Biden’s Indo-Pacific economic framework leaves Asian leaders wanting more

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Months after US President Joe Biden first announced his administration would launch a new Indo-Pacific economic framework (IPEF) that would signal enhanced U.S. engagement with Asian economies, the president, along with leaders from a dozen countries across Asia, announced the launch of IPEF in Tokyo on May 23.

The Biden administration believes the new framework is an opportunity to showcase what senior U.S. officials have described as a “middle-class foreign policy,” an initiative that addresses a strategic need while delivering results for American workers and businesses.

In a discussion with the press ahead of the launch of the IPEF, US National Security Advisor Jake Sullivan said that “expanding US economic leadership in the Indo-Pacific through vehicles like the IPEF is good for America”. US Commerce Secretary Gina Raimondo, whose department is responsible for negotiating three of the framework’s four pillars, described it as “an important turning point in restoring US economic leadership in the region and showcasing the countries of the Indo-Pacific as an alternative to the Chinese approach”. Trade Representative Katherine Tai sees it as an opportunity to “address the challenges of the 21st century and promote fair and resilient trade for years to come”.

Months after US President Joe Biden first announced his administration would launch a new Indo-Pacific economic framework (IPEF) that would signal enhanced U.S. engagement with Asian economies, the president, along with leaders from a dozen countries across Asia, announced the launch of IPEF in Tokyo on May 23.

The Biden administration believes the new framework is an opportunity to showcase what senior U.S. officials have described as a “middle-class foreign policy,” an initiative that addresses a strategic need while delivering results for American workers and businesses.

In a discussion with the press ahead of the launch of the IPEF, US National Security Advisor Jake Sullivan said that “expanding US economic leadership in the Indo-Pacific through vehicles like the IPEF is good for America”. US Commerce Secretary Gina Raimondo, whose department is responsible for negotiating three of the framework’s four pillars, described it as “an important turning point in restoring US economic leadership in the region and showcasing the countries of the Indo-Pacific as an alternative to the Chinese approach”. Trade Representative Katherine Tai sees it as an opportunity to “address the challenges of the 21st century and promote fair and resilient trade for years to come”.

However, while Japan and other US partners in Asia have been keen for Washington to reinvigorate economic cooperation with the region since former US President Donald Trump pulled the US out of the trans-pacific partnership (TPP) in 2017, there is some unease around IPEF. After all, Asia-Pacific governments have made it clear that they would rather the United States join the TPP – now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – than any other alternative.

The slow process of determining what will be in the four “pillars” of IPEF, how the negotiations will be handled due to a division of labor between the US Trade Representative and the Secretary of Commerce, and the Uncertainty about which governments would join deepened the ambivalence.

Because of this ambivalence, the joint statement the launch of the framework refers to “collective discussions with a view to future negotiations”, indicating that there is still work to be done to flesh out the initiative.

Asian governments are not wrong to have mixed feelings about IPEF. US trade officials plan to secure better labor and environmental performance from negotiating partners, but they have also indicated that they are not ready to offer access to the US market, let alone pursue a TPP-style free trade agreement. Tai, the U.S. Trade Representative, has describe such treaty deals, which offer broad market access in return for promises to improve labor and environmental standards that critics say are likely to have little effect practice impact on real conditions, as a “tool of the 20th century”. She wants to show that it is possible to pursue an international economic policy that benefits working-class and middle-class Americans.

But it’s unclear if or how Asian leaders will play ball. Asian governments, which have recently implemented the Regional Comprehensive Economic Partnership and are preparing to join the CPTPP, regard market access as the crown jewel of international economic cooperation. They are still fond of old-fashioned free trade agreements and will not be easily convinced to adopt a new model. Nor do they believe that the IPEF can supplant the CPTPP as a standard-setting body. Taro Kono, Japan’s former foreign minister, offered a stark assessment during a recent appearance at the Brookings Institution think tank in Washington. The CPTPP, he said, is the region’s regulatory body.

