Leaders of China & Russia Signal New World Order

WSJ: Biden admin. preparing first broad economic strategy for Asia-Pacific region
 

Market Focus:
• VIX, measure of market volatility, is up more than 50% this year
• Energy stocks are winners so far this year
• Investors closely watching as shale companies report their earnings
• German Chancellor Olaf Scholz will meet President Biden today
• France leader to confer with Putin then head to Ukraine
• Tuesday could show U.S. trade deficit hit a record in December
• Industrial production in Germany dipped in December
• USDA sees decline in 2022 net farm income as farm financial indicators edge higher
• Bitcoin now around 30% above late-January lows
• FT: EU draws up contingencies in case Ukraine crisis hits energy supplies  

Policy Focus:
• U.S. gov’t bond market is signaling the Federal Reserve will be able to tame inflation

Personnel:
• Yellen wants to remain as Treasury
• White House trying to save embattled FDA commissioner nominee Robert Califf
• Sonny Perdue chancellor?  

China Update:
• China and Russia propose plan for new world order
• China criticizes U.S. for extending tariffs on imported solar
• China’s tennis star Peng Shuai breaks her silence: no sexual assault

Trade Policy:
• Biden administration preparing first broad economic strategy for Asia-Pacific region

Energy & Climate Change:
• EU/U.S. energy summit  

Coronavirus Update:
• Mayor of Ottawa declares state of emergency as protests against vaccine mandate rise
• Australia to re-open borders to vaccinated travelers from Feb. 21

Politics & Elections:
• N.C. Supreme Court struck down state's congressional map
• Pa. GOP voted not to endorse candidates ahead of Senate and gubernatorial primaries  

Congress:
• House on Friday passed the America COMPETES Act in a 222-210 vote

Other Items of Note:
• Russia and Belarus to hold joint military exercises not far from Ukraine border
• Decisive round for Iran’s nuclear talks

Equities today: Global stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly lower openings.

     U.S. equities Friday: The S&P 500 and Nasdaq Composite erased early losses to finish higher Friday to conclude their best week so far this year, led by continued strength in quarterly earnings reports and a better-than-expected January jobs report. The Dow ended down 21.42 points, 0.06%, 35,089.74, falling back into negative territory late in the session after managing to hold above unchanged much of latter portion of the trading day. The Nasdaq gained 219.19 points, 1.58%, at 14,098.01. The S&P 500 rose 23.09 points, 0.52%, at 4,500.53.

     For the week, the Dow added 1.1%, the S&P gained 1.5%, and the Nasdaq jumped 2.4%. The Dow and S&P 500 briefly dipped into correction late last month before bouncing back. They are now within 5% to 7% of their record highs. The Nasdaq, loaded with tech companies, remains in a correction. It's about 14% below its peak.

     Volatility in perspective: The VIX, a measure of market volatility, is up more than 50% this year and more than 60% above where it was trading at the end of 2019.

     Energy stocks are the winners so far this year. Chevron is leading the Dow with a 15% gain while Exxon Mobil is up more than 30%. Halliburton, Schlumberger, Occidental Petroleum, Hess and APA are among the top gainers in the S&P 500. Exxon analysts have raised their earnings forecasts for 2022 by 16% over the past three months and have raised their 2023 profit targets by 20%.

On tap today:

     • European Central Bank President Christine Lagarde appears before the Committee on Economic and Monetary Affairs at 10:45 a.m. ET.
     • USDA Grain Export Inspections report, 11:00 a.m. ET.
     • White House climate adviser Gina McCarthy will join Politico Live for a virtual interview to discuss Biden’s challenging path ahead to fulfill his climate agenda. 1:30 p.m. ET.
     • Federal Reserve releases consumer credit data for December at 3 p.m. ET.
     • German Chancellor Olaf Scholz will meet President Biden today and the U.S. president is expected to push the new German leader to support tough sanctions on Russia should Moscow invade. Scholz succeeded Angela Merkel as German chancellor nearly two months ago. Germany has stood out among major NATO allies for its refusal to arm Ukraine, or allow others to send German-made weapons, in keeping with its overall policy of restraint and more specifically its refusal to export weapons to combat zones. Biden/Scholz meeting at 1:30 p.m. ET; joint press conference at 3:15 p.m. ET.

