Statement: Mercy Kuo, Andrew Wilson on U.S.-China, Washington state-China trade, their "platform" for Washington State China Relations Council
By Wen Liu May 3, 2017
The new leadership team at the Washington State China Relations Council, Mercy Kuo as the president and T. Andrew Wilson as the board chairman, stepped onto the stage, literally and metaphorically, on March 15 when they opened China Council’s 37th annual banquet at the Bell Harbor International Conference Center. What they also opened was a new chapter, their chapter, of the Council history.
As they represent a new generation of China hands, watchers and practitioners, they also face a new landscape in U.S.-China and Washington state-China relations. What are their views on “fair trade” with China, as raised by President Trump? What’s their take on the widely cited auto tariffs of 25% when U.S. automakers sell to China, while the U.S. imposes just 2.5%? Do they see U.S.-China trade as skewed in favor of China, as mentioned by former USTR Charlene Barshefsky earlier in Beijing? What about Boeing building a 737 finishing plant, along with jobs, in China? And most importantly, like the winning ticket of a leadership campaign, what is their “platform” leading the Council forward, soon onto its 40th anniversary in 2019?
Rather than addressing each of these questions in a Q&A, Mercy and Andrew, out of their new and busy schedules, prepared the following special statement, a first, for the readers as well as friends and fans of the Council.
Statement from Mercy Kuo and T. Andrew Wilson - May 2, 2017
WSCRC is dedicated to furthering mutually-beneficial economic and cultural relations along with deeper understanding between the United States and China. As the leading U.S. state exporting economy, with the largest trading relationship with China, Washington State is in a unique position to contribute to the national dialogue on U.S. trade policy. Washington State’s economy is a prototype 21st century economy to which many other states aspire. As a gateway to the Pacific, Washington is driven by the technologies, industries and agriculture that will fuel economies of the future. The WSCRC is in a unique position to serve our state and U.S.-China relations by promoting public and bilateral discussions that inform national policies with optimal balance of interests.
Unsurprisingly, the U.S.-China relationship is increasingly complex. Since China’s accession to the World Trade Organization 16 years ago, China has become a leading global manufacturer. China is also undergoing a significant transition to develop domestic consumption and a stronger service economy. Opportunities abound in opening more sectors of the Chinese economy to foreign investment and participation commensurate to the access that Chinese companies enjoy in other global economies. The Bilateral Investment Treaty (BIT) negotiations are a good vehicle to create this new level of cooperation and mutual access.
WSCRC understands that priorities for improving bilateral trade relations change as economies develop. China’s economy has been rapidly expanding and integrating globally for more than a quarter century. As the two largest economies in the world, the United States and China are well-served to update terms of trade to reflect the current environment. Moving forward on BIT should be a priority for Washington DC and Beijing – and for Washington State. Balanced conditions for the flow of investments and capital between our two economies is critical to assure equal opportunities for investors in both countries. This assures equivalent market access for all companies, whether it is a Chinese company investing in the U.S., or a U.S. company expanding through investment in the Chinese economy. A BIT framework would facilitate mutual economic expansion through equal access to technology and other assets, and would greatly benefit Washington State companies.
WSCRC recognizes the role of Washington State companies in the global supply chain and the importance of informing public understanding on the real impacts of global trade on job and wage growth. Two examples illustrate the complexities and realities of modern supply chains: studies in the automotive industry have shown that some parts in a car actually move across the U.S.-Mexico border seven times as they increasingly integrate into subassemblies and then the final product, along the way creating jobs on both sides of the border. Similarly, analysis of the iPhone business has shown that although the final product value is registered as an export from an assembly plant in China, the profits and jobs associated with product design and parts manufacturing are distributed across Apple and many parts companies, most of which reside outside of China.
Therefore, analyzing the trade “balance” in an industry, such as automobiles or cell phones, is more difficult than it appears. Looking only on the surface at the value of cars imported vs. exported between two countries could lead to the wrong conclusions because of the complexity of “supply chains”. Supply chains refers to the complex web of component manufacturing and assembly operations that results in components being manufactured in many countries, with many different profit margins, before moving to the final country for assembly. This is even more complex in 21st century industries such as cloud services and data analytics – industries where Washington State is leading the world. Therefore, the jobs created, and profits created, by a given product or service are obscured when we only look at statistics from the final "exporting” country. It is important to look deeper to the full job impact of all the designs, service labor, and parts that go into the final product assembly or service offer.
As the stakes in U.S.-China relations continue to grow higher for both countries, WSCRC endeavors to amplify the leadership role of Washington State in strengthening U.S.-China cooperation on strategic issues. The Council welcomes your support and participation in our efforts.