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 , an organization that advocates for U.S.-China trade.

鈥淥ur 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,鈥� said Anna Ashton, senior vice president of government affairs at the .

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.

鈥淐hina is a much more powerful country, both economically and militarily, than it used to be,鈥� Ashton said. 鈥淚t鈥檚 not inappropriate for us to be going through a process of rethinking exactly what that relationship should look like.鈥�

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

鈥淓ven if were removed tomorrow 鈥� all of them 鈥� 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鈥檚 a ton of policy being promulgated to deal with perceived national security issues as well as human rights issues in China,鈥� she said.

Those policies have 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.

鈥淲e feel like it鈥檚 really important for states and state chambers to be aware of what鈥檚 going on in Washington and also to make sure that they are contributing their voice to the policy conversation in Washington, that they鈥檙e making sure that their own states鈥� interests 鈥� commercial interests, economic interests 鈥� are being looked after as these policies are being promulgated,鈥� Ashton said.

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

Arizona鈥檚 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鈥檚 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.

鈥淲e 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 鈥斅燼lmost doubling the purchases of U.S. goods each year for the next two years,鈥� she said.

That might not be possible, though, Ashton said.

鈥淚鈥檓 interested to see how that鈥檚 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鈥檙e actually increasing restrictions on [the Chinese] buying,鈥� 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, 鈥渢hat鈥檚 okay,鈥� because it has stopped the tariffs enacted in December 2019 and reduced the tariffs enacted in September 2019.

鈥淚f 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 鈥斅爐hings 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 鈥斅爐hen that鈥檚 a good thing,鈥� 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.

鈥淭he steel and aluminum tariffs that affect a lot of our trading partners 鈥� many of those trading partners are countries that we used to be working together with to address challenges in China,鈥� she said. 鈥淲e鈥檙e hoping that there will be a more multi-lateral approach.鈥�

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

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Throughout the country, U.S. agricultural exporters, including soybean and pork producers, have taken major hits in their economic numbers as a result of the tariff war with China.

Now, The Trump Administration will spend $16 billion to help farmers hurt by the US-China trade war, Agriculture Secretary Sonny Perdue announced yesterday.

The fear among farmers, importers and consumers in Arizona is that Chinese tariffs placed on their goods will keep them out of the Chinese market for a long time.

鈥淲hat’s going to end up happening is you end up having an impact on those businesses that import,鈥� said economist Jim Rounds. 鈥淭he tariffs will end up passing more costs to consumers, so you and I will be paying for those tariffs. In the meantime, people will adjust and businesses will adjust their supplier network from other countries. But this will create a disadvantage with China.鈥�

China struck back at the U.S.鈥檚 tariff hike on $200 billion of imported Chinese goods with tariffs on about 5,000 types of American products reaching about $60 billion. Some of the major components of those tariffs are agricultural products including beef, soybeans, and vegetables.

China is Arizona鈥檚 third-largest exporter, shipping out goods such as meat products and cotton. According to the Arizona Beef Council, Arizona鈥檚 cattle community contributes about $435 million a year to the state鈥檚 GDP, and exports about $525 million of its total beef output to places such as China.

鈥淚 think it鈥檚 all very delicate,鈥� Rounds said. 鈥淭rade agreements for us on the border typically mean issues with Mexico. When it comes to China, however, I think most Americans in general, especially in Arizona, feel that China really hasn’t played by the rules when it comes to trade. I think it鈥檚 been very difficult for us to swallow the way China has gone about this.鈥�

Pig farmers in the country have faced two separate rounds of 25 percent punitive tariffs from China on their exports last year. The value of pork from the United States has dipped 14 percent so far this year and producers of the commodity are losing about $8 per pig because of the trade dispute.

鈥淚 think what you do have is a lot of conversation toward trade, which is very good,鈥� Jaime Chamberlain of J.C. Distributing in Nogales said. 鈥淚t鈥檚 always very good to have these discussions and issues. This will help more people realize where their products come from and how they get their goods and the costs of those goods. I think the American public needs to educate themselves a lot more.鈥�

The scuttlebutt around the farming and import community in Arizona is that hopes are now being turned toward finalizing the United States-Mexico-Canada Agreement (USMCA), or even expanding business with the European Union, which has called for more soybean imports.

鈥淥ur efforts should never turn away from Mexico. I think it鈥檚 something we need to continue to foster. It behooves us to have a very good relationship with our southern and northern partners,鈥� said Chamberlain. 鈥淲e should never take our eye off the ball with that. I do believe that the ratification of the USMCA is extremely important for our trade future. That should be the number one thing we should focus on. But with China, the tariffs most certainly need to be addressed.鈥�

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