Better understand the Indo-Pacific economic framework for prosperity | Brownstein Hyatt Farber Schreck

Summary

President Biden officially launched the Indo-Pacific Economic Framework for Prosperity (IPEF) (“Framework”), the administration’s economic initiative for the region, during his visit to Tokyo on May 23. The Framework, widely seen as a mechanism to counter China’s outsized influence in the region and aimed at enhancing trade cooperation, has been a key goal of the administration. Thirteen countries (India, Indonesia, Thailand, Vietnam, Brunei, Philippines, Japan, South Korea, Australia, New Zealand, Singapore, Malaysia and Fiji) have publicly announced their intention to continue IPEF negotiations, signaling that the initiative is far from definitive. The countries have not yet indicated which pillars they will join and the timetable for the negotiations has not yet been revealed. While many in the region welcome the administration’s regional orientation, the lack of an enforcement mechanism and market access have many lamented the absence of the United States in more formal mechanisms. The U.S. government, likely in an effort to build credibility and focus on IPEF, sent several senior officials, including Secretary of Defense Lloyd Austin, Under Secretary of State Wendy Sherman and other senior State Department officials in the area in early June. after the President’s visit from 20 to 24 May and the official launch of the framework.

The framework

The administration, through the new Indo-Pacific Economic Framework for Prosperity, aims to increase commercial ties in the Indo-Pacific region through four pillars:

  • Connected economy: largely focused on the digital economy and standards on cross-border data flows and data localization. This pillar aims to ensure that small and medium-sized enterprises can benefit from the rapid growth of the e-commerce sector in the region, while tackling issues such as online privacy and discriminatory and contrary use. ethics of artificial intelligence.
  • Resilient Economy: Focused on strengthening global supply chains, this pillar will aim to establish an early warning system, map critical mineral supply chains, improve traceability in key sectors and coordinate efforts of diversification.
  • Clean Economy: Focuses on promoting investment in infrastructure and decarbonization, as well as pursuing clean energy and energy efficiency commitments to achieve ambitious climate goals.
  • Fair economy: aims to establish new rules on taxation and the fight against corruption in order to promote a fair economy.

A White House fact sheet adds that the IPEF “will allow the United States and our allies to decide the rules of the road that ensure American workers, small businesses and ranchers can compete in the Indo-Pacific”. The fact sheet does not mention China directly despite strong implications conveyed by the administration that the initiative is aimed at countering its influence. Indo-Pacific nations welcome this signal of renewed attention to the region’s importance in US policy, but doubts remain as to whether it will yield real results. Many locals have hinted that they would prefer the United States to join the TPP or its successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which are seen as more effective mechanisms for trade and regional cooperation.

There is still great uncertainty around the IPEF and its effectiveness as a trade and engagement mechanism. The launch was noticeably lacking in detail on which pillars countries agreed to participate in. There is speculation that the original framework was relaxed considerably before launch in order to attract countries that had previously expressed doubts or disinterest in IPEF. Notably, the Indo-Pacific economic framework makes no promise of better access to the US market and does not include any enforcement mechanism. Some business issues are likely to prove difficult in areas such as digital regulation, corporate responsibility, labor standards and environmental protection.

There has been no official announcement yet of when negotiators will hold the first official round of talks, but a high-level meeting of countries participating in the launch is scheduled by mid-summer. Negotiations within the framework’s four pillars will continue, but many see the November 2023 Asia-Pacific Economic Cooperation Leaders’ Meeting hosted by the United States as the focus for finalizing agreements under the framework. IPEF. Some advances are expected to be announced in key areas such as supply chains and clean energy.

The focus on the Indo-Pacific as a key strategic priority for the administration continued in the weeks following President Biden’s visit to the region. Secretary of Defense Lloyd Austin, Under Secretary of State Wendy Sherman, and State Department adviser Derek Chollet have all made visits to the area. Defense Secretary Austin’s remarks at the Shangri-La Dialogue in Singapore on June 11 added another dimension to recent Indo-Pacific talks and underscored the importance of security and prosperity in the region as a principle. fundamental organizing principle of American national security policy.

Hill’s response to IPEF

On Capitol Hill, the Biden administration has come under fire for not including Taiwan in the framework. Ahead of his revelation, a bipartisan group of more than 50 senators sent a letter to Biden calling for Taiwan’s inclusion to demonstrate American support for the country as it faces continued threats from China. Taiwan displeasure aside, initial reactions from congressional Democrats were broadly supportive of the framework with the House Foreign Affairs Committee (HFAC), Gregory Meeks (D-NY) and HFAC Asia Subcommittee Chairman , Ami Bera (D-CA), applauding him. Senate Foreign Relations Committee and Senate Finance Committee Chairman Ron Wyden (D-OR) also offered praise. Others expressed trepidation that the IPEF is not ambitious enough, lacking Republican priorities, including removing barriers to digital and agricultural trade and requiring the strategy to gain congressional approval.

The future of American engagement

The Biden administration, exemplified by the IPEF launch and subsequent high-level remarks and regional travel, is committed to engaging with the Indo-Pacific region. Biden’s first trip to Asia, nearly 18 months after taking office, was a success for what it was, but leaves Asian analysts questioning engagement in the region, especially given the absence of a clear strategy for China. Moreover, the ASEAN Leaders’ Summit held in Washington, D.C., a few weeks ago, also lacked real deliverables to deepen political engagement in the region and serve as a foil to the ever-present influence. growth of China in Asia.

Senior U.S. government officials have maintained their engagement with the Indo-Pacific despite the president and administration’s pivot to the June 6-10 Summit of the Americas and the launch of the Partnership of the Americas for Economic Prosperity (similar in its content and structure at IPEF). We expect US engagement in the region to continue even as the IPEF negotiations falter. The Quad will continue to be an important point of contact for the administration, with the United States, Australia, India and Japan committed to deepening ties through a number of initiatives in the areas global health, infrastructure, climate, people-to-people connections, critical issues and emerging technologies, cybersecurity, space and the recently announced Quad maritime security initiative.

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