Tuesday could show the U.S. trade deficit hit a record in December, a sign of strong consumer demand and small improvements in supply-chain bottlenecks that have hindered economic growth and fueled inflation. The deficit was close to a record in November and preliminary data for December showed a new high for goods imports and a pickup in goods exports — both led by autos and consumer products.

Industrial production in Germany dipped in December, falling by 0.3% on the previous month as construction and energy production slowed. But tentative signs that supply-chain bottlenecks are easing suggest increased output is now likely. The Ifo index, a measure of business sentiment, grew for the first time in six months in January and Germany’s purchasing-managers’ index rose to a four-month high.

USDA sees decline in 2022 net farm income as farm financial indicators edge higher. First some highlights of USDA’s latest farm income forecasts:

     • 2022 net farm income to fall while net cash farm income to rise versus 2021.
     • Rising crop, livestock receipts more than offset by rising expenses.
     • Another big fall in gov’t payments forecast.
     • Farm sector financial indicators edge higher; working capital edges down for 2022.

     Details: U.S. net farm income in 2022 is forecast to fall to $113.7 billion, down 4.5% from $119.7 billion in 2021, but still above the $100-billion plateau for a second straight year. The 2021 level is $23.9 billion (25.1%) above the 2020 result.

     Net cash farm income is expected to be at $136.1 billion, up 1.4% from $134.2 billion in 2021. Net cash farm income covers cash receipts from farming as well as farm-related income (including government payments) minus cash expenses. It does not include noncash items — including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings — reflected in the net farm income.

     Cash receipts to rise, but so are expenses. Cash receipts for crops and livestock are forecast to reach $461.9 billion, up from $432.6 billion, a rise of 6.8%, including a rise of 5.1% for crop receipts and 8.9% for livestock receipts.

     Gov’t farm program payments are forecast to make up an even smaller part of farm receipts in 2022, falling to $11.7 billion, down 57.0% from 2021 when they were at $27.1 billion. The 2022 forecast is the lowest since they were at $11.5 billion in 2017.

     Cash expenses are seen posting their fourth consecutive annual increase in 2022, rising to $376.4 billion, up from $358.3 billion in 2021, up 5.1%. Total expenses are forecast up by 5.1% to $411.6 billion in 2022 compared with $391.5 billion in 2021.

     Details on gov’t payments, which have been in decline since they peaked at $45.7 billion in 2020, a record-high mark. Payments fell to $27.1 billion in 2021 and are now pegged to be at just $11.7 billion for 2022. “This overall decrease in 2021 and 2022 reflects lower anticipated payments from supplemental and ad hoc disaster assistance, mainly direct payments from Covid-19-related assistance programs,” USDA said.

     Supplemental payments are now seen at $6.2 billion, down a staggering $13.6 billion from 2021 levels. Pandemic assistance, including the Coronavirus Food Assistance Program (CFAP) efforts, are pegged at $3.4 billion in calendar 2022, down from $7.8 billion in 2021 and $23.5 billion in 2020.

     No payments under the Paycheck Protection Program (PPP), operated by the Small Business Administration, are forecast for 2022 after those totaled $8.7 billion in 2021. USDA is currently basing their view that even though the program was administered as a loan, provisions are for the loans to be forgiven if the program requirements are met. “We assume all recipients will meet the loan-forgiveness requirements,” USDA stated. “Accordingly, we treat these loans as a direct payment to farm operations.” But they cautioned that forecast could be revised, and any unforgiven amounts could be included as a liability on the fam balance sheet and removed from direct payment totals.

