The Crush - January 2019 - 5

[ FEDERAL FOCUS ]

Farm Bill, USDA Activities Impacted by Shutdown
OTHER KEY FEDERAL ISSUES: TRADE, WILDFIRE AID, SUBSTITUTION DRAWBACK PROGRAM
FARM BILL SIGNED INTO LAW
President Trump on Dec. 20 held a signing ceremony for the farm
bill (H.R. 2 - Agriculture Improvement Act of 2018). It was the
first time since 1990 that a farm bill was enacted the same year
it was introduced. Among those joining Trump at the ceremony
were House and Senate Agriculture Committee leaders and
USDA Secretary Sonny Perdue. "[It's] a big deal for agriculture, a
big deal for the U.S. economy, ag economy, for food security and
national security," Perdue said. "The bill bolsters farm safety net
programs, protects federal crop insurance, and maintains strong
rural development and research initiatives."
FARM BILL, USDA IMPACTED BY GOVERNMENT
SHUTDOWN
The celebration ended soon after the signing due to the partial
government shutdown, which has slowed down USDA's
implementation of the farm bill. The shutdown has impacted
many other USDA activities; the agency issued updates (www.
usda.gov/media/press-releases) about how the lapse in
federal funding will affect services, programs and employees.
In addition, all USDA agencies developed procedures and
contingency plans (www.usda.gov/shutdownplans).
116TH CONGRESS BEGAN ON JAN. 3
➤TRADE: Cornerstone Government Affairs reports that
trade will be a significant issue for agriculture this year. The
U.S.-Mexico-Canada (USMCA) trade agreement will need
to be approved by Congress. Before that happens, the U.S.
International Trade Commission will need to deliver its report
to Congress on the economic impact of the new agreement; the
deadline is March 15. Congressional action is likely to begin
around then unless the U.S. Trade Representative (USTR)
needs to renegotiate parts of the deal to accommodate House
Democrats' concerns. If USTR does not need to renegotiate, the
committees could vote sometime in the spring. Also, the United
States will be negotiating a trade deal with the European Union
(EU). Although the EU has said agriculture will not be part of
the discussion, there could be a strong push from Congress to
include agriculture.
➤DISASTER AID PACKAGE: The 116th Congress also plans
to pass a disaster relief bill, as billions are needed for recovery
from natural disasters. However, disaster aid for wildfires and
hurricanes would be handled separately from appropriations
bills.

➤NEW LEADERSHIP: With Democrats now in control of the
House, the new chair of the House Agriculture Committee is
Collin Peterson (D-Minn.), who was most recently the ranking
member. He has been a member of the committee since entering
Congress in 1991. Peterson previously served as chair in the
110th and 111th Congresses and as ranking member in the 109th
Congress.
SUBSTITUTION DRAWBACK
FINAL RULE
On Dec. 18, the U.S. Treasury
and Customs and Border
Protection (CBP) published
a final rule in the Federal
Register that substantially
restricts the substitution
drawback program, sometimes
referred to as "duty drawback"
or "double drawback."
CAWG has a history of interest in the substitution drawback
program. Supporters of the program contend substitution
drawback is a subsidy that promotes wine exports. Critics of the
program contend the drawback program allows imported wine
into the U.S. without having to pay alcohol excise taxes, putting
domestically produced wine at a competitive disadvantage. The
reality is the substitution drawback program is complicated and
its effects on California winegrape growers is a mixed bag. The
program is neither exclusively a subsidy for imports nor exports,
but in fact is a subsidy program for wine industry enterprises
that both import and export wine.
In September 2018, CAWG submitted comments on CBP's
proposal to substantially restrict drawback subsidies. A key
flaw in the drawback subsidy program is the lack of data and
transparency. In written comments to CBP, CAWG stated: "The
lack of publicly available data on drawback subsidies claimed
on the basis of wine varietal (cabernet sauvignon, chardonnay,
merlot, sauvignon blanc, etc.), country of origin, destination
country, price point and dates make it impossible to accurately
assess which communities of growers are helped or hurt by this
program. This lack of transparency is highly problematic because
imported bulk wines compete with domestic growers of the same
wine varietals." View comments at www.cawg.org - news tab.

JANUARY 2019 / 5
http://www.usda.gov/media/press-releases http://www.usda.gov/media/press-releases http://www.usda.gov/shutdownplans https://www.cawg.org/Wine1/News/Shared_Content/News/Press_Releases.aspx?hkey=6384600d-7d6e-40e2-850b-1b4dd959cfe8
The Crush - January 2019

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