Trading options

As Beijing and Washington raise the stakes in the biggest trade war since the 1930s, Tara Joseph, President of the American Chamber of Commerce, or as it’s often shortened to “AmCham”, in Hong Kong, is not taking sides.

“We have a very obvious mission and the first priority is to foster trade between the United States and Hong Kong – and China – and we also really seek to enhance Hong Kong’s stature as an international business centre,” she says.

Relations between the two powers have rarely been frostier in recent history, but Joseph, a former journalist, believes the best way to serve her membership is to be non-political and non-partisan.

Interviewed at the chamber’s headquarters in – appropriately enough – the Bank of America Tower in Central, Joseph believes that Hong Kong and the U.S. have many common interests and are both keen to maintain strong trade ties.

“My role is very much about promoting the chamber’s core values, which are the rule of law, ethical and responsible business practices and transparency and also importantly the free flow of information.”

Information has become a precious commodity as trade tensions have worsened, with the uncertain timing and strength of each tit-for- tat round of tariffs over the past few months. “I think the state of play is uncertainty and concern,” Joseph says of the trade dispute.

“For us, what is of the utmost importance is really being open and in discussion constantly with our members to learn about how trade tensions or a trade war could be affecting them. We want to make sure we’re discussing it in the open and people feel they can come to the chamber to learn about it.”

The AmCham President says one key thing is keeping communication lines open. “We maintain an open and very frequent dialogue with the Hong Kong government to ensure that the U.S.-Hong Kong trade relationship remains solid,” she says.

The trade war has come at a time when the U.S.-Hong Kong relationship was booming. The U.S. is Hong Kong’s second-largest trading partner in the world, after Mainland China. Goods imported from the U.S. accounted for US$27 billion, or 5 percent, of Hong Kong’s total imports in 2016.

For its part, Hong Kong is the U.S.’s 20th-largest trading partner. It is, however, the third-largest market for U.S. wine exports. “It’s a very active trade relationship across a wide variety of business sectors ranging from logistics to financial services to education and food and beverage,” says Joseph.

Hong Kong’s difference

Joseph joined AmCham Hong Kong from Thomson Reuters, the international media company, in February 2017. “It was just after Chinese New Year, which was a month after Donald Trump was inaugurated as U.S. President,” she recalls.

“We have 1,500 members and more than 20-plus committees and a board of 25 people,” she adds. “Most of our members are American, but we’re actually also 30 percent international, and we have people in sectors ranging from financial services to education to logistics to entrepreneurs who just moved to the city, so it’s a very varied and dynamic group.”

The chamber has a full public schedule of seminars, workshops and conferences. “But we also have closed-door meetings where we will get senior executives together with Hong Kong government officials to really have a candid discussion and dialogue,” she says.

“We also go to Washington at least once a year where we advocate about Hong Kong and what’s important in our view between the U.S. and Hong Kong and why Hong Kong is so important for the American business community.”

“It’s very important for us to separate out Mainland China and what makes Hong Kong unique, specifically in Washington D.C.”

AmCham is also a prolific publisher. “We do a lot of advocacy,” she says. “We write a submission to the [Hong Kong] Chief Executive every year and we will also write white papers to the government on issues that are important to our community.”

While the U.S. differentiates between Hong Kong and Mainland China for the purposes of economics and trade through the United States-Hong Kong Policy Act, one continuing role is to explain to the U.S. government and business communities about “one country, two systems.”

“We’ve really spent a lot of time this year trying to remind people in the States of what Hong Kong is, what makes Hong Kong unique, and how the business environment here is different,” says Joseph. “It would be easy if you’re somewhere overseas to not understand ‘one country, two systems’,” she adds. “It’s an unusual set up. We have to really drive home the fact that, for example, [the Mainland’s] cyber-security law is not being enacted here in Hong Kong.

“It’s very important for us to separate out Mainland China and what makes Hong Kong unique, specifically in Washington D.C., because we were very concerned that the trade war would just be one big bus that would roll over in China and Hong Kong would get caught in that wake.”

Joseph also differentiates between her organization and its Mainland counterpart, the American Chamber of Commerce in the People’s Republic of China, which has offices in Beijing and Shanghai. “There is no mother ship, there is no headquarters for American chambers of commerce,” she says. “We’re friendly with the others but we’re independent in structure. That said, we do co-operate a lot: we have a lot of companies that are active in both places and I do like to hear what AmCham China is saying about the U.S.-China trade relationship.”

