US-China Business Council offers foreign trade resources in wake of tariff disputes

A top staff member of the U.S.-China Business Council visited Arizona this week to offer her expertise on trade relations between the United States and China, partly in reaction to disputes over tariffs between the two countries.

Arizona exported about $1.2 billion worth of goods to China in 2018, and about $1.1 billion worth of services in 2017, according to a report from the USCBC, an organization that advocates for U.S.-China trade.

“Our mission, broadly, is to encourage policies both in the United States and China that are good for U.S. companies that do business with China,” said Anna Ashton, senior vice president of government affairs at the USCBC.

The national trade association has 225 member companies with business interests in China, most of which are large companies that have been operating in the country for about 20 years.

“China is a much more powerful country, both economically and militarily, than it used to be,” Ashton said. “It’s not inappropriate for us to be going through a process of rethinking exactly what that relationship should look like.”

But current policy being proposed by the Trump administration is worrying USCBC and its members, Ashton said.

“Even if tariffs were removed tomorrow — all of them — we would have a lot of other policies and proposed policies in the works that would make it much more difficult for American companies to continue doing business with China and in China, because there’s a ton of policy being promulgated to deal with perceived national security issues as well as human rights issues in China,” she said.

Those policies have commercial implications that might not be considered by the people proposing the legislation, she said.

In response, the USCBC has been reaching out to states and business associations, including state chambers of commerce, to make them more aware of the issues in Washington and to ensure their voices are heard when it comes to foreign trade policy.

“We feel like it’s really important for states and state chambers to be aware of what’s going on in Washington and also to make sure that they are contributing their voice to the policy conversation in Washington, that they’re making sure that their own states’ interests — commercial interests, economic interests — are being looked after as these policies are being promulgated,” Ashton said.

Arizona’s own interests are significant in that regard. According to Ashton, when considering both exports and imports, China edges out Canada as the state’s second-largest trading partner behind Mexico.

Arizona’s biggest exports to China include semiconductors, aerospace products and navigational and measuring instruments, while the most lucrative services include travel, education and industrial processes.

The state’s export of goods to China has grown by 45 percent since 2009. More notably, the export of services has grown by 260 percent since 2008.

Ashton said she hopes the phase one deal preliminarily reached between the U.S. and China will improve the outlook for this trade relationship.

“We know that there is a large purchase agreement for China to buy U.S. goods, and the figure that the U.S. has cited is at least $200 billion more over the next two years than the annual purchase amount in 2017, which was $128 billion — almost doubling the purchases of U.S. goods each year for the next two years,” she said.

That might not be possible, though, Ashton said.

“I’m interested to see how that’s going to happen, because I think the easiest way for us to reach that figure would be for China to be able to buy a lot of high-value, high-tech goods, but those are the kinds of goods that we’re actually increasing restrictions on [the Chinese] buying,” she said.

China has yet to confirm that number.

Ashton said, even if the bulk of the phase one agreement is focused on purchase mandates, “that’s okay,” because it has stopped the tariffs enacted in December 2019 and reduced the tariffs enacted in September 2019.

“If it greases the wheels for both sides to be more regularly at the table with each other, talking about the issues that the United States trade representative [Robert Lighthizer] identified in the first place in their 301 Investigation — things like tech transfer, IP [intellectual property] protection and enforcement, subsidies to state-owned enterprises, and other things that make the playing field un-level for foreign companies in China — then that’s a good thing,” Ashton said.

Overall, USCBC members believe there needs to be a greater focus by the Trump administration on working with U.S. allies, including the European Union and Canada, to put pressure on China to make the changes that need to be made, she said.

“The steel and aluminum tariffs that affect a lot of our trading partners — many of those trading partners are countries that we used to be working together with to address challenges in China,” she said. “We’re hoping that there will be a more multi-lateral approach.”

Ashton said she thinks increased awareness could help ensure polices are crafted more carefully with regard to U.S. trade interests.