be a major part of bilateral talks.
“In addition to working with China on security issues — including its role in dealing with challenges in Afghanistan, Iran, Pakistan and North Korea — he said discussing climate change and the environment would be important parts of his efforts here, because, ‘In today’s world, we’re all downstream.’”
And an update posted yesterday at the Environmental Capital Blog (The Wall Street Journal) noted that, “In his ‘first sit-down interview with Western media’ since arriving in China in August, Jon Hunstman, Jr. told our own Ian Johnson that President Obama gave him a very clear—and green—remit: ‘Before setting out for China, Mr. Huntsman said, Mr. Obama told him to focus on a few big-picture issues: global economy, energy and climate change.’”
With respect to India, Krishna Pokharel reported today at The Wall Street Journal Online that, “India is digging in against legally binding caps on carbon emissions ahead of December’s climate-change talks with the U.S. and Europe in Copenhagen.
“On Wednesday, the Indian government released a report that showed the country’s per capita greenhouse-gas emissions — thought to be the cause behind global warming — will be lower over the next two decades than the global per capita emissions in 2005. These levels will also remain lower than those of Western countries for about the same period, the report said.
“The findings aim to rebut concerns that India’s quest to become a global economic power will transform it into a leading emitter of greenhouse gases. Still largely agrarian and poor, India has bristled at suggestions from industrialized countries, such as the U.S., that it should do more to cap emissions even if it means curbing growth.”
WTO Cotton Case
David Bennett noted yesterday at the Delta Farm Press Online that, “Following a lengthy dispute, the WTO Arbitration Panel has issued a ruling in favor of Brazilian claims that U.S. government payments to cotton farmers have been excessive.
“As compensation, Brazil is able to immediately impose $295 million in sanctions on U.S. imports with the possibility for even more. The amount is the second-largest ever allowed by the WTO.”
The article indicated that, “The American Farm Bureau Federation ‘is disappointed the WTO found in Brazil’s favor,’ said Bob Young, AFBF chief economist, during an interview with Southeast Farm Press on Sept. 1. ‘When you look at the markets today — who is increasing cotton acreage, who is decreasing — we have a problem with the fundamental premise that the United States was at fault.’
“Iowa Sen. Tom Harkin, chairman of the Senate Agriculture Committee, said the ‘decision obviously sets up a new challenge for the United States in carrying out our farm programs. …The WTO continued certain errors in interpreting the U.S. cotton program and world cotton markets. Still, the decision is final and we must now find a practical way to deal with it. That is why it would have been preferable to settle these trade disputes through careful negotiations rather than WTO litigation, and it is unfortunate that the matter has had to come to this point.’
“Brazil’s ‘new ability to infringe on intellectual property rights has the potential to impose significant costs on the United States’ economy,’ continued Harkin. ‘Additionally, today’s ruling is flawed because the case record is established based on how the program impacted the cotton market between 1996 and 2002, when the United States’ cotton programs were much larger. This compensation does not accurately reflect what is happening in the world cotton market today.’”
A news release posted yesterday by the National Cotton Council stated in part that, “In response to the WTO Arbitration Panel decision on the USDA export credit guarantee (‘GSM-102’) program released August 31, the North American Export Grain Association, National Cotton Council, CoBank, Farm Credit Council, US Rice Producers Association, and National Council of Farmer Cooperatives released the following statement:
“We are very disappointed that the panel based its decision on the GSM program as it existed in 2005, and failed to recognize the significant changes that have been made to the GSM-102 program since 2005. As a result, we urge the U.S. government to request a new Compliance Panel to update this ruling to reflect the changes in the program made by Congress and the USDA since 2005.
“The extent of the program changes is demonstrated in the President’s budget for fiscal year 2010. According to the U.S. Office of Management and Budget, in 2010 the GSM program will generate a positive return to the federal government of $54 million. In other words, the revenues from guarantee premiums charged to program participants more than offset the cost of program operations, including any credit losses. Under the WTO panel’s obsolete ruling, Brazil would be entitled to place tariffs or other import penalties on an amount of U.S. products based on the use, each year in the future, of a program that is clearly not a subsidy.”
Yesterday’s release added that, “The WTO panel also failed to recognize the benefits that have accrued to Brazil’s banks as a result of their significant participation in the GSM-102 program. These benefits far outweigh the costs arrived at by the arbitration panel. Ironically, Brazil’s banks have been by far the largest users of the GSM-102 program since 2002 – the year in which Brazil initiated its WTO case against the United States. Since that time, Brazilian banks have taken more than $5.4 BILLION in loans under the GSM-102 program.
