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FRIDAY, AUGUST 17, 2018
Click HERE for Wednesday's exchange between Sen. Schatz and Amb. Lighthizer.
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RETALIATION: THE TARGETED, THE $12 BILLION, AND THE CHALLENGE
"We can't be in a position where China has the on-off switch on whether we do things that are in our national interest by being able to unfairly attack various constituents."
Ambassador Robert Lighthizer
July 26, 2018
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Two days before USTR
Robert Lighthizer testified at a subcommittee of the Senate Appropriations Committee, Secretary of Agriculture
Sonny Perdue told reporters the Administration is prepared to provide up to $12 billion in support for farmers who have been hurt by retaliation from China and other countries. That was on July 24th. When the Subcommittee on Commerce, Justice, Science, and Related Agencies convened on July 26, members were well aware of the announcement. Several raised it. For us, the two most memorable exchanges on the issue were those Ambassador Lighthizer had first with Senator
Jeanne Shaheen, a Democrat from New Hampshire and the Ranking Member of the Subcommittee, and with Senator
Lisa Murkowski, a Republican from Alaska.
Both asked about the scope of the program and whether their constituents would be eligible for any of that $12 billion. Today's featured quote was part of the ensuing dialogue, and we shall turn to that in a moment. First, though, a word about the program at issue. This paragraph from an article in Successful Farming seems to sum it up:
Payments will be made to soybean, sorghum, corn, wheat, cotton, dairy and hog farmers. The USDA will purchase food for donation to charity to help fruit, nut, rice, legume, beef, pork, and milk producers. It also will provide funds to outside organizations to build overseas markets for U.S. food and ag exports. The money for the program will come from, as it is known, 'USDA's bank,' the Commodity Credit Corporation, created during the Depression era and given broad power to support farm income and commodity prices.
Our understanding is that the funds from this new program will begin flowing right after Labor Day, which could mean as early as Tuesday, September 4. Agriculture Secretary Perdue has been clear that this is a temporary program, geared to offset the roughly $11 billion in harm that U.S. agriculture is facing as a result of retaliation by China and other countries. When Secretary Perdue talked about the program in his July 25 speech to the Ag Transportation Summit, his message was not only to American farmers - hold on - but to foreign trading partners. "I hope," he said, "
this is a clear signal that China cannot bully our farmers in order to coerce Americans [in to] caving in politically."
It was against that background that Ambassador Lighthizer was quizzed about the program by Senators Shaheen and Murkowski and others. Explicitly and implicitly, both of those senators suggested that the Administration was not treating their states' producers fairly. Senator Shaheen began with a question from one of her constituents. The owner of Moonlight Meadery in Londonderry, New Hampshire, had a question for the Administration, and Senator Shaheen put it to Ambassador Lighthizer.
SENATOR SHAHEEN:
He [the owner of Moonlight Meadery] said, "I'd like to ask them what the plan is? I'd like to ask them, why are they asking small businesses to bear the brunt of this policy? It doesn't seem fair."
Senator Shaheen continued:
So, you have, the Administration has proposed $12 billion in aid to farmers who are being hurt by this policy. Are you talking about aid for small businesses like those in New Hampshire who are being hurt by this policy? And how do you distinguish between the two [famers and others]?
In his response, Ambassador Lighthizer emphasized that the fundamental unfairness did not begin with the Administration's actions against China but with China's actions against U.S. producers over a long period.
AMB. LIGHTHIZER said:
There are an awful lot of people that are facing unfair trade, and their own businesses are suffering from it. But it's kind of been like the status quo so they haven't really focused on it.
It is the view of the Administration that agriculture has been particularly targeted by retaliation as a result of the kinds of actions we're doing to try to level the playing field. And, therefore, the President [and] the Secretary of Agriculture put in place this program.
If those were the themes of Senator Shaheen's questioning of the U.S. Trade Representative, this was the coda.
SEN. SHAHEEN:
So, you're not contemplating that kind of assistance for other small businesses that are being hurt by this trade war.
AMB. LIGHTHIZER:
Not at this time, no.
