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Friday, October 28, 2011

Deregulating Genetically Engineered Alfalfa and Sugar Beets: Legal and Administrative Responses

Tadlock Cowan
Analyst in Natural Resources and Rural Development

Kristina Alexander
Legislative Attorney


Monsanto Corporation, the developer of herbicide-tolerant varieties of genetically engineered (GE) alfalfa and sugar beet (called Roundup Ready alfalfa and Roundup Ready sugar beet), petitioned USDA’s Animal and Plant Health Inspection Service (APHIS) for deregulation of the items. Deregulation of GE plants is the final step in the commercialization process. Monsanto filed a petition for deregulation of its GE alfalfa in 2004, and for GE sugar beets in 2005.

As part of the deregulation process, APHIS conducts an environmental review under the National Environmental Policy Act (NEPA) to determine whether any significant environmental impacts will result from deregulation. APHIS conducted a limited review, known as an environmental assessment (EA), of the GE plants to assess the impacts of growing them on a commercial scale. APHIS issued a “finding of no significant impact” (FONSI) for GE alfalfa and for GE sugar beet.

Lawsuits subsequently challenged the adequacy of the EAs in separate actions. Both courts held that APHIS should have prepared a more analytically thorough environmental impact statement (EIS) for the deregulation decisions. Separately, the courts directed APHIS to complete an EIS on the effects of deregulating GE alfalfa and GE sugar beet.

The court in the GE alfalfa case halted planting of the genetically modified seed, and nullified the deregulation. The injunction was appealed to the U.S. Supreme Court, which held that the injunction was too broad and that the court should have considered partial deregulation. The Supreme Court did not discuss the appropriateness of the environmental review. In the meantime, APHIS completed the environmental review directed by the lower court, releasing a final EIS for GE alfalfa on December 16, 2010. On January 27, 2011, Secretary Vilsack announced that APHIS was granting GE alfalfa full deregulation. Suit was filed claiming the deregulation violated NEPA and the Plant Protection Act.

The court in the GE sugar beet case did not formally prohibit planting sugar beet, but it voided APHIS’s deregulation decision in August 2010, undoing the five-year-old approval of GE sugar beet, from which nearly half of U.S. sugar is derived. APHIS issued four permits authorizing seedling production that would not allow flowering or transplanting without additional authorization. In November 2010, a judge ordered those seedlings pulled from the ground, holding that APHIS had violated NEPA in issuing the permits. The Ninth Circuit temporarily halted that decision in December 2010, ultimately holding in February 2011 that the seedlings did not have to be removed.

APHIS anticipates that an EIS for GE sugar beet will be completed in May 2012. In the interim, APHIS announced on February 4, 2011, that the agency would partially deregulate GE sugar beet root crop production, but continue full regulation for sugar beet seed crop production. That regulatory status will remain effective through December 31, 2012. An EA-FONSI was issued. Suits have been filed either challenging the EA or seeking to establish its legality.

The cases of GE alfalfa and sugar beet highlight continuing policy questions about the adequacy of APHIS’s deregulation protocol, particularly regarding the environmental review process. In their suits against APHIS, plaintiffs cited the EAs’ failure to assess the impact on non-GE alfalfa growers (particularly those who export to Japan, Korea, and Taiwan) and on producers of commercial table beet and chard seeds (species that can cross-pollinate with GE sugar beet).



Date of Report: October
18, 2011
Number of Pages:
18
Order Number: R
41395
Price: $29.95

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Garcia v. Vilsack: A Policy and Legal Analysis of a USDA Discrimination Case

Jody Feder
Legislative Attorney

Tadlock Cowan
Analyst in Natural Resources and Rural Development


The U.S. Department of Agriculture (USDA) has long been accused of unlawfully discriminating against minority and female farmers in the management of its various programs, particularly in its Farm Service Agency loan programs. While USDA has taken concrete steps to address these allegations of discrimination, the results of these efforts have been criticized by some. Meanwhile, some minority and female farmers who have alleged discrimination by USDA have filed various lawsuits under the Equal Credit Opportunity Act (ECOA) and the Administrative Procedure Act (APA). Pigford v. Glickman, filed on behalf of African-American farmers, is probably the most widely known, although Native American and female farmers also filed suit in Keepseagle v. Vilsack and Love v. Vilsack, respectively.

In addition, a group of Hispanic farmers filed a similar lawsuit against USDA in October 2000. The case, Garcia v. Vilsack, involved allegations that USDA unlawfully discriminated against all similarly situated Hispanic farmers with respect to credit transactions and disaster benefits in violation of the ECOA, which prohibits, among other things, race, color, and national origin discrimination against credit applicants. The suit further claimed that USDA violated the ECOA and the APA by systematically failing to investigate complaints of discrimination, as required by USDA regulations. After nearly a decade of litigation and numerous rulings on procedural and substantive issues, the Garcia plaintiffs exhausted their final avenue of appeal to have their claims heard as a class action. As a result, the Garcia plaintiffs who wish to pursue their available claims in court must do so individually, or they and other eligible Hispanic farmers may participate in a settlement process recently established by USDA.