These objections have not stopped Japan and other Asian countries from joining the framework. They would still prefer an American commitment to none. But their objections should temper some of the Biden administration’s rhetoric about what IPEF means. It is not a new regional architecture or a substitute for the dense economic ties that Asian economies have with China.

In addition, there remain important questions about the substance of the four pillars: Fair and Resilient Trade, Supply Chain Resilience, Infrastructure and Decarbonization, and Taxation and Anti-Corruption. There are considerable differences in how each of the pillars is fleshed out. The supply chain and infrastructure decarbonization pillars, for example, would build on work done in bilateral and plurilateral contexts such as the Quadrilateral Security Dialogue. The trade pillar, meanwhile, includes the digital economy but also trade facilitation and labor and environmental standards. And the tax and anti-corruption pillar brings a global Biden administration foreign policy priority in an Indo-Pacific context.

Unsurprisingly, negotiating partners are more interested in some of the pillars than others, since several provisions seem more suited to US domestic political messages than to regional priorities. (Any of the four pillars can be chosen, which means that participation in one is not conditional on joining others.) As things stand, it seems likely that only rich economies in the region – Japan, South Korea, Australia, New Zealand, and possibly Singapore – will opt for the trade pillar, given the reluctance of Southeast Asian countries to improve labor, digital and environmental without being granted market access in return.

Meanwhile, it’s unclear if potential IPEF members other than the US have much appetite for the tax and anti-corruption pillar. And the Biden administration has not included Taiwan, whose potential participation has puzzled emerging economies in the region. Although the United States may be preparing separate bilateral talks with Taiwan, its exclusion from the IPEF suggests that China can set the terms of the region’s economic architecture, even in agreements in which it does not participate.

Perhaps more importantly, far from answering questions about US economic leadership in the region, the framework’s clumsy deployment has prompted those questions to arise with greater urgency. In concrete terms, the Presidential Trade Promotion Authority “accelerated” expired last year, and the political sensitivities that doomed the TPP have barely subsided. The US withdrawal from the TPP revealed – and the Trump administration’s conclusion of the US-Mexico-Canada deal confirmed – that the only trade pacts that could be ratified would have strong labor and environmental standards. with strong enforcement tools, terms that many emerging Asian economies may find too high a price to pay even for access to the US market. It’s unlikely the White House could garner enough votes in Congress for a more traditional trade pact, even if it were interested.

The result is that the IPEF tries to bridge the gap between domestic political constraints and Asian governments’ demands for market access to the United States, which may leave neither Asian governments nor major national constituencies in the states States particularly satisfied.

Certainly, IPEF can still do a lot of good in the region. There is strong interest in “friendshoring,” the process of shifting supply chains from China and other hostile authoritarian countries to allies and partners, at the center of the supply chains pillar. And friendhoring can provide an opening to improve environmental and labor performance in supply chains.

The region’s wealthiest economies are so interested in a digital trade deal that they pushed the administration to sever a digital trade deal from the trade pillar and make it a top priority for IPEF; the administration objected, but a digital trade deal is still part of the package.

Finally, the first group of countries to register for the discussions includes 7 of the 10 members of the Association of Southeast Asian Nations, suggesting that the IPEF is an opportunity for, in the words of a senior administration official, “addressing the concerns…that matter to countries today and, of course, advancing our own economic interests in the process.” Fiji decision joining the framework shortly after its launch suggests that the IPEF could also contribute to the economic development of Pacific island nations, particularly as they grapple with the effects of climate change.

IPEF marks a new start for constructive economic engagement with key U.S. partners in a critical region that could pay off in the long term as the U.S. government thinks more seriously about how it can reduce its partners’ vulnerability to Chinese economic coercion and contribute to sustainable development. and equitable growth in emerging markets in Asia.

But the Biden administration needs to be realistic about what IPEF means. It will not redraw the economic map of Asia or become the preferred place for the development of regional rules. The talks themselves could still help the administration identify what regional players value most after market access and show that Washington understands what East Asian leaders want, even if it doesn’t. cannot offer a second TPP.

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