News

U.S.-China trade talks

Chinese officials are in Washington this week as trade talks continue between the two countries. On Tuesday, Chinese Vice Premier Liu He arrived in Washington to meet with U.S. Trade Representative Robert Lighthizer. Mr. He is also expected to meet with President Trump on Thursday. Trade discussions will include the ongoing tariffs and in place by both countries, as well as Chinese intellectual property rights and forced technology transfer policies. Reports indicate that U.S. and China officials are negotiating a meeting on trade between President Trump and Chinese President Xi Jinping later this year.

Venezuela Sanctions

On January 28, 2019 the U.S. Treasury’s Office of Foreign Asset Control announced sanctions against Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s state-owned oil company, pursuant to Executive Order (EO) 13850. The purpose of the EO 13850 is to target rampant corruption within the Venezuelan government, which according to the US government has exacerbated “the economic and humanitarian crises afflicting the Venezuelan people.”

As a result, US persons are now broadly prohibited from engaging in transactions with PDVSA, including its majority-owned subsidiaries. Previously, PDVSA had only been subject to limited sanctions imposing restrictions on certain debt and equity transactions.

In light of the impact the blacklisting of an entity such as PDVSA would have on the United States and beyond, OFAC rolled out a slew of general licenses (summarized below) authorizing US persons to engage in certain transactions involving PDVSA and its majority-owned subsidiaries – two of which PDV Holding, Inc. (PDVH) and CITGO Holding Inc. (CITGO) are US entities.

ATP Awards

On January 31, U.S. Secretary of Agriculture Sonny Perdue announced $200 million worth funding to 57 organizations as part of the USDA’s Agricultural Trade Promotion (ATP) program. The program is intended to help U.S. farmers and ranchers identify and access new export markets. The program was authorized by President Donald Trump as part of a $12 billion assistance package to mitigate the adverse effects of trade retaliation. A list of organizations that received money under the ATP can be found here. More information on the program can be found here.

EU Negotiating Objectives

On January 18, the European Commission released its draft negotiating objectives for upcoming trade negotiations with the United States. In a statement, EU Commissioner for Trade Cecilia Malmström said: "Today's publication of our draft negotiating directives is part of the implementation of the July joint statement of Presidents Juncker and Trump. Ambassador Lighthizer and I have already met several times in the Executive Working Group and I have made it very clear that the EU is committed to upholding its side of the agreement reached by the two Presidents. These two proposed negotiating directives will enable the Commission to work on removing tariffs and non-tariff barriers to transatlantic trade in industrial goods, key goals of the July Joint Statement."

The negotiating objectives cover two potential agreements with the U.S:

  • A trade agreement strictly focused on the removal of tariffs on industrial goods, excluding agricultural products;
  • A second agreement, on conformity assessment, that would help address the objective of removing non-tariff barriers, by making it easier for companies to prove their products meet technical requirements on both sides of the Atlantic.

Condolences

We extend our sincere  U.S. Ambassador Gregg Doud, Chief Agricultural Negotiator in the Office of the United States Trade Representative, and his family on the death of his mother, JoAnn Doud.a tragic fall at the Doud family farm in of the

U.S. Government Shutdown and Export Sales Reporting

Today marks the 20th day of the partial U.S. government shutdown, one day shy of the longest shutdown in Congressional history.

Many U.S. government personnel have been furloughed until government appropriations are restored. This includes much of the U.S. Department of Agriculture, including FAS and ERS offices.  

Some agencies, and thus the employees working in them, are “exempt” from a shutdown because they do not get their funding through the congressional appropriations process. Other agencies, or parts of them, also have funding not subject to annual appropriations – for example, through fees they charge for their services, or from trust funds or multi-year budgets. Employees whose salaries are funded in that way would continue working, and getting paid, as normal.  For example, export grain grading by USDA FGIS is exempt but some of the work – like grain appeals at the National Grain Center in Kansas City and FGIS international services is not exempt.

For employees whose salaries are paid from appropriations, there is another distinction: “excepted” vs. “non-excepted” (not “essential” vs. “non-essential,” which are the more commonly used, but not official, terms).