     Conservation program payments are forecast at $4.2 billion, up 7.3% from 2021, as USDA expects higher acreage in the Conservation Reserve Program (CRP) and higher payments under Natural Resources Conservation Service programs.

     Meager ARC and PLC payouts. Regarding the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, they are forecast to be just $279 million for PLC in 2022, down from $2.109 billion in 2021, while ARC payments are to be just $5.1 million, down from $121.8 million in 2021. The 2022 payments reflect funds paid relative to 2021 crops. “ARC payments are expected to decrease in 2022 because of higher commodity prices for all covered commodities and higher yields in 2021 compared with 2020 levels, particularly for corn and soybeans,” USDA explained. “PLC payments are also expected to decrease in 2022 because of higher prices for all covered commodities in 2021 compared with 2020.”

     Payouts under the Dairy Margin Coverage (DMC) program are expected to be at $1.0 billion in 2022, down slightly from $1.13 billion in 2021, but up substantially from $185.4 million in 2020.

     Details: Expenses rising, including interest. Beyond the downturn in government payments, rising expenses also took a bite out of the net farm income forecast for 2022. The higher crop prices that are tempering government payments under ARC and PLC are translating into higher feed costs. “Feed expenses, the largest single expense category, are forecast to increase in 2022 by $3.9 billion (6.1%) in nominal terms to $68.9 billion because of higher prices for feed commodities,” USDA said.

     But the rise in crop inputs is also a factor. “Fertilizer-lime-soil conditioner expenses are forecast to increase by $3.4 billion (12.0%) in nominal terms to $31.9 billion,” USDA said. However, seed expenses are expected to remain steady.

     While land values are rising, rental payments are expected to fall in the USDA outlook. “Net rent to landlords is expected to decline by $1.2 billion (6.6%) to $17.6 billion, in nominal terms,” USDA said.

     Cash labor expenses are seen rising to $39.92 billion in 2022, up from $37.94 billion in 2021, USDA noted, including $33.03 billion in hired labor expense and $6.88 billion in contract labor expense.

     Interest expenses are seen rising to $22.96 billion in 2022 after moving up to $20.79 billion in 2021. Interest on nonreal estate debt is forecast at $6.98 billion, up from $6.35 billion in 2021.

     Financial indicators edging up but still far below farm crisis marks. The level of farm debt and equity produce a debt-to-equity ratio of 16.41 for 2022, up from 16.13 from 2021. This is the first time since 1998 and 1999 that there have been back-to-back years where this indicator has been above 16. In 1998, the debt-to equity ratio was 17.92 and it eased to 17.27 in 1999.

     The debt-to-asset ratio also edged up, sitting at 14.11 for 2022, up from 13.89 in 2021. The last time the debt-to-asset ratio was at 14 or above was 2002 when it was 14.96.

     However, both marks remain well below the peak of the farm crisis when the debt-to-equity ratio stood at 28.51 in 1985 and the debt-to-asset ratio was at 22.19.

     Perspective: The strength in crop and livestock prices, reflected in higher receipts, make the farm income picture still look solid even as the income from government payments has dropped dramatically. The rise in expenses is pressuring more operations. But USDA is figuring that farmers will tap additional working capital in order to cover those costs.

     USDA forecasts working capital to fall to $93.04 billion in 2022, down from $96.21 billion in 2021 as farmers were coming off of years with large government payments that made up a substantial portion of farmer incomes. But the working capital level peaked at $121.04 billion in 2014 and declined dramatically to $65.19 billion in 2016. It took until 2019 for working capital to climb back above $70 billion when it stood at $78.27 billion, and then increased again to $84.75 billion in 2020.

     Another key in this outlook that is not known is on interest. That was the fastest rising component of farm expenses when the Fed embarked on its last round of increases to the target range for the Fed funds rate. The drop back to near-zero by the Fed during the pandemic reduced interest expenses. But those expenses are starting to rise as USDA is forecasting. But it is not clear how much of an increase USDA is assuming the Fed will make. A more-aggressive Fed could have the interest category rise even further for 2022 and potentially again in 2023.

