Question

If the United States has the ability to grow its own coffee, why would it import coffee from Columbia? Additionally, why does China import its oil from Iran in exchange for technology?

Answer 1

Colombia was the biggest coffee trading partner of the United States in 2019, with the U.S. importing 1.14 billion dollars’ worth in that year. Brazil, another South American country known for its coffee tradition, was second, exporting over 1 billion dollars of coffee to the U.S. in the same year.

Colombian coffee.Colombia is well known for its coffee. The fictional character Juan Valdez, used in advertisements for the National Federation of Coffee Growers of Colombia, has become an icon in popular culture, instantly associated with Colombian coffee. In 2018, the country was the third largest coffee grower in the world, producing 14.2 million 60-kilogram bags of coffee. About 16 percent of the coffee imported by the United States from Colombia was Fair Trade certified in 2016. Fair trade is a movement which aims to improve conditions for workers in agriculture and the environmental sustainability of the crops harvested. In the same year, 22 million dollars of the imported coffee from Colombia was organic.Colombia is the 2nd biggest coffee producer and the biggest producer of Arabica coffee, which is considered the highest quality bean.

China’s outbound capital policy is an attempt to reforge the Middle East in its own economic likeness through a revised ‘Going Global’ geoeconomic macro policy. China-Iran oil trade is only the beachhead of a deeper economic integration agenda, yet the geoeconomic management institutions that are currently forming will define China-Iran and wider China-Middle East engagement for decades to come.China’s demand for Iran oil is only one side of a geoeconomic game that takes in multiple stake-holders in nuclear energy, advanced manufacturing, offshore distributed manufacturing zones, and global trade routes.Iran’s dependence on China for oil exports may be problematic for Iran, but for China, the relationship represents a multiplex of institutional and policy opportunities.

China’s wider foreign policy in the Middle East is still emerging, however the institutions surrounding the Iran-China oil trade are already well advanced. Macro geopolitical rhetoric will continue to be delivered in terms of ‘civilization-to-civilization’ Athens Forum dialogue. However the geoeconomic institutional realities are more sobering than this affectation.Iran-China oil trade is a long-term institutionalized project that is likely to remain quietly stable through the 2020 oil price volatility. And while the China-Iran geoeconomic relationship is often seen from outside as geopolitics in the extreme, the institutional realities are more pragmatic with fewer hyberbolic foreign policy soundings from the domestic China perspective.The overarching bilateral framework for petroleum cooperation between the two states was established under the Long-term agreement on crude oil trade between the People’s Republic of China and the Islamic Republic of Iran treaty, signed on March 17 2002. The treaty provides for at least 12 million tons of crude oil export annually.In order to implement the agreement, overcome various stages of sanctions and to integrate China’s Iran policy with China’s wider ‘Going Global’, ‘International Capacity Cooperation’, and ‘Belt and Road’ foreign policies, a variety of institutions have developed to manage the China-Iran petrochemical policy relationship.

The most recent, and important, of these institutions is the China Petrochemical Industry International Capacity Cooperation Enterprise Alliance (ICC Petrochemical Industry Alliance) established in 2016.Naturally, strengthening geoeconomic ties with Iran serves internally coherent economic goals. But China building a maritime sphere of influence in the north-western Indian Ocean is impossible to ignore. China in the Middle East is a new global economic dynamic. And China’s long-term institution building in Iran is a vanguard of China’s wider Indian Ocean geoeconomic policy.