US President Joe Biden is expected to unveil the Indo-Pacific Economic Framework (IPEF) next week when he visits Tokyo to meet Prime Minister Fumio Kishida and prime ministers of the Quad countries.
IPEF is the Biden administration’s tool for growing its trade footprint in the Indo-Pacific after former US President Donald Trump withdrew from the Trans-Pacific Partnership, a 12-nation agreement, in 2017.
Unlike the Comprehensive and Advanced Agreement for the Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), it does not provide tariff cuts and other market access tools.
It will focus on fair and flexible trade, supply chain resilience, infrastructure, clean energy, decarbonization, taxation, and anti-corruption.
The IPEF also cautioned not to upset American voters as the Trump era rhetoric surrounding outsourcing and market access continues to appeal to a section of the electorate.
The Biden administration, like the Trump administration before it, believes that unfettered trade liberalization is hurting the American worker.
The Biden administration’s foreign policy also aims to serve the middle class and allow ordinary Americans to get the benefits of American diplomacy, and the IPEF helps in this goal as it allows Americans to access the benefits that this business partnership brings but also to some extent supports American citizens. One disadvantage that comes with trade liberalization is, according to a report by Nikkei.
Hence, the IPEF, as mentioned above, remains a tool to counter China, which has firmly established itself as a reliable partner in the 11-member CPTPP and RCEP. It brings to the Indo-Pacific an economic component of the United States, which until now has been largely focused on security.
Nikkei Asia quoted in a report Jayant Menon, Senior Fellow at ISEAS-Yusof Ishak, who said the IPEF’s goal of increasing supply chain resilience could be a compelling measure to take China out of supply chains and thus disrupt the ASEAN network.
A report from the Financial Times said the Biden administration has softened the language of the IPEF draft to attract more East Asian countries.
What countries are likely to join?
A report by ThePrint stated that India is likely to join the IPEF with the United States. Japan welcomed the framework and Thailand earlier this week said it would be part of the IPEF. South Korea, Singapore and the Philippines have also shown interest (however, this is unlikely to have any impact on China’s relations with Marcos Jr., the new president of the Philippines, who is pro-Beijing).
ASEAN member Vietnam has questioned the concrete elements of the IPEF and Vietnamese Prime Minister Pham Minh Chin said his administration would “discuss and clarify what these pillars imply”.
(With entries from the Financial Times, ThePrint and Nikkei Asia)
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