     The farm income picture will take on even more importance as Congress gets further down the road in writing the next version of the farm bill.

Market perspectives:

     • Outside markets: The U.S. dollar index is near steady early today. The U.S. Treasury 10-year note yield is presently fetching 1.925%.

     • Bitcoin is now around 30% above the late-January lows. The rise of as much as 3% this morning briefly put the largest cryptocurrency above the 50-day moving average, a key technical indicator, for the first time in two months.

     • Crude oil futures are lower and trading around $91.50 a barrel after prices Friday hit a seven-year high. Oil traders are eyeing $100-a-barrel crude in the not-too-distant future.

     •  FT: EU draws up contingencies in case Ukraine crisis hits energy supplies. Brussels is examining how to shield consumers from a potential energy crisis as part of plans to protect Europe’s households, businesses and borders from the fallout from a Russian military escalation in Ukraine. Diplomats have told the Financial Times that the EU is discussing contingency measures to deal with risks from surging gas prices, a possible migratory crisis and cyber security threats if Russia invades Ukraine. The priority of EU emergency planning, FT noted (link/paywall), is to cope with any reduction in gas flows from Russia, which as Europe’s largest supplier accounts for about 40% of imports. World leaders today will meet on both sides of the Atlantic to seek a diplomatic solution to de-escalate the crisis with Russia. We previously reported that French leader Emmanuel Macron will meet Vladimir Putin face-to-face in Moscow after three phone calls in the past 10 days. FT said the French president plans to tell his Russian counterpart that while the security of Ukraine cannot be compromised, he understands that Moscow has concerns of its own. Meanwhile, EU energy commissioner Kadri Simson said Azerbaijan had shown a “clear willingness to support the EU in case of a disruption of gas flows.” She is due to hold talks with the U.S. this week over the country’s LNG capacity.

     • Investors will be closely watching as shale companies report their earnings over the coming weeks for indications of changes in growth plans. And the Baker Hughes rig count — up almost 60% over the past year — will provide an insight of any acceleration in drilling.

     • CFTC Commitments of Traders report (Source: Barron’s):

     • NWS weather: A coastal storm to produce and icy wintry mix from the southern Mid-Atlantic to southern New England today; measurable snowfall expected in northern New England... ...Rain in South Texas this morning; snow showers in the Great Lakes; blustery winds in "Big Sky Country" and Southern California today... ...A warm up for the Northern and Central Plains, quite mild along the West Coast.

— U.S. gov’t bond market is signaling the Federal Reserve will be able to tame inflation in coming years without eliminating economic growth. Despite Friday’s figures on the labor market, which pointed to rising wage pressure, expectations for future inflation barely budged. A Treasury market measure known as break-evens indicated that inflation would recede to less than 3% in five years. That would mark a significant fall from the 7% rate recorded in December. Observers note that. longer term break-even rates suggest that markets are expecting the Fed to succeed in pushing inflation back towards its 2% target. Bottom line: Some are upping their estimates of how many times the Fed would tighten policy this year to more than five quarter-point rate rises, from between four and five a day before the Jobs report.

— Yellen wants to remain as Treasury Secretary because “we still have a huge amount of important work to do.” Yellen, 75, in a statement last week to Bloomberg News following a wide-ranging interview marking her first year in office, said: “I have no plans to leave Treasury anytime soon.”

     Yellen’s track record is at best incomplete. The biggest “win” of her tenure — a global agreement on corporate taxes that Yellen engineered through international diplomacy —remains incomplete, with the U.S. Congress yet to endorse it and Republicans in the Senate likely not giving it final approval. The administration’s “Build Back Better” package of social investments is also dead in its last form, with a modified version still not officially unveiled. Meantime, high inflation is marring assessments of the $1.9 trillion Covid aid bill enacted last March. And recall Yellen had to admit she was wrong (along with her Fed Reserve chair successor Jerome Powell) in saying for months in 2021 that inflation was “transitory” when it has reached the highest point since 1982.