In addition to an analysis of the Garcia lawsuit, this report also discusses several possible options for Congress to consider if it wishes to respond to the Garcia dispute.



Date of Report: October 17, 2011
Number of Pages:
18
Order Number: R
40988
Price: $29.95

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Monday, October 24, 2011

Trade Adjustment Assistance for Farmers


Remy Jurenas
Specialist in Agricultural Policy

The Trade Adjustment Assistance for Farmers (TAAF) program provides technical assistance and cash benefits to producers of agricultural commodities and fishermen who experience adverse economic impacts caused by increased imports. Congress first authorized this program in 2002, and made significant changes to it in the 2009 economic stimulus package (P.L. 111-5). The 2009 revisions were intended to make it easier for commodity producers and fishermen to qualify for program benefits. It also provided over $200 million in funding through year-end 2010. The 2010 omnibus trade measure (P.L. 111-344) temporarily extended the program through February 12, 2011, and authorized an additional $10.4 million.

The U.S. Department of Agriculture (USDA) is required to follow a two-step process in administering TAAF program benefits. First, a group of producers must be certified eligible to apply. Second, a producer in a certified group must meet specified requirements to be approved to receive technical assistance and cash payments.

To be certified, a group must show that imports were a significant cause for at least a 15% decline in one of the following factors: the price of the commodity, the quantity of the commodity produced, or the production value of the commodity.

Once a producer group is certified, an individual producer within that group must meet three requirements to be approved for program benefits. These include technical assistance with a training component, and financial assistance. A producer must show that (1) the commodity was produced in the current and also in one recent previous year; (2) the quantity of the commodity produced decreased compared to that in a previous year, or the price received for the commodity decreased compared to a preceding three-year average price; and (3) no benefits were received under any other trade adjustment assistance program. The training component is intended to help the producer become more competitive in producing the same or another commodity. Financial assistance (capped at $12,000 over a three-year period) is to be used by the producer to develop and implement a business adjustment plan designed to address the impact of import competition.

Since 2009, USDA has certified 10 of the 30 petitions filed by commodity groups and fishermen (e.g., producers of shrimp, catfish, asparagus, lobster, and wild blueberries). In FY2010, USDA approved about 4,500 agricultural producers who applied for training and cash assistance under three certifications. Under the seven FY2011 certified petitions, USDA approved about 5,700 producers. Program benefits in both years are expected to mostly flow to shrimp producers.

Because funding for all TAA programs expired on February 12, 2011, the 112th Congress continues to consider proposals for their future. A mid-February effort in the House to temporarily extend TAA authorities through mid-year 2011 become caught up in criticism of their rationale and calls by some Members to link a TAA extension to the Obama Administration committing to a timetable to submit the three pending free trade agreements (FTAs) to Congress for a vote. The Senate on September 22, 2011, approved an amendment to H.R. 2832 to reauthorize most TAA programs. Its language reflected the compromise worked out earlier between the House and Senate committee chairmen with jurisdiction on trade matters and the White House. The House is expected to consider this bill once a process to take up the FTAs is agreed upon with the White House. Among the compromise’s provisions, the TAA for Farmers program would be extended through December 2013 and be funded at an annual level of $90 million.



Date of Report: September 30, 2011
Number of Pages: 14
Order Number: R40206
Price: $29.95

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Monday, October 17, 2011

Brazil’s WTO Case Against the U.S. Cotton Program


Randy Schnepf
Specialist in Agricultural Policy

The so-called “Brazil cotton case” is a long-running World Trade Organization (WTO) dispute settlement case (DS267) initiated by Brazil—a major cotton export competitor—in 2002 against specific provisions of the U.S. cotton program. In September 2004, a WTO dispute settlement panel found that certain U.S. agricultural support payments and guarantees—including (1) payments to cotton producers under the marketing loan and counter-cyclical programs, and (2) export credit guarantees under the GSM-102 program—were inconsistent with WTO commitments. In 2005, the United States made several changes to both its cotton and GSM-102 programs in an attempt to bring them into compliance with WTO recommendations. However, Brazil argued that the U.S. response was inadequate. A WTO compliance panel ruled in favor of Brazil’s non-compliance charge against the United States in December 2007, and the ruling was upheld on appeal in June 2008.

In August 2009, a WTO arbitration panel—assigned to determine the appropriate level of retaliation—announced that Brazil’s trade countermeasures against U.S. goods and services could include two components: (1) a fixed amount of $147.3 million in response to U.S. cotton program payments, and (2) a variable amount based on U.S. GSM-102 program spending. In response to Brazil’s argument that insufficient trade in goods occurred between the two countries, the arbitrators also ruled that Brazil would be entitled to cross-retaliation if the overall retaliation amount exceeded a formula-based variable annual threshold. Cross-retaliation involves countermeasures in sectors outside of the trade in goods, most notably in the area of U.S. copyrights and patents. Based on the arbitrators’ formulas, using 2008 data, Brazil announced in December 2009 that it would impose trade retaliation starting on April 6, 2010, against up to $829.3 million in U.S. goods, including $268.3 million in eligible cross-retaliatory countermeasures.

