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Kicking a Gift Horse in the Teeth

by ARGeezer Fri Aug 23rd, 2019 at 09:35:05 PM EST

China started buying oil from Iran after Trump imposed sanctions on the country. So why is it so difficult for the USA to find another buyer for soybeans after China stops buying from the USA? (Quara digest)

China was buying oil from Iran long before Trump put sanctions on Iran. In fact, aside from attempting to bankrupt Iran, Trump's sanctions on Iran were also targeted to disrupt the Chinese & other BRICS economies that have been bypassing the US$ in international trade. China and most of northern Asia are dependent on imports of Middle Eastern oil. It is one of the reasons massive amounts of money is being spent on building pipelines to Russia's oil fields.

As for soybeans, USA farmers can easily sell their crops, the market is huge.

However, USA farms, by world standards, are grossly inefficient and the markets will most often not pay the price needed by USA farmers to make soybeans, corn, and other products economically viable (worth growing).

China doesn't buy from the USA by choice, it can buy cheaper and better quality product elsewhere. It buys from the USA to assist the USA balance of payments, in effect reducing the profitability of its sales to the USA (which happen to be four times bigger than what it buys from the USA).

Realise that the USA is a highly protected and highly subsidised economy. This fact is what makes the USA so vulnerable in trade negotiations and why Trump has imposed increased indirect taxes (tariffs) on the USA consumer, who are the only ones filling the Treasury's coffers, so Trump has the finances to ease the suffering he has caused USA farmers and manufacturers with his financially irresponsible economic policies.

The expression used by US VP Cheney ... last "throes" of Donald Trump's presidency in the White House.

No need to clarify ... the Boss is losing it!

In a bad sign for trade talks, Trump deploys a new label for China's Xi - 'enemy' | CNBC |

Continued a few minutes later ...

Apple and chip stocks slide after Trump orders US companies to look for alternative to China | CNBC |

White House trade policy - the wheels coming off!

Posted yesterday in my diary ... Trump Lost BIG!!

'Sapere aude'

by Oui (Oui) on Sat Aug 24th, 2019 at 03:44:13 AM EST
So that we don't have to!

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Aug 25th, 2019 at 10:13:19 AM EST
[ Parent ]
Profits is the wrong way to think about it. Bales of dollar bills are not actually useful to China. China was buying US crops to limit the degree to witch they were shipping the US stuff and getting numbers in a computer in return.
by Thomas on Sat Aug 24th, 2019 at 08:29:58 PM EST
Exactly. China was doing the USA a courtesy by recycling trade dollars. It was also beneficial to them. But it was something they could forego. And China had bought more than they needed in previous years and just stock piled the soy. Perhaps they were also prescient.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 25th, 2019 at 03:10:53 AM EST
[ Parent ]
about Sino-American "trade relations"

Quora | Why does China import soybeans from the US?

May 2018, pulp rag: The world's biggest soybean importer, China has nearly tripled its imports from Russia, according to Bloomberg. Russian trade data show the country sold 850,000 metric tons of soybeans to China between July 2017 and mid-May this year....
Oct 2018, trade rag: If you thought it was odd that Egypt was the number one buyer of soybeans in July, you might want to sit down. The top buyer of U.S. soybeans in August 2018 was Iran. ...
Aug 2019, gov rag: With the arrival of African Swine Fever in China in mid-2018 along with the ongoing trade dispute, a steady decline in China's soybean import volume has been observed with imports currently forecast to reach 83 million tons in 2018/19, 11 million tons below 2017/18.  If not for the increase in demand from other markets, spurred in part by lower prices, the current trend in global soybean trade would have turned negative. ...
History of Soy in the Middle East
Quora | Why doesn't Russia just sell more oil and gas to China since they are two of the world's largest exporters and importers, respectively? Russia would mitigate Western sanctions and China would rely less on sources that are politically unstable.
2008-2018, EU28-CN-US: gross vol and value, commodity
2018 CN: Top 15 trading partners, gross vol and value
2019 RU: Top 5 trading partners, gross vol and value
US-RU: 1992-2019 gross value
Russia-China to discuss growing energy ties amid global trade uncertainty: Russia remained China's top crude oil supplier in 2018, CNPC and CNOOC agree to take 10% each in Novatek's Arctic LNG 2, CNPC 20% stake in Yamal LNG.
China-Russia gas pipeline construction begins new phase

Quora | Is there evidence that China is buying Iranian oil?