— White House is trying to save embattled FDA commissioner nominee Robert Califf, with top officials calling senators to try to win their support, the Washington Post reports (link).

— Sonny Perdue chancellor? Georgia Gov. Brian Kemp appears to have paved the way for his opponent David Perdue's cousin, former Gov. and USDA Sec. Sonny Perdue, to be named chancellor of the University System of Georgia. The person running the University System of Georgia oversees 26 public colleges and universities, more than 341,000 students and a budget of nearly $10 billion.

— China and Russia propose a plan for new world order. China and Russia outlined a vision of international relations anchored in their potential to reinforce each other in disputes with the U.S. and its allies while cooperating on an array of economic and diplomatic fronts. Chinese General Secretary Xi Jinping and Russian President Vladimir Putin issued a joint statement (link) that forecast the “transformation of the global governance architecture and world order.” That transformation would be marked by the progress of concepts and initiatives that Moscow and Beijing conceived separately, often in opposition to the U.S. and its Western allies, and now could develop into an integrated challenge to American power.

     Xi and Putin, the statement says, “reaffirm that the new inter-State relations between Russia and China are superior to political and military alliance of the Cold War era. Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation [emphasis added], strengthening of bilateral strategic cooperation is neither aimed against third countries nor affected by the changing international environment and circumstantial changes in third countries.”

     “The sides intend to strongly uphold the outcomes of the Second World War and the existing post-war world order, defend the authority of the United Nations and justice in international relations, resist attempts to deny, distort, and falsify the history of the Second World War,” the China-Russia joint statement says. “In order to prevent the recurrence of the tragedy of the world war, the sides will strongly condemn actions aimed at denying the responsibility for atrocities of Nazi aggressors, militarist invaders, and their accomplices, besmirch and tarnish the honor of the victorious countries," they continued.

     In the statement, the two sides are redefining the very meaning of democracy to embrace their repressive systems that censor media, prohibit dissent, lock up political opponents, and support like-minded authoritarian systems.

     U.S. officials cautioned Beijing that conflict in Ukraine would affect China’s international interests, White House Press Secretary Jen Psaki said following the meeting between Xi and Putin.

     As Putin considers his own options regarding Ukraine, his relationship with China could help him manage any potential new sanctions, particularly through deepened energy agreements and financial arrangements. On Friday, China and Russia announced new oil and gas deals valued at an estimated $117.5 billion. Rosneft, Russia’s largest oil producer, announced a new agreement to supply 100 million tons of crude through Kazakhstan to the Chinese state company China National Petroleum Corporation over the next ten years — while the Russian energy giant Gazprom pledged to ship 10 billion cubic meters of gas per year to China through a new pipeline. The numbers: Last year, trade between the two countries hit a record $147 billion, making China Russia’s largest trading partner.

— China criticizes U.S. for extending tariffs on imported solar. China chastised President Joe Biden’s decision to extend tariffs on imported solar equipment, saying the act will “distort” international trades of the renewable energy product. “The U.S. government insisted on the extension regardless of the strong opposition domestically and internationally,” the Ministry of Commerce said in a statement on Saturday. “The act won’t contribute to the healthy development of America’s solar industry and distorts the international trade order of solar as a new energy product.” The tariffs, first introduced by former President Donald Trump in 2018, had been scheduled to expire in early February and will now run for another four years. “We hope the U.S. can take real action to deal with the climate change and push forward global free trade,” the Chinese ministry said in the statement.

     Biden’s move includes an exemption for imported two-sided, or bifacial, panels that are widely used in utility-scale solar projects. The exclusion was first granted by Trump, and though he later tried to eliminate it, the exemption remains in place.

