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Europäische Wirtschaft

D'arcy Mcgee

2012

Sandro H. ©

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ID# 33008







The relationship between Colombia and USA

Distribution of wealth

 

Inhaltsverzeichnis

Trade relationship between Colombia and the United States 1

Commodities from Colombia. 2

Commodities from the USA. 3

Coffee. 3

Social Issues and Responses 4

Sources: 5

 

Trade relationship between Colombia and the United States

The USA and Colombia have both free market economies and have strong relations which reach from the energy sector, mining and oil export, other to the cultivation of cocoa and coffee beans  and even reach the illegal trade of drugs like cocaine. Therefore the war on drugs and also terrorism is one of the main contributions to relationship of these countries. Despite those major reasons, what also affects the huge investment of the USA in Colombia is the issue of Human rights as well as general territorial tensions and conflict in Colombia. The USA is Colombia’s biggest trading partner worldwide, some people argue Colombia has total economic dependents to the US.

Commodities from Colombia

Due to Colombia’s geographical and temperature conditions, there is a diverse variety of agricultural products they export. The United States imports cacao, coffee, beans, bananas, Tabaco and coconuts from Colombia. In 2000 the States imported Colombian goods being worth 6 billion dollar. In general the agricultural belt is Colombia’s most important, it has a weak developed technical industry and therefore counts on human labor. The issue of drug trafficking and drug cartels makes it harder for farmers and the government to maximize their economic potential.

The main attraction for US investment on Colombia is the energy sector.  The US imports natural gas, oil, and coal from Colombia. When it comes to energy generation, Colombia falls into the same category like most other Latin-American countries, simply because the US has, throughout the cold war for political interest, established strong economic and political relationships with the countries surrounding Colombia. And even with the fall of the Soviet Union, these countries still are from great important to the states.

 

Although the energy sector takes the biggest part of US interest, what shall not be overlooked is the service sector. It takes up 52.7% of the GDP and inhibits 36.1% of the Colombian labor force.  Tourism is becoming more and more popular in Colombian, when comparing it to the time before millennium. In 2010 Colombia had more than 1.2 million visitors from which the majority came from Venezuela, Brazil and the United States. As with the agricultural belt, Colombia again struggles to maximize for economic potential with tourism as well due to the violent tensions within the country.

 

 

 

 

Commodities from the USA

The largest exported products from the States to Colombia are manufactured petroleum and coal; in fact they made up to 89 percent of manufactured merchandise. Adding to that other significant commodities is general purpose machinery. These are Computer equipment, machinery for construction and agriculture and basic chemicals. Therefore in general Colombia mainly receives technological goods and manufactured products, rather than pure resources.

 

Coffee

Colombia produces Coffee in all price classes. It is often rewarded as a high quality product with a distinctive taste. In general the most holistic and efficient way of cultivation is, after the Soil was given some rest from the previous harvest, to emigrate already planted seedling from nurseries outside. This is because during the usual growing time most seeds are eliminated from the rain. On the other hand a great percentage of Coffee beans are being picked from wild tress which did not get artificially planted. The beans in raw form look like cherries.  There different ways of picking these cherries, the two major ones are selective picking, which is to only pick ripe cherries so the rest of the pant remains untouched and Strip picking, where the whole crop is being picked. Usually Colombian Coffee beans are primarily picked by Human labor, however to the country a competitive edge Colombia regularly increases the use of machines, which are imported by industrial countries like the USA, Germany and France for example. After the picking the beans are being “washed”, to separate the bean from the fruit and also isolate the good beans. Following this the beans are being cleaned, and dried in the sun. Continuing with removing the last layers of fruit and dry skin there are now different options depending on the expected quality of the Coffee. These are polishing, which improves the appearance and taste and sorting, which can be done by colour or density and size. After these basic steps the coffee can be stored. The local farmers sell their coffee to Companies which then export the product. The coffee bags arrive in the various countries and are distributed to supermarkets, shops and so forth. The consumer purchases the Coffee and consumes it normally my roasting it.

 

Social Issues and Responses

To start off, Colombia has always had environmental issues throughout the cold war, to suit the US demand for wood and oil. Therefore the burning of fossil fuels and the soil degradation associated with over cultivation and the chopping of trees are just some indicators of the damage to nature. What also contributes is the illegal cultivation of coca plants, which the government seeks out for to destroys. Deforestation is probably one of the major issues Colombia is facing today and its importants will for sure increase in the near future, due to the fact that Colombia can’t allow exceeding its environment because of the way its economy runs. The damage to the environment and climate change has led into a decline of Colombian coffee production from 12 million bags in 2006 to 9 million bags in 2010, according to the New York Times. The article also stated that the rising temperature creates more and more problems for the cultivation requirements and coffee beans like Coffea Arabica.

There are many Human rights abuses in Colombia which are associated with the working conditions and the exploitation of resources. The highest poverty rate can be found in the mining zones. Foreign western cooperation’s who control those areas; practically force locals to work for a unfair payment  in order so suit the economic demand. This also leads into an ascending rate of child labor, which is one the human right issues Colombia is increasingly facing. Coffee gives a great example of how the trade relationship creates social issues. To maintain competitive with countries like Brazil and Panama, Colombia must sell its coffee cheaper and cheaper. Local authorities work for inappropriate prices. Moreover Colombia is forced to increase the amount of coffee produced, which leads into soil degradation, the exhaustion of water supply, the destruction of the forest and desertification. The Colombian environmental management has been multiple times criticized from inefficient planning and harvesting.  The low standards of living and the bad payments, creates job opportunities in the illegal drug transfer of cocaine. Because of the increasing number of people interacting in that field, some countries fear that Colombia may become a Narco state at some point. This situation creates violence and instability in the country. Due to this fact, a lot a company’s utilize paramilitaries. The company Chiquita Banana has been recently exposed for subsidizing paramilitaries near their plantations for protection use and also to suppress any riots of low paid workers.

 

The government of Colombia and the international Community response is expanding their police and military forces to stabilize internal conflicts. NGO like the Colombian Coffee Growers Federation, fight for rights and economical fairness of farmers. There are several agreements between Colombia and the USA, which also fight for these rights. Over the last 10 years, these initiatives managed to decline the right of violence and crime, the GDP growth has remained constant and unemployment did not rise as well, in fact extreme poverty has eventually dropped. Therefore in comparison to the 90’s Colombia’s situation has strongly stabilized. In my opinion the International Community’s response has been a good approach for Colombia’s people and economy. But I think that there are a lot of factors it did not seek out to improve like the environmental issues and the inefficient cultivation. I believe that the next step for the international Community is to enforce laws for western companies to generate Colombia’s recourses in a more sustainable way and also not to push productivity over the rights of each individual worker. If these demand are not met in the near future, then the not only the Colombia’s economy will fall, Its people will suffer from extreme poverty and territorial violence and if  that happens It will have a drastic impact on the States as well, in nearly every aspect.

Sources:

 


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