Tag Archives: trade relations

“New Chapter” for two countries

Book your flights to Cuba, because barriers and travel warnings are now down. For the first time in half a century tensions between the United States and the island off the coast of Florida, which stood as a dark power during the Cold War times on the side of Russia, have been eased.

U.S. President Barack Obama has called for a move to reestablish diplomatic ties with Cuba (Politico). The move and efforts have suddenly been made known to the public as Cuba released a long time U.S. hostage who had been held captive since 2009. Of course U.S. citizen’s lives are important, but what pushed such a big move for friendship after the release of one hostage?

“[Alan] Gross was convicted of espionage by a Cuban court in 2011 and sentenced to 15 years for bringing telecommunication devices into Cuba” (WREG Memphis).

In addition, the United States has released 3 Cuban spies.

President Barack Obama (left) greets Cuban President Raul Castro during the memorial service for Nelson Mandela on Dec. 10, 2013, in Johannesburg, South Africa. | Getty

Although seemingly sudden, the deals between U.S. and Cuban officials has been culminating over the past year. Obama calls the embargoes on Cuba to be a failure.

What this means:

    • Travel restrictions eased
    • Increased exports of U.S. goods to Cuba
    • U.S. travelers to bring in some items
    • Embassies will be opened in both countries

While only Congress can formally overturn the five decades-long embargo, the White House has some authorities to liberalize trade and travel to the island,” WREG Memphis.

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Analysis

With the petro dollar value falling, Russia loosing influence and Venezuela’s economy faltering in the midst of falling prices; some of Cuba’s main financial and export partners are withering at the core. It’s no wonder, if Cuba along with other countries is turning its eye to new partners. It’s not about the prices of oil, but petro politics and who’s producing it. The reality is the U.S. and Canada fracking and shale revolutions are changing dynamics. The global economy and relations are switching as can already be seen as almost a 50-year silence is being broken between two former rival countries.

 

 

The Dawn of the Dragon

Since the emergence of China as a real economic competitor in 2005, China has not ceased the development within their borders, let alone outside of them. China has surpassed meager relations with the United States and has greatly expanded its global trading system, even to the exotic lands of Latin America.

According to CNN money reports, today China has the second largest economy; it has trampled Germany and Japan with a GDP of 10 trillion dollars. China, however, still follows behind the United States who has a total GDP of 17.5 trillion dollars.

With the world’s largest population, ~1.3 billion people, the Asian beast does not have a sufficient amount of oil, natural gas, copper, and other natural resources and foods that it needs to sustain a population as large as itself.

Although many African nations support most of China’s import needs, China has stretched out its tentacles to Latin America for resources. The countries China is strategically working with being: Argentina, Bolivia, Brasil, Chile, Ecuador, Mexico, Panama, Peru, Venezuela, and Cuba. China’s trade in 2012 with Latin America reached $261.2 billion and is expected to hit $400 billion in 2017 according to Trade Solutions by JP Morgan.

China’s need for resources to sustain their production as well as their population does not appear to be dissipating. From a 2005 Wilson Center study, China was Chile’s second largest export market, at the time importing 1/5 of its copper and 45 percent of its wine and grapes imports from Chile. Various other materials, like soy beans are mass exported from Brasil and Argentina, a total of 68 percent between the two countries alone makes up China’s soy bean imports. An even more outstanding number was in 2005, China depended on Peru and Chile for about 80 percent of their imported fish meal.

Brasil having the largest economy in Latin America is a key partner of China, as was emphasized by the global recession, when the importance of the Brasilian market and trade was made clear. China has also become one of the main funders of Brasilian exploration for newly discovered deep-water oil reserves.

However, attention has switched to Argentina’s mining and oil sectors. In 2003, the CNCP (China National Petroleum Company), made agreements with Pluspetrol, an oil and gas firm that works in northern Argentina and Peru. In 2010, China National Offshore Oil Corportation (CNOOC) invested $3.1 billion for 50 percent for Argentina’s Bridas Holdings (an oil and gas corporation based in Argentina).Latin America Export Destinations

The relations don’t stop solely with Brasil and Argentina, but continue on, creating new political pacts and introducing market battles to the region. Agreements such as APEC and BRIC further emphasize the mutual relations between the regions. Who benefits from this Chinese-Latin American relation? Is it all a geopolitical power dispute among the great powers? What Latin American economies are becoming more dependent on trade with China and why?