     The U.S. imports most of its panels from Thailand, Malaysia and Vietnam, including from factories owned by Chinese companies. The tariffs Biden is extending are layered on top of existing anti-dumping and countervailing duties on solar cells and panels from China.

     Bottom line: For U.S. solar manufacturers and union labor, who favored restrictions to safeguard American jobs, the move is a disappointment. They say the decision is a boon for renewable energy developers who will retain access to cheap overseas supplies, specifically the two-sided solar panels used by most large-scale solar projects, helping meet the Biden administration's climate targets. Opponents of the decision note about 80% of solar panels are made in China, where the government has heavily subsidized the industry, relied on forced labor, and dumped panels to gain market share. Ohio Sens. Sherrod Brown, a Democrat, and Rob Portman, a Republican, and Ohio Democratic Reps. Marcy Kaptur and Tim Ryan issued a statement Friday calling the bifacial exclusion a “disappointing, misguided decision” that “undermines American workers and manufacturers at a moment when domestic solar production is poised to dramatically expand… The administration is missing the best opportunity in a generation to ensure the United States leads the way in manufacturing solar supply chain components,” the lawmakers said.

— China’s tennis star Peng Shuai breaks her silence: no sexual assault. The three-time Olympian says she made no such claims in a social media post which sparked international concerns for her well-being.

— Biden administration is preparing to unveil its first broad economic strategy for the Asia-Pacific region, a move awaited by U.S. allies and American business groups that are uneasy about China’s expanding influence in the region, the Wall Street Journal reports (link). With the new Indo-Pacific Economic Framework, the U.S. aims to work more closely with friendly nations on issues including digital trade, supply chains and green technology. The framework is aimed at filling the hole in U.S. Asia strategy left by its 2017 departure from the Trans-Pacific Partnership (TPP), a robust trade agreement the U.S. had helped to design as a counterweight to China. While details of the plan have yet to be released, the framework isn’t expected to try to return the U.S. to the TPP.

— EU/U.S. energy summit. EU and U.S. officials meet in Washington today to discuss energy cooperation against the backdrop of rising prices and a possible cut to European supplies amid Russia-Ukraine tensions. U.S. Secretary of State Antony Blinken and Energy Secretary Jennifer Granholm are among the high-profile U.S. attendees while EU foreign affairs chief Josep Borell and European Energy Commissioner Kadri Simson attend on the EU side.

— Summary: Global cases of Covid-19 are at 395,378,364 with 5,741,360 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 76,505,941 with 902,626 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 543,220,044 doses administered, 212,806,521 have been fully vaccinated, or 64.83% of the U.S. population.

— Mayor of Ottawa declared a state of emergency, as protests by lorry drivers against a vaccine mandate intensified, threatening to overwhelm police in the Canadian capital. Parts of the city’s downtown area have been blocked for a week by trucks forming a “freedom convoy”. Demonstrations — which have broadened to encompass more general anti-government sentiment — have since spread to other big Canadian cities. Other protests sprouted in major cities spanning the nation, including Vancouver, Winnipeg, Toronto and Quebec City. At least seven arrests were made yesterday and about 450 citations have been issued, according to the Ottawa Police Service.

— Australia will re-open its borders to vaccinated travelers from Feb. 21 for the first time in nearly two years. The country has had some of the world’s toughest border controls during the Covid-19 pandemic. In recent months it has eased travel rules for selected countries, including New Zealand. Further relaxation will be especially welcome for the tourism and international-education sectors.

— North Carolina’s Supreme Court struck down the state's congressional map in a ruling on allegations the map unfairly favored the Republican Party — a map drawn by the Republican-led Legislature had positioned the GOP to win 10 or 11 of the state’s 14 House seats. The ruling overturned a lower court that upheld the map and gave the legislature until Feb. 18 to draw new district lines. It was the second map struck down this year by state courts based on provisions in state constitutions. Maps drawn by both political parties are being challenged. In New York, voters represented by a Republican former legislator filed suit asking a state court to invalidate the House district map drawn by the Democratic-controlled Legislature. The legal challenges are among several arguing that provisions in state law, some being tested for the first time, bar states from drawing district lines that heavily favor one political party.

