Joe Biden has launched a trade initiative with 12 Indo-Pacific countries in his first major effort to boost economic engagement in the region as the United States seeks to oppose more insistent China.
Biden unveiled the Indo-Pacific economic framework in Tokyo on Monday after meeting with Prime Minister Fumio Kishida on his first visit to Asia as president of the United States.
Jake Sullivan, the US National Security Adviser, said allies such as Japan, Australia, New Zealand and South Korea would join the agreement. India and seven Southeast Asian countries – Singapore, Malaysia, Indonesia, Vietnam, the Philippines, Thailand and Brunei – will also join the IPEF, which includes nations that make up 40 percent of the world’s economy.
“The fact that we have such a range and a significant number of partner countries on the ground floor for the launch. . . shows that there is great interest in the whole region, “said Sullivan, who added that the Indo-Pacific region is expected to be the biggest driver of global growth in 30 years.
US Secretary of Commerce Gina Raimondo said the IPEF was “an important turning point in restoring US economic leadership in the region”, which would provide countries with “an alternative to China’s approach”.
China is part of a separate broader trade agreement in the region, the 15-member Regional Comprehensive Economic Partnership or RCEP, which also includes Japan and South Korea, as well as 10 ASEAN members. Analysts said the RCEP would further reduce the US economic role in the Indo-Pacific region.
IPEF contains four pillars: trade; supply chains; clean energy and infrastructure; and tax and anti-corruption.
Biden hopes the IPEF will silence criticism for not including a trade component in its Indo-Pacific strategy for heavy security. Many countries want the United States to join a trade agreement with 11 countries, which was renamed the Comprehensive and Progressive Trans-Pacific Partnership Agreement after President Donald Trump left the Trans-Pacific Partnership in 2017.
Catherine Ty, a U.S. trade representative, said there was insufficient support in Congress for TPP, a traditional trade deal that cut tariffs to increase market access. She said IPEF is in line with the modern economy and will include an important component for digital commerce.
“Our goal is for IPEF to meet the challenges of the global economy of the 21st century,” Ty said.
An American official said IPEF members would spend two weeks deciding which of the four pillars they wanted to join. She said Washington hopes to finalize agreements for each pillar within 12 to 18 months and that deals on one or more pillars can be concluded before an agreement is reached for the others.
The official added that the Biden administration will try to show IPEF countries that the agreements will be lasting, keeping the US Congress fully informed during negotiations to increase purchases by US lawmakers and avoid political problems that derailed the TPP. .
Many countries, especially in Southeast Asia, were initially lukewarm because IPEF did not provide access to the US market. Japan has called on the United States to amend the launch statement to facilitate the countries’ accession to the IPEF, saying it would begin consultations that would lead to negotiations.
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Illustrating these concerns, Arjad Rasjid, president of the Indonesian Chamber of Commerce and Industry, suggested that it was difficult at this stage to commit to IPEF because there was a “lack of transparency”.
“How can we comment, how can we actually support it if we don’t understand what it is?” Rasjid asked. He said he would like access to the US market to be added to IPEF.
Japan has backed the US bid for the IPEF as the “next best alternative” to the CPTPP, given the low chances of the US returning to a traditional trade agreement.
Tokyo sees the IPEF as symbolically critical of the United States maintaining its economic influence in the region, even if the agreement pales in comparison to the CPTPP. Japan has called on the United States to be flexible and focus on digital commerce as an alternative to providing market access.
“Given the current position of the United States, IPEF gives the United States the best chance to take the initiative in the region and maintain its economic presence,” said Kenichiro Sasae, a former Japanese ambassador to Washington who heads the Japan Institute. on International Affairs. “That’s why Japan will support him.”
The United States has not asked Taiwan to join the IPEF, in part because Southeast Asian countries have been concerned about antagonizing China. Some experts doubt how the United States can reach a meaningful agreement on supply chains without Taiwan, the world’s most important semiconductor maker.
The US official said Washington was “thinking about things we can do with Taiwan in parallel”, which will ensure that any final IPEF supply chain agreement is combined with separate efforts involving Taipei.
Additional reports from Oliver Telling in Singapore
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