Anna Tucker Ashton, a Little Rock native who serves as senior director of government affairs at the U.S.-China Business Council, was in town Thursday to speak at a workshop on the U.S.-China trade dispute hosted by the Arkansas Association of Asian Businesses.
The U.S.-China Business Council is a trade association representing 220 U.S. companies that do business with or in China, including Walmart Inc. of Bentonville and Tyson Foods Inc. of Springdale. It’s been around since 1973, since U.S.-China relations began to normalize, and has offices in Washington, Beijing and Shanghai.
Ashton said her job is to talk to members of Congress about U.S.-China business issues, and she’s recently been tasked with working on outreach cities and states that, like Arkansas, have been hit by the trade war.
On Friday, she spoke with Arkansas Business over the phone about the trade war and its effects here.
AB: What were the key takeaways from yesterday's workshop?
Ashton: I learned a lot from it — getting the more granular perspective that some of the other speakers provided. … One of the goals that the president has continued to talk about is bringing U.S. companies’ manufacturing back to the United States, and something that I think is commonly misunderstood is that most U.S. companies are no longer manufacturing in China primarily for the purpose of exporting cheap goods back to the U.S. Certainly, that is still happening, but China’s economy has developed so much that the really cheap manufacturing isn’t necessarily in China.
However, China has a huge consumer market. China’s middle class is 15% of their population, and, at just 15% of their population, China’s middle class is bigger than the entire population of the United States. The United States has approximately 50% of our population is middle class. So when China’s middle class gets to be 50% of their population, it’ll be three times the population of the United States. So it’s an enormous consumer market, which means that any U.S. company that has ambitions to be a global brand or already is a global brand and wants to stay competitive in that way needs to be successful in China, needs to be selling in China.
So, even though the trade war has made it hard for companies to do business and made it more costly, those companies still have every intention of staying in the China market. That was one of the key takeaways. I think probably the U.S. business community has not done the greatest job of talking about this, of explaining this in mainstream conversation over the years, but we’re trying to do that now.
What's your take on the recently announced plan for both countries to cancel tariffs in phases?
I think that there’s a good chance that we’re going to get this phase one agreement with China in the coming weeks. Everything we hear from the Trump administration and from the Chinese government is that both sides are optimistic, and I think that will include a significant agricultural purchase agreement, but the details remain to be seen. I’m sure it will include soybean purchases, so that should help farmers that have been struggling.
I think that any rollback of the tariffs right now is a good thing for the U.S. economy in general. I think, if we can avoid having the tariffs that are scheduled for Dec. 15 come into effect, that’s really important because the tariffs that we levied on Chinese imports in September and the tariffs that are scheduled for December both heavily impact consumer goods … Most of the previous tariffs haven’t included a lot of consumer goods. It’s been the intermediary goods for manufacturing supply chains. Consumer goods, especially as school is starting or as we hit the holidays, that really hits people’s pockets, so we are very hopeful that’s not going to happen. …
I know that, on the U.S. side, U.S. Trade Rep. [Robert] Lighthizer feels strongly that some tariffs need to stay in place in order to ensure that the Chinese side meets its obligations, or meets its commitments. My understanding is that the Chinese side is amenable to the idea that both sides can roll back tariffs on each other’s goods to some extent and then continue doing so as they move forward with negotiations or, if one side or the other doesn’t live up to its commitments, then they can put tariffs back on. It seems like a way of moving forward at any rate, which is good.
How much damage can Arkansas' economy take from the trade war?
That’s part of what I’m here to better understand because, clearly, farmers have endured a lot but also have been able to endure it for an extended period of time now. I don’t know what the answer is to how much more the economy can take, but I’m certain that nobody wants to be in a situation where that's what their future looks like. Everybody wants to see a turnaround where they’re benefiting again from the relationship rather than suffering as a result of the U.S.-China relationship.
What's the prognosis for the Sun Paper project in Arkansas and other delayed projects?
I can’t speak to that project in particular because I am just not familiar enough with all the details. I know it’s been in the works for a really long time, and that it’s been frustrating for the community that it hasn’t fully come together. And I hope that, ultimately, it will.
But I do think the broader dynamic for Chinese foreign direct investment is not a good one. Part of the trade war, outside of the tariff situation, is that we have revamped our law on reviewing foreign direct investment in the United States that might pose a national security concern. And it can sweep up a lot broader range of investment now, and a lot of inbound Chinese investment is vulnerable to that kind of scrutiny even when you wouldn’t think that it should be.
There are people on the Hill who worry about if a Chinese company wants to buy a poultry business or a pork business, is that going to endanger our food supply? … There’s a little bit of hyperbole. So I think there is a climate where Chinese companies feel less welcome. And I also know that a lot of Chinese companies that are already invested in the United States or that are trying to make investments in the United States are struggling to get the visas they need to come over here and pursue those opportunities or to bring their workers here to train the local workers on their process and stuff like that. Hopefully, we’re going to get some of that stuff resolved going forward too, but I actually think those kinds of problems may be the more lasting struggles here than the tariffs.
How can Arkansas help end this trade war? What should our policymakers and business leaders be doing right now?
The biggest thing is that the trade war is playing out locally, not just at the national or at the global level. Being in D.C., I hear people talking about it in this very sort of broad and almost theoretical way a lot of the time. … There are all sorts of very real, very tangible stories that affect people’s daily lives and their ability to make a living all across the country, and I think those stories need to be being told. People need to be speaking up about how this is impacting their communities, them personally. And, to the extent that papers like yours are doing that, I think that’s a really important thing to be introducing more strongly into the national conversation about this.
What opportunities might Arkansas have amid the trade war?
That is a good question, and not one I’m prepared to answer. I do think that, with the agriculture agreement that we’re expecting with the phase one deal, that there will be opportunities for soybean sales. My understanding is that there may be some opportunities for poultry too, as well as pork, beef and even corn ethanol. All of those things sound like they’re in the works, but the soybean and the poultry opportunities sound the most likely.