— Pennsylvania GOP voted not to endorse candidates ahead of the crowded 2022 Senate and gubernatorial primaries, a blow to Jeff Bartos and Dave White, the Senate and gubernatorial candidates, respectively, who were seen as most likely to earn the blessing. This is the first time the state party hasn’t endorsed a candidate in decades, per the Philly Inquirer (link).

— House on Friday passed the America COMPETES Act in a 222-210 vote, setting up negotiations with the Senate on final legislation that leaders say would boost the country's competitiveness with China. The bill, which passed on an almost party-line vote, would increase spending on chip production and research and development. Republicans previously derided the package as "toothless," saying it does too little to hold China accountable for alleged human rights and economic abuses.

     Key port congestion amendment added. Two lawmakers are hoping that the China competition bill will improve the odds of getting legislation through the Senate that's designed to ease port congestion and give exporters more power. The House approved legislation (HR 4996) by Reps. John Garamendi (D-Calif.) and Dusty Johnson (R-S.D.,) Dec. 8 with a 364-60 vote. The House adopted the bill as an amendment to the competition legislation (HR 4521) now on its way to the Senate. There also is a Senate version (S 3586) of the shipping bill by Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.) filed last Thursday. Industries including agriculture and retail see the ocean shipping bill as a tool to address kinks in the supply chain at ports that have kept their products stuck on land or stalled in delivery. In letters and in testimony, business representatives said disparities in freight rates provided a financial incentive for ships to leave U.S. ports with empty containers and to head to Asia to pick up more lucrative cargo. They said delays in getting onto ships resulted in higher fees for keeping a container at a port beyond the time allotted. The bill would address high late charges known as detention or demurrage fees, export cargo booking practices and other issues that have made it difficult to get goods to foreign buyers.

     If enacted (by no means a certainty), the bill would amend for the first time since 1998 the duties of the Federal Maritime Commission to include requiring ocean carriers to comply with minimum service standards that meet the public interest, requiring ocean carriers or marine terminal operators to certify that any late fees meet federal regulations, and putting the responsibility on the ocean carrier to prove the reasonableness of the fees.

     The legislation would prohibit ocean carriers from unreasonably refusing to take U.S. exports, directing the Federal Maritime Commission to define unreasonableness through rulemaking. The legislation would direct the commission to use the rulemaking to prevent ocean carriers and marine terminal operators “from adopting and applying unjust and unreasonable demurrage and detention rules and practices.”

     Ocean carriers also would be required to report to the Federal Maritime Commission on a quarterly basis about total import and export tonnage as well as loaded and empty containers on each vessel that makes port in the U.S.

     Bottom line: Democrats must face reconciling the House and Senate versions before it can become law. The two bills look very different. So some of the rah-rah commentary on this topic in the ag press may be premature at best.

— Russia and Belarus will launch joint military exercises — not far from the Ukraine border — on February 10. While some say this could be cover for a real intervention, most others think Putin will not want to rain on Beijing’s hosting of the Olympics, which ends Feb. 20. For more on the Russia/Ukraine situation, see The Week Ahead (link). Today, Emmanuel Macron, France’s president, will fly to Moscow to urge Vladimir Putin, his Russian counterpart, to back down from the conflict. On Tuesday, Macron visits Ukraine for talks with President Volodymyr Zelensky.

— Decisive round for Iran’s nuclear talks. Negotiators gather in Vienna this week for the ninth and probably decisive round of talks to revive the Iran nuclear deal. The Joint Comprehensive Plan of Action was signed under then-president Barack Obama in 2015, but abandoned by Donald Trump, his successor, three years later. It limited Iran’s nuclear program and tightened inspections in return for a lifting of many sanctions.