Bill Huffman
Director - Governmental Affairs

The Friday Report

August 1, 2008

Congress left Washington, D.C. today for their 5-week August recess. They will return to session after Labor Day.

Agriculture Appropriations

Both the Senate and the House Agricultural Appropriations Committees completed their work on FY 2009 agriculture appropriations to fund farm and other programs for the next fiscal year beginning October 1. Unfortunately, the entire appropriations process at the floor level has come to a halt over the issue of off-shore oil drilling. The Republican’s are adamant that they want to amend into one of the appropriations bill legislation that would permit new off-shore oil drilling in the Gulf of Mexico, on the East and West Coasts and in the Artic National Wildlife Refuge in Alaska. The Democratic leadership is adamantly opposed to expanding off-shore drilling and the issue has become a political issue in this election year.

Most Washington, D.C. observers believe Congress will ultimately pass an Omnibus appropriations bill late in this session as a catch all for all of the appropriation bills that are caught up in this political battle.

For certain, nothing will happen now until Congress returns to session after Labor Day.

DOHA Discussions Collapse

The U.S. rice industry and other major farm commodity groups have been carefully watching the trade discussions in the DOHA round of talks for the past three years. Fearing that the Bush Administration might arbitrarily offer to severely reduce agricultural subsidies and import duties as demanded by Brazil, Argentina and a number of other developing countries, there is no need to worry any further.

The DOHA round of trade talks collapsed this week because of a key disagreement centered on measures to protect farmers in developing countries from surging imports. China and India demanded a “safeguard” clause that would allow them to raise tariff on key crops such as cotton, sugar and rice if there were a sudden surge in imports. The U.S. and the trade officials from China and India could not agree on where to set the threshold for any import surge that would trigger the clause.

Even though U.S. Trade Representative Susan Schwab offered to further lower U.S. agricultural subsidies to $15 billion from the previous offer of $17 billion, that was not enough to get a trade deal done. In the end, China and India were the two countries that effectively brought the talks to a collapse.

WTO Director-General Pascal Lamy said he would “wait for the dust to settle” before deciding how to proceed. European Trade Commissioner Peter Mandelson said that in his opinion there was little hope of bringing the DOHA talks back to life anytime soon.

U.S. Trade Representative Susan Schwab said that “we were so close to getting this done” and she emphasized the Bush Administration remains committed to the DOHA round.

We will just have to wait and see if any new efforts are made to resume the negotiations.

Prepared by Bill Huffman