U.S./U.K. trade deal talks | USMCA signing Jan. 29? | WOTUS rule revamp
In today's updates:
* China expands travel lockdown; number of cases, death continue to rise* xxx
— Chinese coronavirus update:
- China expands travel lockdown to 40 million. Chinese officials extended restrictions to 12 cities near Wuhan, the epicenter of the outbreak of a deadly coronavirus, doubling the number of cities on lockdown. With cases detected in every Chinese province and abroad, efforts to contain the spread of the virus are accelerating. In Wuhan, where it started, authorities shut the airport and railway stations to outgoing passengers. Other cities in Hubei province faced similar restrictions.
- The number of cases of the Wuhan coronavirus rose to 830, according to China’s National Health Commission, with 28 deaths linked to the virus. Singapore also confirmed additional cases of the virus. Hubei province is where much of the attention is focused, and public transportation has been halted in at least 11 cities in the province, including the provincial capital of Wuhan. Authorities in a county in neighboring Henan province also put restrictions in place. The Chinese Basketball Association said all games after Feb. 1 would be postponed and Shanghai closed locations like museums, movie theaters and Shanghai Disneyland Park.
- U.S. impact: Health officials said they were examining whether a Texas A&M University student could be the second known case of the virus in the U.S. The U.S. is monitoring 43 individuals who had contact with the man in Washington state confirmed to have the virus.
- The World Health Organization said it was too early to declare an international health emergency, in part because there are so far relatively few cases outside China. "Make no mistake. This is an emergency in China, but it has not yet become a global health emergency," WHO Director-General Tedros Adhanom Ghebreyesus said Thursday. "It may yet become one."
- Members of the Senate Health and Foreign Relations Committees will get a briefing this morning from administration health officials on the Wuhan coronavirus situation.
- The company behind an experimental anti-Ebola drug is working with researchers in the United States and China to assess whether it could be used to treat the Wuhan coronavirus. While the treatment was ineffective against Ebola, researchers say it could fight coronaviruses. Three other research teams are working on potential vaccines. Link to WSJ article on the search for vaccines.
— Trump administration is eyeing a trade deal with the United Kingdom before the end of 2020, Treasury Secretary Steven Mnuchin said Thursday. Talks could start as soon as February. “The president is very focused ... on Europe,” Mnuchin said in an interview with CNBC. “The good news is we have seen a lot of investments in the U.S. from the European car companies. But the president wants to make sure that we have free and fair and reciprocal trade in Europe. And by the way, we’re very focused on a U.K. Free Trade Agreement, which we hope to get done this year as well.” British Prime Minister Boris Johnson is expected in Washington next month to begin talks with Trump.
— President Trump will sign the signature trade deal with Canada and Mexico (USMCA) during a White House ceremony on Wednesday, the administration confirmed.
Canada still has to ratify the agreement. Next week, Canada’s parliament is expected to begin consideration of the deal. The length of time it takes for Canada to work on the package is not clear, but some suggest it could take until April before they move to approve the plan which is widely expected even as Prime Minister Justin Trudeau’s party lost its majority in the legislative body.
The implementation phase includes actions by all three countries, including updating rules to reflect new provisions in the agreement. Once those steps are completed, then the three nations are to exchange letters notifying each other of the changes. The agreement would then enter into force 60 days after the final notification letter is delivered.
Some suggest the timeline means the deal may not be implemented until after the 2020 elections, but it is clear that the time used by Canada to consider the deal will dictate the actual date the agreement will enter into force. The Trump administration is aiming for the trade deal to go into effect by July.
— Observations from travels to several U.S. states in recent weeks:
- Farmers and ag industry officials continue to think that USDA does not have a solid grip on the 2019 corn crop.
- When you fly into and out of Fargo, N.D., you can’t miss all the corn still left in the fields above the multiple-inch snow on the ground. Concerns are mounting because the snowfall came before the ground was frozen.
- Sugarbeet growers in N.D. and Minnesota are forlorn relative to the spate of crop-impacting weather events for last year’s crops. Farmers in North Dakota are scrambling to pay the around $300 per acre tab remaining to fulfill contracts with their cooperative. The coming disaster-related payment will help in this regarding but will still come in less than half of the contact commitment payments.
- WHIP + participants are hearing different things from county FSA offices with farmers in Minnesota saying they are being told to simply wait for additional details.
- USDA’s move to relocate two research areas from Washington D.C. to Kansas City, say some Midwest residents, will eventually lead to more people applying for the jobs than what was the case when the research agencies were in D.C. Reason, according to several: Interested workers simply did not want to move to Washington.