Excepted employees are those whose jobs involve the safety of human life, the protection of property, or certain other types of work designated by their agencies as necessary to continue. These are not necessarily the same as “emergency” employees who are expected to continue coming to work when agencies close for other reasons, such as for severe weather.

Excepted employees are to continue reporting for work as normal during a shutdown, though for the meantime they would not be paid for that time. Because agencies are required to pay for services performed, those employees are guaranteed to be paid after Congress passes – and the president signs – a new appropriation or continuing resolution. Exactly when they would be paid would depend on the timing of the new spending authority and the payroll cycle the agency uses.

Employees who are neither “exempt” nor “excepted” are put on unpaid furlough. They are to perform what guidance calls “minimal activities as necessary to execute an orderly suspension of agency operations related to non-excepted activities.” That typically is to last about a half-day on their first scheduled workday after a shutdown begins. They then are to leave the workplace and they are not to work while on furlough, even on a volunteer basis.

The Federal Grain Inspection Service, according to its agency shutdown plan, will continue to provide all grain and related commodity inspection and weighing program activities supported by user fees authorized by the U. S. Grain Standards Act (USGSA) and the Agricultural Marketing Act of 1946. Local managers of the Federal Grain Inspection Service (FGIS) will evaluate service requests and, with approval from FGIS’ Field Management Division (FMD) Director, assign employees to revenue generating functions.

During the partial shut down, exporters are reminded to continue to report sales as required: https://www.fas.usda.gov/programs/export-sales-reporting-program. FAS Administrator Ken Isley, who is one of the essential employees and working, indicated this week that that public export sales report (https://apps.fas.usda.gov/export-sales/esrd1.html) will resume once appropriations are restored and FAS will try to provide for missing reports on the same weekly basis in retrospect.  

Please contact us if you have any questions.  

AMS Fee Reduction

Effective January 1, 2019, the Federal Grain Inspection Service (FGIS) reduced inspection and weighing service fees by five percent since FGIS’ operating reserve exceeds 4 ½ months of operating expenses.  FGIS also reviewed tonnage fees and the tonnage fees were adjusted to reflect fiscal year 2018 costs and a five-year average of export tons.  The national tonnage fee is the national program administrative costs for the previous fiscal year divided by the avg. yearly million metric tons (mmt) of exported grain.  For 2019, FGIS is reporting that the National Tonnage fee has increased by $.05, or is 8% higher than 2018.  In comparison, the base fee decreased by almost 10% in 2018. As a result of the national tonnage fee increase, the local New Orleans tonnage fee will increase by $.001 for 2019. The League City fees will increase by $.013, the Toledo local tonnage fees will decrease by $.005, and the Portland local fee will decrease by $.003.

USJTA Negotiating Objectives

On Friday, December 22 the U.S. Trade Representative released its negotiating objectives for the upcoming U.S.-Japan Trade Agreement talks. The negotiating objectives are mandated by Congress under the Trade Promotion Authority legislation and kick off a 30 day countdown before formal negotiations can begin. The objectives call for “secure comprehensive market access for U.S. agricultural goods in Japan by reducing or eliminating tariffs” and for the reduction of non-tariff barriers that discriminate against U.S. products.

A copy of the objectives can be found here.

CBP Blockchain

According to a statement by U.S. Customs and Border Protection (CBP), CBP is preparing to test several new use cases for blockchain in the trade compliance environment, including verifying the origin of certain raw material imports, verifying the composition of liquids imported via pipeline under free trade agreements and a potential joint test with the U.S. Postal Service. Following these tests, CBP will present the results of the use cases to the Commercial Customs Operations Advisory Committee (COAC), after which the agency hopes the private sector provides their thoughts.

Gene Editing Communication

On Wednesday, November 7 the Center for Food Integrity announced the release of a new gene editing communication resource titled Gene Editing: Engage in the Conversation. The resource is a comprehensive guide to engagement meant to answer consumers questions about new gene editing technologies to support an informed dialogue on gene editing in food production

A copy of the guide can be found here.