AmCham Hong Kong has its own Mainland China affairs department, which liaises with Mainland authorities. “We have our own department because we have so many events that are based around China,” says Joseph. “For example, we have our annual China conference and we have a ‘Beijing door knock’ every year for which we organize a delegation to visit officials in Beijing. We are hugely active in terms of government relationships. Our China affairs group builds bridges and relationships in Beijing and in the Greater Bay Area.” ​

AmCham has paid close attention to the Greater Bay Area initiative, which seeks to more closely integrate Hong Kong and Macau with nine municipalities in Guangdong province (read A Greater Role in the Greater Bay Area  for more on the initiative). “I think we started quite early in terms of building thought leadership from different sectors about what are the key issues to make this initiative successful,” says Joseph.

“We go and visit the Greater Bay Area, we talk to various authorities about it, we go back to our committees and ask them what are the important areas of development – Is it labour? Is it the tax regime? – and then we have a sense of what’s really important for a business community.”

The Belt and Road initiative – China’s plan to build trade infrastructure between Asia and Europe – is also of great interest. “We ask what opportunities are there for non-Chinese companies to be involved in Belt and Road, what are the rules, are the contracts fair and open and how can we advocate to make sure those things are in place.”

Joseph stresses the collective nature of AmCham. “We will advocate as a group,” she says. “It’s not just one company saying, ‘I want to be involved in Belt and Road’ – it’s actually U.S. industry saying we’re interested in being involved in Belt and Road and if there are concerns about it to voice it as one organization.”

Rhetoric and reality

For Joseph and her organization, it’s not just explaining Hong Kong and Mainland China to an audience back home. They also find themselves deciphering the U.S. to their hosts. “It is my job to explain things like investment, and I feel like my role is separating out the rhetoric and the reality,” she says.

One critical change in U.S. attitudes has centred around the Committee on Foreign Investment in the United States (CFIUS), an interagency panel that reviews the possible effects on national security of acquisitions  of U.S. corporations by foreign companies.

“We’ve held several sessions this year to demystify CFIUS,” says Joseph. “The idea is to provide information about what sectors are open for business and it’s actually a small percentage of areas in the U.S. that are not open, or are less open to business than they used to be.” ​

CFIUS hit headlines in March when its advice led to the cancellation of a proposed US$117 billion takeover of Qualcomm, a U.S. mobile-telecoms equipment maker, by Broadcom, a Singapore-based rival with substantial Chinese interests.

“It is my job to explain things like investment, and I feel like my role is separating out the rhetoric and the reality.”

Investors from Mainland China feared that was just the beginning, and doors would close on a wide range of potential acquisitions, but Joseph disagrees. “There are many other areas that really are open for business – textiles, industrial machinery, equipment and tools, food and tobacco, hotels and tourism – so it’s not overarching,” she says.

A delegation from the U.S. House of Representatives’ financial services committee recently visited Hong Kong to explain CFIUS reform. “It gave our members an opportunity to really speak their mind to congressional authorities about how they’re viewing it and what their concerns are in Hong Kong about it.”

Joseph hopes to be an oasis of calm as the trade war continues to rage around her. She insists that while AmCham members are not pounding down her door over concerns about tariffs, there is an increasing watchful eye on how it may affect their business plans. “People are working to get on with business in Hong Kong and the key issue is really defining Hong Kong as a strategic hub for business,” she says. “Right now their concerns are really with Hong Kong in maintaining its competitiveness by breaking down long established silos in government which many say have led to an inability to cope with the changes brought on by technology.”

Hong Kong should reinforce its core values to enhance the U.S.- Hong Kong trade relationship, she says. “Many companies, if they sign contracts and do business in English, they like to be here. The tax regime, the infrastructure and the connectedness to international capital markets are all things that make Hong Kong a very important place.”

The American Chamber of Commerce in Hong Kong (AmCham) held its 2018 China Conference this month. Highlighting the key takeaway, AmCham President Tara Joseph said: “This conference confirms that technology and innovation form a critical part of U.S.-China relations just as technology surges as a critical part of business development in every sector of the economy. Navigating the cross current between explosive business growth and political friction is a major challenge.”