By Tom Hance and Dale Thorenson
The new year has started with significant actions on trade issues that dominated agricultural markets in 2019. The U.S. Senate passed the United States-Mexico-Canada Agreement (USMCA) on Jan. 16 by a vote of 89-10. Final ratification of the agreement, which replaces the North America Free Trade Agreement (NAFTA), is expected by the three countries by the end of January. For agriculture, the USMCA maintains tariff-free market access between the three countries without significant changes otherwise.
The U.S. also signed a phase one trade agreement with China that includes a commitment by China to purchase a minimum of $80 billion in U.S. agricultural products over two years (2020-2021). These purchases will be a substantial increase over the $24 billion in such products exported to China in 2017, which was the previous annual high-water mark. The value of agricultural goods to be purchased by China in 2020 and 2021 will be no less than $12.5 billion and $19.5 billion, respectively, in addition to the 2017 baseline.
While the first few weeks of 2020 have seen significant developments on trade policy, the remainder of January will focus on the Trump impeachment proceedings in the Senate. It is expected that the majority Republican Senate will move quickly through the impeachment proceedings to conclude them in two weeks. President Trump is scheduled to deliver the State of the Union address on Feb. 4 and deliver his fiscal year 2021 budget proposal to Congress on Feb. 10.
Given this atypical Presidential election year, little legislation is expected to be enacted in 2020. It is unlikely Congress will complete the annual appropriations bills prior to the election, triggering a Continuing Resolution (CR) to carry government funding into a lame duck session of Congress and possibly into 2021. House Democrat leadership intends to unveil a comprehensive infrastructure package, but agreement between the two parties and the House and Senate will be a challenge.
The surface transportation authorization bill (Highway Bill) and Water Resources Development Act are due for reauthorization in 2020. This may prompt Congress to address infrastructure needs. However, election year partisanship and funding debates will again be a factor, and if recent history is a guide, Congress will opt to pass multiple short-term extensions to the Highway bill before agreeing on a long-term reauthorization.
While the outlook for major legislative accomplishments in 2020 may not be rosy, the good news is that Congress and President Trump did agree to a two-year top-line budget in 2019, which suspends the debt limit into 2021. This provides some hope for passage of the FY 2021 appropriation bills by the end of the calendar year, if not the end of the fiscal year.
Tom Hance is a policy expert and Dale Thorenson is associate director of the U.S. Canola Association with Gordley Associates government relations firm in Washington, D.C.