- From Ohio, to Minnesota, to North Dakota and in South Carolina, one comment heard from farmers, ranchers, ag company officials and ag bankers: The Trump administration should seriously consider announcing a third Market Facilitation Program (MFP) for 2020 because the U.S./China Phase 1 deal will take more than a few months to unfold and make any major difference on the ag sector’s balance sheet. Cash flow problems throughout the country are severe and would be worse if there is no MFP 3 program. Simply put: If you lose the MFP dollars in 2020, the farm income picture looks much worse.
— Navigable Waters Protection Rule replaces WOTUS. A reworked Waters of the U.S. (WOTUS) rule that scales back the number of waterways and wetlands falling under federal Clean Water Act (CWA) jurisdiction was unveiled Thursday by Environmental Protection Agency (EPA) Administrator Andrew Wheeler. Link to rule.
Split opinions. Ag groups reacted positively to the development, while environmental groups vowed to challenge the move in court.
The new rule replaces a 2015 version that EPA repealed late last year — representing “step two” of the plan from EPA and the U.S. Army Corps of Engineers to repeal and replace the earlier Obama-era regulation. The rule scales back the categories of waters, including wetlands and streams, that fall under CWA jurisdiction.
Key change: Water features “that traditionally have not been regulated,” including ephemeral streams, which only contain water in direct response to rainfall or snowmelt, would be removed from federal CWA protection under the new rule. Certain wetlands not connected to larger bodies of water would also lose federal protections under the rule.
EPA officials noted the rule strikes a better balance between state and federal responsibilities, noting that states may still choose to regulate waters that do not fall under the scope of the federal CWA. “EPA and the Army are providing much needed regulatory certainty and predictability for American farmers, landowners and businesses to support the economy and accelerate critical infrastructure projects,” said EPA Administrator Andrew Wheeler. “After decades of landowners relying on expensive attorneys to determine what water on their land may or may not fall under federal regulations, our new Navigable Waters Protection Rule strikes the proper balance between Washington and the states in managing land and water resources while protecting our nation’s navigable waters, and it does so within the authority Congress provided,” he concluded.
The rule sets four categories of waters that are federally regulated:
- The territorial seas and traditional navigable waters
- Perennial and intermittent tributaries to those waters
- Certain lakes, ponds and impoundments
- Wetlands adjacent to jurisdictional waters
The rule also includes 12 categories of exclusions, features that do not fall under the new WOTUS definition, including:
- Features that only contain water in direct response to rainfall
- Ditches that are not traditional navigable waters, tributaries are that are not in adjacent wetlands
- Prior converted cropland
- Diffuse stormwater runoff and directional sheet flow over upland
- Artificially irrigated areas that would revert to upland if artificial irrigation ceases
- Artificial lakes and ponds that are not jurisdictional impoundments in upland or in non-jurisdictional waters
- Groundwater recharge, water reuse and wastewater recycling structures in upland or non-jurisdictional waters
Among the changes from the proposed rule are a clarification that “ditches and impoundments are no longer separate categories of jurisdictional waters,” according to EPA, and language simplifying “the types of connections to the perennial and intermittent tributary network” that bring lakes, ponds and impoundments under CWA jurisdiction.
The rule also established that many adjacent wetlands separated by artificial barriers like berms from waters under CWA jurisdiction are also covered under the CWA — those waters would have been excluded from CWA protections under the proposed rule.
NPPC likes the new approach. Speaking favorably about the new rule was the National Pork Producers Council (NPPC). “We’re pleased EPA has finalized a common-sense rule, the Navigable Waters Protection Rule, that works with – not against – farmers to protect our nation’s waterways,” said NPPC President David Herring. He called the 2015 WOTUS rule “a dramatic government overreach and an unprecedented expansion of federal authority over private lands.” The new rule “balances the role of federal, state and local authorities, protects property rights and provides clarity for farmers like me, while providing regulatory certainty to our farmers and businesses,” Herring concluded.
National Cattlemen’s Beef Association President Jennifer Houston praised EPA “for listening to cattle producers and for working with us to get us to this point,” and said her group “looks forward to working with EPA and the Army Corps of Engineers to successfully implement this new rule in the years to come.”
Perdue cites positive aspects of new rule. The new rule removes “undue burdens and strangling regulations from the backs of our productive farmers, ranchers and rural land-owners,” USDA Secretary Sonny Perdue said in a statement. “The days are gone when the Federal Government can claim a small farm pond on private land as navigable waters,” he added.
