The US is set to host the first gathering of Asian nations on an economic agreement envisioned by the White House as a counter to China’s rising influence in the region.
Thirteen countries are expected to send representatives to the two-day kickoff event starting Thursday in Los Angeles for the Indo-Pacific Economic Framework for Prosperity, or IPEF, which covers about 40% of global gross domestic product. It includes Japan, India, South Korea, Australia and Indonesia, all members of the Group of 20 largest economies.
While the framework is the most significant US economic engagement in the region since Donald Trump pulled out of the Trans-Pacific Partnership in 2017, President Joe Biden’s new effort is thin on specifics and is expected to stop short of reducing tariffs like a traditional free-trade agreement.
“At the moment you’ve got this combination of cautious optimism and continuing uncertainty,” Deborah Elms, executive director of the Asian Trade Centre, said of the framework. “The hope is that you will finish these couple days in LA with a better sense of what exactly are we talking about here. What are the parameters? What is it that I am going to have to do, and what am I going to get for doing that?”
Increasing so-called market access through lower tariffs has been a hallmark of roughly a dozen free-trade agreements that the US has negotiated since Nafta in the early 1990s. But opposition in Washington, from both Democrats and Republicans, has made such deals now politically difficult -- if not impossible.
The US will seek to focus on non-tariff issues that can still deliver market access for American exporters, a Biden administration official said Wednesday, without providing specifics beyond the four so-called pillars of the framework -- trade; supply chains; clean energy, decarbonization and infrastructure; and taxes and anti-corruption.
Among those, a potential point of progress could be efforts to combat climate change, particularly after Biden and his Democratic allies in Congress recently secured $370 billion for green energy development.
‘Concrete Benefits’
Singapore welcomes development on renewable energy, Tan See Leng, the Southeast Asian city-state’s second minister for trade and industry, said in an interview. The IPEF can be a forum for "cross-fertilization of ideas, and then we can move things together as a bloc,” he said.
Thailand is also focused on the green economy. “This is a big deal,” said Tanee Sangrat, a Foreign Ministry spokesman. “IPEF will provide a cooperation that will help Thailand achieve this makeover for our economy.”
Specific actions on all four pillars, however, are still being worked out.
“We need to make IPEF a framework where each country feels the concrete benefits,” Yasutoshi Nishimura, Japan’s trade minister, said this week. “We want to hold discussions so that negotiations can begin soon.”
Since IPEF isn’t a traditional trade agreement, the administration likely won’t need congressional approval. Still, Biden’s efforts could face opposition within his own party. Senator Elizabeth Warren warned at a March hearing that IPEF “cannot be TPP 2.0” and must include enforceable labor and climate commitments.
Trump withdrew from the TPP shortly after taking office, fulfilling a campaign promise to exit from a deal negotiated under the Obama administration. It lives on among 11 members as the rebranded Comprehensive and Progressive Agreement for Trans-Pacific Partnership, an agreement China has sought to join. Beijing also helped spearhead a separate regional trade agreement that doesn’t include the US, which offers lower tariffs to many of the same nations in Southeast Asia.
A US official said in May that the timeline for reaching substantive commitments -- both binding and non-binding -- will be shorter than traditional trade negotiations that include tariff reductions. The US aims to have substantive commitments on which countries will participate in each of the four pillars in about 12 to 18 months, the official said at the time.
Since the IPEF launch in May, the administration has held consultations with groups including organized labor, the business community, and bipartisan members of Congress “on delivering tangible economic benefits to workers and businesses in the US and our IPEF partners,” the Commerce Department said in an emailed statement Wednesday.
The meeting this week also comes as relations with China have deteriorated further after House Speaker Nancy Pelosi’s visit to Taiwan last month amid threats and opposition from Beijing, which regards the self-governed island as its territory. Pelosi was the highest-ranking US politician to visit Taiwan in 25 years, prompting China to respond with unprecedented military drills around the island
Commerce Secretary Gina Raimondo, who along with US Trade Representative Katherine Tai is hosting the meeting in Los Angeles, has said that Pelosi’s trip has made geopolitics with China “particularly complicated.”
The US hasn’t invited Taiwan to join IPEF, even after more than 50 senators wrote to Biden urging him to do so, and is working on a separate framework with the government in Taipei.
Some participants are reluctant to sign up to any agreement that doesn’t include China, the largest trading partner for many of them. Southeast Asian countries in particular had demanded the US keep the framework open to China, even though it’s highly unlikely the nation will be included anytime soon. Administration officials stressed on a call with reporters Wednesday that IPEF isn’t a choice between Washington and Beijing.
“We hope that it could be a lot more inclusive,” said Singapore’s Tan.