“On July 1, 2005, USDA adopted measures to bring its three export credit guarantee programs into compliance with WTO obligations. USDA adopted risk-based guarantee premiums for the GSM-102 Program and the Supplier Credit Guarantee Program and suspended the GSM-103 program.
“The U.S. Congress made these changes permanent by enacting them into law as part of the 2008 Farm Bill. As part of that bill, Congress eliminated the GSM-103 program and abolished the statutory one percent ‘cap’ on guarantee premiums that could be charged by USDA. Congress also eliminated the Supplier Credit Guarantee Program, leaving GSM-102 as the sole remaining USDA export credit guarantee program. In addition, Congress included language in the Farm Bill requiring USDA to operate the GSM-102 program at no net cost to the government, thereby ensuring that the program would not be a subsidy and would comply with the WTO obligation that guarantee premiums received under the program would cover its operating costs and losses.”
The “Washington Insider” section of DTN noted in part yesterday (link requires subscription) that, “So, the cotton case continues to pose policy problems for the United States. The industry is under severe economic pressure, both from foreign producers of cotton and textiles, but also from competition from corn and soybeans for production acreage. Still, cotton programs have always had strong political support and Congress is unlikely to be eager to further modify cotton programs at a time of severe industry stress.
“Nevertheless, U.S. trading partners obviously smell blood in this case and can be expected to argue that the United States must change its programs to comply with WTO rules and has not done so. In the United States, however, trade and agricultural policies both appear to be very low priority issues for the administration and Congress, so observers expect no sweeping changes to U.S. cotton programs, or to other programs that could come under the spotlight as a result of the cotton case.
“Still, U.S. reaction to this case obviously weakens its ability to exercise effective leadership in the Doha Round effort to reduce trade barriers, a development that is bad news for the revitalization and completion of the Round which is now being discussed and for U.S. meats and other high value exports which still face significant tariffs, Washington Insider believes.”
Doha
Stephen Castle and Vikas Bajaj reported in today’s New York Times that, “As stalled global trade talks resume Thursday, the world will look to the two countries most responsible for their acrimonious collapse last year — the United States and India — to lead negotiators in striking a deal that is palatable to both developed and developing countries.
“While there are signs that the host of this week’s session, India, has become more willing to bargain, negotiators are still trying to determine whether the administration of President Barack Obama is even paying attention yet.
“Two days of talks are not expected to produce a breakthrough, and even the optimistic forecast for the long-running negotiations, known as the Doha Development Round, does not foresee any agreement until the end of next year.”
The Times article stated that, “While acknowledging that India still had its problems, [Catherine Ashton, the European trade commissioner] highlighted the difficulties facing Ron Kirk, the new U.S. trade representative.
“‘We all know Ron has very little domestic lobby support for the Doha round,’ she said. ‘There is a sense in which this belonged to the previous administration, and there is not a strong lobby in favor.’
“What was needed, she said, was an ‘Obamaization’ of Doha — ‘making it feel that this is a deal that this administration and this president feels comfortable with.’
“In Europe, policy makers fret that trade is low on the agenda of an administration that is expending political capital on other fronts.
“‘The big issues,’ Ms. Ashton said, ‘are health care and climate change. It is hard when you have big issues domestically to add in more issues.’”
The article noted that, “‘I don’t see that the Obama administration has the energy at this time or the political interest at this time in pushing a trade agenda, when they need it on health care,’ said Gary Clyde Hufbauer, a fellow at the Peterson Institute for International Economics in Washington.”
John W. Miller and Peter Fritsch reported in today’s Wall Street Journal that, “The Obama administration’s first formal meeting with the world’s trade ministers is likely to underscore how the U.S.’s reticence to pursue a free-trade agenda in the face of domestic opposition has become the main obstacle to moving forward on global trade talks.
“The talks Thursday and Friday in New Delhi between officials from 36 countries, including U.S. Trade Representative Ron Kirk, are the first since a summit in Geneva in July 2008 failed to kick-start global trade talks.”
The Journal article added that, “Few, however, expect substantive progress on Doha at this week’s gathering. So far, the Obama administration has been ambivalent about trade, say trade officials and analysts. As a candidate, Barack Obama walked a fine line between protectionism and free-market ideology. Yet he hasn’t proceeded with free-trade agreements in the works with South Korea, Panama and Colombia and has been largely silent on Canadian and Mexican complaints of protectionism.”
Keith Good