Iran is a founding member of OPEC and the OPEC open market Reference Basket (ORB).
Iran Crude Oil Production gross BBL/D/1K, 1973-2019 (e)
April 2019: inventory, China, India, S. Korea  
May 2019: crude stock draws, Russia, intermediaries, refiners
July 2019: JCPOA signatories reaffirm commitment to Iran nuclear deal
Aug 2019: minimum vol, INSTEX settlement
Defying U.S. Sanctions, China and Others Take Oil From 12 Iranian Tankers
US Side-lined
China and Russia are signatories of the Joint Comprehensive Plan of Action (JCPOA). The treaty modified Iran's nuclear programme in exchange for termination of sanctions by UNSC and EU regulation. Neither JCPOA terms of agreement nor UNSC and EU instruments stipulate sanctions against oil trade with Iran.
The US unilaterally withdrew from JCPOA 8 May 2018. The US terminated US sanctions relief for Iran and reasserted primary and secondary sanctions against third-parties contemplating trade Iran 6 Nov 2019. Now the KSA and Russia control supplies.

Diversity is the key to economic and political evolution.
by Cat on Sun Aug 25th, 2019 at 01:34:11 AM EST
US soy bean sales to China declined much more than 11 billion tons. China's total decline in impors was 12%.  
USDA's Federal Grain Inspection Service reveals that through the first seven weeks of the 2018/19 marketing year, 7.4 million bushels of new-crop U.S. soybeans have been shipped to China, down 97 percent from prior-year levels. Through the first seven weeks of the previous marketing year, the U.S. shipped 239 million bushels of soybeans to China, and during that same period in the 2016/17 marketing year the U.S. shipped 211 million bushels.

The retaliatory tariffs of 28 percent on U.S.-sourced soybeans have resulted in a sharp decline in China's purchases. Shipments of soybeans to China have fallen by 98 percent along the Mississippi River, 95 percent out of the Columbia River and by 91 percent from the Puget Sound. Shippers in the Interior, South Atlantic and East Gulf regions have yet to make a soybean shipment to China, Figure 1.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 25th, 2019 at 03:02:39 AM EST
[ Parent ]
Who am I to argue with the USDA?
Wonderful, venerable institution.

Diversity is the key to economic and political evolution.
by Cat on Sun Aug 25th, 2019 at 03:25:14 AM EST
[ Parent ]
"Why doesn't Russia just sell more oil and gas to China since they are two of the world's largest exporters and importers, respectively? Russia would mitigate Western sanctions and China would rely less on sources that are politically unstable."

Perhaps China wants to diversify its petroleum sourcing. Perhaps it needs more oil than can easily be supplied by Russia or perhaps it gets the oil at a better price.

But, most significantly, China wants to consolidate its grip on Asia, of which Iran is an important part. At the same time China greatly increases its presence in the Indian Ocean  and South Asia. China has a port facility in Columbo, Sri Lanka and has docked both nuclear and diesel submarines there. It has established a naval port in Djabouti and may be planning one in Pakistan,

Given its strategic placement, Sri Lanka is fast becoming the pivot of rising Chinese naval presence in the IOR, in that, China also has a substantial controlling stake in the Hambantota port, with Colombo agreeing to grant Chinese state-owned companies operating rights to as many as four berths in exchange for an easing of loan conditions. Besides, there are unconfirmed reports of construction of a Chinese-run aircraft maintenance facility near Hambantota in order to service PLAAF assets based in Sri Lanka. In neighbouring Pakistan, the docking of a Chinese submarine in Karachi, following the handing over of the port's operational control to China Overseas port Holdings is another step towards consolidating Chinese permanent naval presence in South Asia.