Rep. Conaway supports the new rule. The new rule “provides clarity and consistency for landowners affected by the scope of WOTUS jurisdiction,” House Agriculture Committee Ranking Member Mike Conaway (R-Texas) said. He argued that under the new regulation “our nation’s navigable waters will remain well-protected, while farmers and ranchers will no longer be subjected to ambiguous guidelines and regulatory uncertainty.”
Sen. Roberts comments. The new rule corrects the “severe regulatory overreach” brought by its predecessor said Senate Agriculture Committee Chairman Pat Roberts (R-Kan.). “The growing threat farmers were facing from the previous administration’s regulatory warpath would have only added costs to their businesses and stymied their ability to compete. I’m thankful this administration’s rule is a much more reasonable approach to regulation,” he added.
Environmental groups criticized the new rule, saying it will dramatically scale back protections for the nation’s waterways and drinking water. “The damage President Trump is doing to the nation’s drinking water supply and to the laws and safeguards once in place to protect it is appalling and indefensible,” said Environmental Working Group (EWG) Senior Vice President for Agriculture and Natural Resources Craig Cox. “Once again, the president is turning his back on science and the public’s health at the behest of polluters.
National Wildlife Federation (NWF) President and CEO Collin O’Mara said “this misguided rule places our drinking water, our wildlife and our nation’s way of life further at risk.”
Legal action challenging the rule was widely expected and O’Mara confirmed NWF intends to do just that. “Since the Administration refuses to protect our waters, we have no choice but to ask the courts to require the EPA to follow the law. We simply cannot afford to lose protections for half of our remaining wetlands, nor can we take any unnecessary chances with our drinking water,” he said.
— Other items of note:
Trump’s Mideast peace plan coming. President Donald Trump has invited Israeli Prime Minister Benjamin Netanyahu and his political rival Benny Gantz to Washington next week. U.S. officials are expected to at last unveil some of the details of their delayed Middle East peace plan.
Noted newsman Lehrer dies. Jim Lehrer, a PBS newsman for 36 years, gave viewers an alternative to network evening news programs, with in-depth interviews and news analysis. He died on Thursday at 85. Lehrer died "peacefully in his sleep," according to PBS. He had suffered a heart attack in 1983 and more recently had undergone heart valve surgery in April 2008.
Cotton AWP edges lower. The Adjusted World Price (AWP) for cotton is at 61.29 cents per pound, effective today (Jan. 24), down from 61.40 cents per pound the prior week. This marked the first decline in the AWP since the week of December 13, 2019. Meanwhile, USDA announced that Special Import Quota #14 will be established January 30 for 56,220 bales of upland cotton, applying to cotton purchased not later than April 28 and entered into the U.S. not later than July 27.
Union Pacific plans to run its railroad with nearly 3,000 fewer workers this year as the company pushes ahead with a new operating plan that runs fewer, longer trains. The strategy, known as precision-scheduled railroading, is sweeping across the U.S. freight railroading industry. As recently as two years ago, Union Pacific was offering railroad workers signing bonuses of as much as $25,000 as it and other freight railroads were struggling to fill jobs. But the recent changes to the operating plan mean that Union Pacific can operate its network with fewer people, the Wall Street Journal reports (link). Meanwhile, U.S. rail industry employment hit a post-recession high in early 2015 but has since dropped off. The sector shed 20,600 jobs in 2019 alone.
— Markets. The Dow on Thursday eased 26.18 points, 0.09%, at 29,160.09. The Nasdaq rose 18.71 points 0.11%, at 9,402.48. The S&P 500 was up 3.79 points, 0.11%, at 3,325.54.
Global manufacturing slump may have bottomed out. IHS Markit's preliminary purchasing managers indexes for Japan, the U.K. and Europe showed factory activity continued to contract in January but at a slower pace, a potentially promising sign for a struggling sector. "The worst of the manufacturing downturn looks to have passed and industry appears to be moving towards stabilization," IHS Markit's Andrew Harker said of the latest readings from Europe. Manufacturers around the globe were hit hard last year by U.S./China trade tensions, compounding a broader economic slowdown. The latest data suggest Japan's economy may have contracted in the fourth quarter but appears to be on track for a mild rebound at the start of 2020.
Millions face drop in credit scores. Changes in how the most widely used credit score in the U.S. is tallied will likely make it harder for many Americans to get loans. The changes will create a bigger gap between consumers deemed to be good and bad credit risks, the creator of FICO scores says.