The threat of sanctions led to intense negotiations between Brazil and the United States to find a mutual agreement and avoid the trade retaliation. In April 2010, the two parties reached a preliminary memorandum of understanding (MOU) spelling out certain actions which, if undertaken by the United States, would lead to suspension of Brazil’s threatened retaliation.

On June 17, 2010, U.S. and Brazilian trade negotiators concluded the Framework for a Mutually Agreed Solution to the Cotton Dispute in the WTO (WT/DS267). The framework agreement— which lays out a number of “steps and discussions”—represents a path forward toward the ultimate goal of reaching a negotiated solution to the dispute, while avoiding WTO-sanctioned trade retaliation by Brazil against U.S. goods and services. As a result, Brazil has suspended trade retaliation pending U.S. compliance with the framework agreement measures. Key aspects of the framework agreement include (1) payment by the United States of a $147.3 million annual fund to a newly created “Brazilian Cotton Institute” to provide technical assistance and capacitybuilding for Brazil’s cotton sector, (2) quarterly discussions on potential limits of trade-distorting U.S. cotton subsidies (recognizing that actual changes will not occur prior to the 2012 farm bill), and (3) near-term modifications to the operation of the GSM-102 program coupled with a semiannual review of whether U.S. GSM-102 program implementation satisfies certain performance benchmarks. A further U.S. commitment, made under the April MOU, includes modification of the animal disease status of the Brazilian state of Santa Catarina to allow products such as pork and live swine exports into the United States. These U.S. commitments are intended to delay any trade retaliation until after the 2012 farm bill, when potential changes to U.S. domestic cotton subsidies will be evaluated.



Date of Report: October
4, 2011
Number of Pages:
46
Order Number: R
L32571
Price: $29.95

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.

Agriculture in Pending U.S. Free Trade Agreements with South Korea, Colombia, and Panama

Remy Jurenas
Specialist in Agricultural Policy

On October 3, 2011, President Obama submitted the free trade agreements (FTAs) with South Korea, Colombia, and Panama to the 112th Congress for consideration. The bills to implement these agreements will now be debated under trade promotion authority, or fast-track rules, designed to expedite congressional consideration. Liberalizing trade in agricultural products, particularly the pace of expanding market access for the more sensitive agricultural commodities, was one of the more challenging areas that trade negotiators faced in concluding each of these FTAs. In each instance, issues dealing with food safety and animal/plant health matters (technically not part of the FTA negotiating agenda) were not resolved until later.

Of these three pending agreements, the U.S.-South Korea (KORUS) FTA would be the most commercially significant for U.S. agriculture since the North American Free Trade Agreement (NAFTA) took effect with Mexico in 1994. Because Colombia, one of the largest markets in South America, imposes a high level of border protection on agricultural imports, the Colombia FTA has the potential to noticeably increase U.S. agricultural exports. Though Panama is a relatively small market, U.S. exporters would have opportunities to make additional sales under that agreement.

Many U.S. commodity groups, some general farm organizations, and many agribusiness and food firms support these three trade agreements. They argue for their approval to secure the benefits of additional agricultural exports once all three FTAs are fully implemented. They contend that the timely approval of these FTAs will protect or enhance the U.S. competitive position in these three markets. Their focus has shifted not only to securing the gains already negotiated, but also to ensuring that the United States does not lose market share to other major agricultural exporting countries. They point to the European Union-Korea FTA, implemented on July 1, 2011, and to the Colombia-Canada FTA, which took effect on August 15.

Analyses suggest that the market openings could result in U.S. agricultural exports from $2.3 billion to $3.1 billion higher than they would be without these trade agreements. These changes would be concentrated in a few commodity/product sectors. In value terms, U.S. exports of beef, processed food products, poultry, pork, and wheat would be noticeably higher. Agricultural imports under these FTAs would be slightly higher compared to maintaining the status quo.

The major agricultural issue remaining after these FTAs were signed was the terms of U.S. beef access to South Korea. The Obama Administration and some Members of Congress sought a full opening of South Korea’s market to U.S. beef (i.e., slaughtered from all cattle, irrespective of age). In the last round of supplemental negotiations in late 2010, Korean negotiators succeeded in deflecting this issue. The Administration’s commitment since then to request consultations on this matter as soon as the KORUS FTA takes effect was welcomed by Members, and removed the last remaining obstacle to moving that agreement forward.

Under the trade promotion authority process set into motion, Congress has 60 days to consider the bills to implement each FTA transmitted by the Administration (South Korea—H.R. 3080/S. 1642; Colombia—H.R. 3078/S. 1641; Panama—H.R. 3079/S. 1643). The House Ways and Means Committee on October 5 favorably reported all three bills, which the House will consider in mid-October. The Senate Finance Committee has scheduled its markup on October 11, with Senate floor action expected shortly thereafter.



Date of Report: October 6, 2011
Number of Pages: 33
Order Number: R40622
Price: $29.95

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