These developments, significantly, are in sync with China's much pronounced Maritime Silk Route strategy -- a prominent feature of the upcoming 13th Five-Year Plan (2016-2020). The maritime route is a proposed sea network of ports, coastal infrastructure projects beginning in Quanzhou in the Fujian province and culminating in the northern Mediterranean Sea. By virtue of this fresh strategy, Beijing seeks to gain greater access to the strategic pathways of the Indian Ocean, alleviated access to the Gulf oil -- which consequently shall reduce its dependence on the passage through the Straits of Malacca -- a key potential vulnerability for China in the event of a future conflict.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 25th, 2019 at 03:34:05 AM EST
[ Parent ]
'We're already at war economically,' Iranian Foreign Minister Zarif tells FRANCE 24
Miriam Pirzadeh, FRANCE24: It seems that Iran will leave some of her engagements of this period, in a few weeks?
ZARIF: No, it means that Iran has the right in JCPOA to take some measures. We informed our European partners as well as our two other members. That is Japan--ah, no, sorry--Russian and China that we will be taking certain measures. Those measures are reversible within a few hours, not even days, provided that Europe takes the measures that it is supposed to take legally in order for the Iranian people to receive the economic benefits of JCPOA which remains one of tenets, one of the principles and pillars of this deal. This deal based on two pillars. Iran respecting its nuclear obligations and Europe and the United States, China, and Russia normalizing relations with Iran along with the rest of the international community because this is also a [UN] Security Council solution.
US piracy
ZARIF: We will continue to sell our oil. The United States will try to prevent it, but we'll continue.
FRANCE24: How?
ZARIF: Well, we know the ways. We have dealt with US aggression and US economic terrorism for the past forty years, and we will live with it. We have prospered. We have made progress. We passed an eight years of foreigh aggression against our country relying on our own people. Don't forget, missiles that shot down the most sophisticated US drone were Iranian made, because we had  S-300s. We could have used S-300s, but we used Iranian missile system to show that while we have friends, we don't rely on anybody for our defense.
invitation to the White House declined: "Iranians are allergic to threats."

Diversity is the key to economic and political evolution.
by Cat on Fri Aug 30th, 2019 at 12:50:12 PM EST
[ Parent ]
I'm surmise, the G7 isn't going as smoothly for Team Trump as hoped for. Apparently, they were prepared for the worst. Note the publication date, 19 March 2019, of the CRS report.

Powerful, OBSCURE law is basis for Trump 'order' on trade

China's announcement Friday that it was raising tariffs on $75 billion in U.S. imports sent Trump into a rage and White House aides scrambling for a response.

Trump fired off on Twitter, declaring American companies "are hereby ordered to immediately start looking for an alternative to China." He later clarified that he was threatening to make use of the International Emergency Economic Powers Act in the trade war

Over the course of the twentieth century, Congress delegated increasing amounts of emergency power to the Presidentby statute. The Trading with the EnemyAct was one such statute. Congress passed TWEA in 1917 to regulate international transactions with enemy powers following the U.S. entry into the First World War. Congress expanded the act during the 1930s to allow the President to declare a national emergency intimes of peace and assume sweeping powers over both domestic and international transactions. Between 1945 and the early 1970s, TWEA became a critically important means to impose sanctions as part of U.S. Cold War strategy. Presidents used TWEA to block international financial transactions, seize U.S.-based assets held by foreign nationals, restrict exports, modify regulations to deter the hoarding of gold, limit foreign direct investment in U.S. companies, and impose tariffs on all imports into the United States.
raising questions about the wisdom and propriety [!] of making the 1977 act used to target rogue regimes, terrorists and drug traffickers the newest weapon in the clash between the world's largest economies.
Research Problem
How to reach beyond the political cliches about "who lost Iran"? How to recover the thousands of secret or confidential American communiques, and piece together a complete, day-to-day record of U.S. interactions with the Shah, Iranian military officials, opposition politicians, and the religious movement? How to gain the inside historical grasp needed for contemporary policy debate?
It would mark the latest grasp of authority by Trump, who has claimed widespread powers not [?] sought by his predecessors despite his own past criticism of their use of executive powers.
The act gives presidents wide berth in regulating international commerce during times of declared national emergencies. Trump threatened to use those powers earlier this year to place tariffs on imports from Mexico in a bid to force the U.S. neighbor to do more to address illegal crossings at their shared border.

