China Gives U.S. The Cold Shoulder

Grind for September 27th, 2018
“I sincerely believe…that banking establishments are more dangerous than standing armies.”

– Thomas Jefferson

Buzz Kill

The Headline

Colombia’s production of cocaine reaches all-time high

The Grind

Colombia’s production of cocaine increased 31% to hit an all-time high of 1,400 tons in 2017.

This figure comes from the UN Office on Drugs and Crime, which estimates Colombians are using 171,000 hectares of land to grow coca plants (a 17% increase compared to 2016).

Colombian officials burn any illicit plants they find, but fields and labs are often hidden deep in the jungle and defended by gangs. Last year, officials seized 400 tons of cocaine.

The UN report estimates the production of cocaine to be worth $2.7 billion in the local market – which makes it more lucrative to grow coca plants than to grow safer crops like avocados.

Other locals make money working as informants to help traffickers smuggle their product onto container ships.

“As long as there is coca and cocaine, those groups will have support to continue their fight against Democracy and to continue their fight against [the] civilian population,” says General Alberto Mejia.

The Details

The United States provides about $400 million per year to assist in Colombia’s war on drugs, but the US is also the largest consumer of cocaine. US demand for cocaine is increasing substantially, with the number of Americans dying from overdoses involving cocaine more than doubling since 2013. Demand for cocaine is also increasing in Europe.

Other factors exacerbating the problem include the 2016 peace deal with the drug trafficking organization FARC, which did little more than facilitate the rise of other illegal groups, and the 2015 decision to stop the aerial spraying of herbicides on illegal crops.

To make matters worse, today’s coca crops produce 33% more leaf than they did in 2012; and, despite the increasing seizure of illicit plants, the eventual price for consumers has decreased by more than 10%.

What all of this translates to is an increasing murder rate in Colombia and the deaths of thousands of Americans from drug overdose.

The Saga Continues

The Headline

China cancels trade talks with US

The Grind

The Trump Administration on Monday announced new tariffs on $200 billion in Chinese imports.

China responded by backing out of scheduled trade talks and imposing taxes on $60 billion in US goods.

Trump then promised to increase pressure on Beijing by taxing an additional $257 billion in Chinese products.

The Details

Treasury Sec. Steven Mnuchin is still hoping to meet with Vice Premier Liu, who had been planning to visit Washington on September 27th following negotiations led by Vice Commerce Minister Wang Shouwen.

Both of those trips have been canceled, but according to officials Beijing is still considering the possibility of talks with Washington later this year.

“There are no meetings on the books right now,” admitted a senior White House official. “The President wants us to continue to engage to try to achieve a positive way forward, but it does take China to come to the table in a positive way.”

Previous offers from China – including increased purchases of US agriculture and other products – have been deemed as inadequate in addressing the massive trade deficit between the two countries.

If officials fail to resume negotiations, Trump is expected to implement taxes on virtually all US imports of Chinese products – which in 2017 totaled $505 billion (compare this to China’s imports of $130 billion in US goods).

Chinese officials are viewing Trump’s newest threat as an appeal to voters ahead of midterms and have recommended waiting until after the elections to resume negotiations.

Even if Trump begins the process of implementing more tariffs, it would take weeks for the new taxes to go into effect (i.e., giving China more than enough time to reconsider).

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