A HIT TO ALASKA'S SEAFOOD
At the end of June, China announced a 25 percent tariff on U.S. seafood exported to China for consumption in China. That has hit Alaska hard. The state sells a lot of seafood to China. In her exchange with Amb. Lighthizer, Senator Murkowski explained that China bought 40 percent of Alaska's salmon harvest in 2017 and 54 percent of its cod harvest. So China's 25 percent retaliatory tariffs hurt. So too does the 10 percent tariff that the U.S. has slapped on seafood imports from China, because much of that is from fish caught in Alaska but shipped to China for processing and sent back. The U.S. tariff, Senator Murkowski said, "is in effect imposing a ten percent tax on our own seafood, which is just a tough one to reconcile.
Then she too pressed Ambassador Lighthizer on the $12 billion and the question, who will be eligible?
SENATOR MURKOWSKI
I look at that, and I don't see that there would be any allowance for fishermen. We call them 'farmers of the sea," but apparently that doesn't seem to fit with your definition.
Don't get me wrong. Alaskans are not necessarily looking for or supporting what they consider to be this bailout. But they are interested in knowing, would this encompass them as well because of the impacts they have seen?
Then she made a telling point
Some of these existing funds, for instance in the purchase and distribution program, have been used in the past to actually help Alaska purchase [product] that is then donated. So we benefit from that. So, if you are taking from this program to allow for benefits that would go exclusively to the traditional agricultural sector, you're putting us at a further disadvantage. So, I'm just trying to get some clarity here.
The Senator more than had the Ambassador's attention. This is not a USTR program, but he promised to consult with the Department of Agriculture and get back to her.
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There are certain fixed patterns in the mind of your aging editor. One of them has to do with the difficult topic of fairness. Whenever it is raised, especially in situations like the one discussed above, he thinks back to John Kennedy's memorable press conference of March 21, 1962. Reservists had been called up in response to a crisis in Berlin and to the deteriorating situation in South East Asia. There had been some protests on bases, and a reporter asked the President about the situation. Part of his answer, the most famous part, was this:
There is always inequity in life. Some men are killed in a war, and some men are wounded. And some men never leave the country. And some men are stationed in the Antarctic and some are stationed in San Francisco. It's very hard in military or in personal life to assure complete equality. Life is unfair.
John F. Kennedy
We are not suggesting that the patent truth of President Kennedy's observation relieves the U.S. Government of its obligation to treat citizens fairly and equally to the maximum extent possible. It does not, but there are two other quotes that should be highlighted in this context. One is from the U.S. Constitution and is, indeed (and understandably), highlighted by the Senate Appropriations Committee on its website, namely this:
No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law ... .
That limitation isn't just important, it's the essence of parliamentary democracy. In the current circumstance, it connects two ideas. The first is this observation on the announcement by the Department of Agriculture.
AMB. LIGHTHIZER:
It's my understanding that they're using existing programs that have already been set up by the Congress; so that they're using existing authority, under existing law, and existing funds.
The second idea is easily stated but hard to execute. The current program may be too limited, and, if it is, it could be improved upon, but Congress would have to act. Congress makes the laws.
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At Senate Appropriations is a link to the page video recording of the hearing held on July 26 by the Subcommittee on Commerce, Justice, Science, and Related Agencies, which is chaired by Senator Jerry Moran (R-KS). This was the source for today's featured quote.
Program Elements is an article from Successful Farming with the descriptive paragraph on the $12 support program quote above.
A Perdue Explanation takes you to an article on Secretary Perdue's speech at the Ag Transportation Summit, including his comments on this new program for those harmed by retaliatory tariffs. This too is from Successful Farming.
Moonlight Meadery is a link to the website of this beverage company that featured so prominently in Senator Shaheen's comments at the July 26 hearing discussed above.
A Presidential Press Conference takes you to an MP3 of President Kennedy's press conference of March 21, 1962, a few lines of which are quoted above.
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©2018 The Global Business Dialogue, Inc.
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R. K. Morris, Editor
Joanne Thornton, Associate Editor
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