It was not immediately clear how Trump could use the act to force American businesses to move their manufacturing out of China and to the U.S, and Trump's threat appeared premature -- as he has not declared a [national] emergency with respect to China.

Extension of Iran Sanctions Act passes U.S. Congress, 2016
"sending the measure to the White House for President Barack Obama to sign into law and delaying any potentially tougher actions until next year"
US Congress Approves Iran, Russia, and North Korea Sanctions Bill, 2017
Senate shoots down attempt to curb Trump's Iran war powers, 2019

archived odious
Trump accuses France's Macron of sending 'mixed signals' to Iran
Trump Extends Sanctions, National Emergency With Respect to Venezuela
The Dictator and The Decider
Reid Rule

Diversity is the key to economic and political evolution.

by Cat on Sun Aug 25th, 2019 at 03:13:53 AM EST
"Trump curtly told reporters he had 'no comment' on Zarif's presence. Officials said the White House was not aware in advance of the invitation to Zarif -- a further indication of Trump's diminished role."

Diversity is the key to economic and political evolution.
by Cat on Sun Aug 25th, 2019 at 08:29:51 PM EST
[ Parent ]
Iran slams European powers as nuclear deal UNRAVELS
"The European Union was supposed to be the replacement of the US but, unfortunately, they failed to act on their promises," Salehi told reporters.
French President Emmanuel Macron and his Russian counterpart Vladimir Putin on Sunday discussed Iran in a telephone conversation, their offices said. The two leaders "spoke in favour of uniting the efforts of all interested parties in order to preserve the JCPOA and full compliance with it", a Kremlin statement
On Saturday, Iran's [AEA] said it had taken another step by starting up 20 IR-4 and 20 IR-6 advanced centrifuges. Under the [JCPOA], Iran was allowed to enrich uranium using only first generation -- or IR-1 -- centrifuges. Despite the latest move, the agency said Iran would allow the [International] AEA to continue monitoring its nuclear facilities in accordance with the 2015 agreement. Feruta also held talks on Sunday with Iran's top diplomat Mohammad Javad Zarif. [Feruta] said he would report the findings from his visit to Iran to the agency's board of governors when it convenes for a quarterly meeting in Vienna on Monday.
Oil Producers Mull Supply Cuts as Trade War Hits Prices
"OPEC has traditionally resorted to production cuts in order to shore up the prices," said M. R. Raghu, head of research at Kuwait Financial Centre (Markaz). "However, this has come at the cost of reduction in OPEC's global crude market share from a peak of 35 percent in 2012 to 30 percent as of July 2019," he told AFP.
[...US sanctions wedge...]
The deliberations also coincide with stymied production from Iran and Venezuela and slower growth in US output, meaning that supplies are not excessively high. "US shale output growth does not have the same momentum as in previous cycles, and OPEC production is at a 15-year low, having fallen by 2.7 million barrels per day over the past nine months," Standard Chartered said in a commentary last month.
US will sanction whoever purchases Iran's oil, official says
"We will continue to put pressure on Iran and as President (Trump) said there will be no waivers of any kind for Iran's oil," Sigal Mandelker, US Treasury Under Secretary for Terrorism and Financial Intelligence, told reporters.
France has proposed offering Iran about $15 billion (€13.6bn) in credit lines until year-end if Tehran comes fully back into compliance with its 2015 nuclear deal, a move that hinges on Washington not blocking it, Western and Iranian sources said.

In addition to saving the deal, Tehran wants to restart selling its oil. Two Iranian officials and one diplomat told Reuters on Aug. 25 that Iran wants to export a minimum of 700,000 barrels per day of its oil and ideally up to 1.5 million bpd if the West wants to negotiate with Tehran to save the nuclear deal.

Diversity is the key to economic and political evolution.
by Cat on Tue Sep 10th, 2019 at 01:38:08 AM EST
And China will continue to purchase Iranian oil, possibly offering PLA Naval escorts for tankers through the straits. If the USA starts a shooting war in the Gulf they face the risk that Iran will destroy Gulf Arab oil infrastructure such that it will be off line indefinitely.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 25th, 2019 at 05:07:50 PM EST
[ Parent ]

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