Trade Aid Could Reach $20B

By Jerry Hagstrom
DTN Political Correspondent

WASHINGTON (DTN) -- Agriculture Secretary Sonny Perdue said late Wednesday that a second trade aid package for farmers may total $15 billion to $20 billion, the latter figure $5 billion higher than President Donald Trump has suggested.

In a call to reporters from South Korea, Perdue said that the $15 billion to $20 billion is the "early estimate" that USDA has made regarding lost export sales since China imposed tariffs on U.S. farm products in retaliation for tariffs that the Trump administration imposed on Chinese products.

Perdue said that USDA would calculate "the legally defensible trade damage done to our producers," give that estimate to Trump and would be "prepared to defend those amounts" to the World Trade Organization, where the United States could face charges that it has violated rules on subsidies.

Perdue said he could not comment on whether the formula for providing payments to farmers would be different from the last package, in which soybean growers got $1.65 per bushel, corn growers got one cent per bushel and wheat growers got 14 cents.

USDA said at the time that the level for each commodity was based on export losses and calculated with an eye toward not violating WTO rules. Corn and wheat growers complained, however, and are lobbying the administration for a different formula in the second package.

Perdue said USDA is "operating conceptually" at Trump's direction. He said he believes the last package "went well" but realizes that some farmers were not happy and said the administration would try to learn from that experience and improve on it.

Perdue also said that, although Trump has talked about using a portion of tariff receipts to pay for the aid, he believes that the money will come from the Commodity Credit Corporation, as it did last time.

Perdue said he is keeping Congress informed about the development of the package. He said the administration is "studying the text" of the supplemental disaster aid bill moving through Congress "to see if there is an opportunity to address trade mitigation," but was not clear about whether the administration would need funding from Congress to make the payments.

The CCC can spend $30 billion per year, and it is not known whether the CCC is bumping up against its spending cap this late in the fiscal year, which ends Sept. 30. Perdue said that, in any case, he should keep Congress informed because members are the "pursekeepers."

The secretary also hinted that one reason the talks with China broke down last week was that China had reneged on previous agreements to buy certain levels of U.S. commodities. Perdue said that one of the purposes of the farm trade aid package is to make it clear to Beijing that Chinese negotiators cannot use "the impact" on U.S. farmers in the negotiations.

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow him on Twitter @hagstromreport

(CC/AG)

© 2019 CHS Inc.