The Indo-Pacific Economic Framework: A “Big Killer” Against China’s Influence?

In his speech launching the “Indo-Pacific Economic Framework,” President Biden said, “The countries here today and those who will join the framework in the future will work towards an economic vision for all of us—all of our peoples—that is: A free and open, connected and prosperous, secure and resilient Indo-Pacific, and our economy—the economic development of this region is sustainable and inclusive.”

The official name of the Indo-Pacific Economic Framework is the Indo-Pacific Economic Framework for Prosperity. This is the latest effort by the Biden administration to rebuild closer economic ties with Asia-Pacific countries after the United States withdrew from the Trans-Pacific Partnership (TPP) in 2017. IPEF comprises four pillars, namely: trade, supply chain, clean energy, decarbonization and infrastructure, and taxation and anti-corruption.

Reensch: Multi-country participation is an achievement in itself:

William Reinsch, director of international business studies at the Center for Strategic and International Studies (CSIS), a Washington-based think tank, told VOA that 12 countries other than the United States participated, including seven of the ten ASEAN members. A nice achievement in itself.

“Because a lot of people had previously expected a much smaller number of countries to participate, I think that having so many countries participating now, at least at this stage, is an important achievement,” he said.

The Financial Times previously quoted six people familiar with the matter as saying that in order to win the support of more countries, the Biden administration agreed to “water down” the wording of the “Indo-Pacific Economic Framework” launch statement. An early draft obtained by the Financial Times said the countries would “start negotiations”, the report said. But the official joint statement issued Monday (May 23) said, “We are embarking on the process of establishing a framework for economic prosperity in the Indo-Pacific.”

Biden administration officials said the IPEF signaled the U.S. intent to engage and cooperate with allies and partners in a way that goes beyond traditional trade deals.

“The IPEF is a 21st-century economic setup designed to address 21st-century economic challenges, from setting the rules for the digital economy, to ensuring secure and resilient supply chains, to helping make clean energy,” said Sullivan, US National Security Adviser. All the major investments needed for the transition to infrastructure and clean energy, to improving standards for transparency, fair taxation, and anti-corruption.”

U.S. Trade Representative Katherine Tai also said that IPEF provides a new model that can more effectively address the challenges faced by countries in the Indo-Pacific region. She said: “We and our partners in the region agree that much of the next few decades will depend on how well governments leverage innovation, particularly clean energy and the ongoing transformation in digital and high technology, And at the same time fortify our economy against a range of threats from fragile supply chains, corruption, and tax havens.”

Sun Yun: Insufficient attraction, lack of interest in developing countries:

But critics point out that because the Indo-Pacific Economic Framework is not a traditional trade agreement and does not include lower tariffs and lower barriers to market entry, it is less attractive to developing countries in the Indo-Pacific. Sun Yun, a senior researcher at the Stimson Center and director of the China Program, told VOA that many ASEAN countries have not shown strong interest in IPEF before, precisely because the framework does not involve access to the US market.

“From the perspective of developing countries, they will feel that this does not involve increasing our (trade) volume, but it only involves setting higher rules and indicators for us, then this (IPEF) is very important to us. What good is it?” she said.

But from the perspective of the Biden administration, in the current political environment in the United States, it is extremely difficult to promote any form of free trade agreement, especially in November this year, the US Congress will face mid-term elections.

U.S. Trade Representative Dai Qi said that the IPEF shows a very pragmatic attitude adopted by the Biden administration, and the TPP case has taught this administration a lesson.

“I think there’s a very, very hard lesson there, that the TPP, as expected from it, is ultimately quite fragile and the U.S. cannot deliver,” she said. That’s a big part of how we plan the Indo-Pacific economic framework. There’s a lot of instructive that trade is an important part of that, but not the only one. So we’re bringing a stronger and holistic approach to our partners in the region.”

Short: IPEF marks US return to Asia-Pacific commitment:

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, told VOA that the important thing is that the IPEF marks the Biden administration’s commitment to returning to the Asia-Pacific.

“They (Asia-Pacific countries) are encouraged that the U.S. wants to do something, and they recognize that a Biden administration, in terms of domestic politics, is not equipped to advance any comprehensive or substantive trade agenda in the region in 2022,” he said. condition.”

Commenting on the U.S. launch of the “Indo-Pacific Economic Framework” on May 24, a spokesperson for China’s Ministry of Commerce said, “Relevant initiatives…should remain open and inclusive rather than discriminatory and exclusive; should promote economic cooperation and solidarity, rather than undermine peace and Split existing mechanisms.”

China is not included in IPEF. The U.S. Assistant Secretary of State for East Asian and Pacific Affairs, Daniel Kritenbrink, made it clear in February that the U.S. has “no intention” to deal with China in its upcoming Indo-Pacific economic framework.

China has participated in the Regional Comprehensive Economic Partnership (RCEP), which includes the ten ASEAN countries, and came into effect on January 1 this year. Eleven of RCEP’s 15 member states are now founding members of IPEF. Last September, China also formally submitted its application to join the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).

Experts believe that although the IPEF has important symbolic significance in maintaining the economic influence of the United States in the Indo-Pacific region and provides countries with an alternative to the Chinese model, it remains to be seen whether it can truly play a role in countering China in the future.

“All of our partners in the Indo-Pacific have substantial trade and investment relationships with China. These relationships are deepening because of the Regional Comprehensive Economic Partnership,” said Shorter of the Peterson Institute for International Economics. “They have significant trade and investment relationships with China. Its extensive investment and trade relationships are an important part of its resilient supply chain.”

The Biden administration wants members of the IPEF to decide within the next two weeks which one or more of the four pillars they intend to participate in, and then hammer out specific agreements within 12 to 18 months for each pillar, and possibly one first. agreement on the pillars. The unofficial deadline to finalize the IPEF agreements is generally believed to be November next year when the United States will host a meeting of Asia-Pacific Economic Cooperation (APEC) leaders.

“It’s not clear which countries will participate in which pillars, and it’s going to make a big difference,” said Reensch, who was a member of the US-China Economic and Security Review Commission from 2001 to 2016. …so much remains to be seen.”