What is the Indo-Pacific Economic Framework?

President Joe Biden faced a dilemma over trade in Asia: he could not rejoin the Trans-Pacific Partnership from which his predecessor had left the U.S. in 2017. Many related trade deals, regardless of their content , had become politically toxic to the United States. voters, who linked them to job losses.

So Biden found a replacement. During Biden’s visit to Tokyo, the United States on Monday announced the countries joining the new Indo-Pacific Economic Framework. In the tradition of trade agreements, it is best known for its initials: IPEF. (Pronounced EYE-pef.)

Who is there?

The framework has 13 members, including the US, representing 40% of the world’s gross domestic product: Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.

What would the IPEF do?

That remains to be seen. Monday’s announcement marks the start of talks between participating countries to decide what will finally be in the framework, so the descriptions for now are largely aspirational. In a broad sense, it is a way for the United States to set a marker that signals its commitment to remain a leading force in Asia.

“We are writing the new rules for the 21st century economy,” Biden said in the announcement. “They will help all the economies of our countries to grow faster and fairer. We will do so by taking on some of the most acute challenges that are holding back growth.”

White House National Security Adviser Jake Sullivan said the IPEF “is focused on greater integration of the Indo-Pacific economies, setting standards and rules, especially in new areas. such as the digital economy, and also trying to ensure secure and resilient supply chains. ” . “

The idea that new standards are needed for world trade is not just about discontent among American voters. It is a recognition of how the pandemic disrupted the entire reach of supply chains, shutting down factories, delaying cargo ships, clogging ports and causing higher inflation globally. These vulnerabilities became even clearer in late February after Russian President Vladimir Putin ordered the invasion of Ukraine, causing dangerous jumps in food and energy costs in parts of the world.

Who will specify the details?

Negotiations with partner countries will revolve around four pillars, or issues, with work shared between the U.S. Trade Representative and the Department of Commerce.

The US trade representative will handle talks on the “fair” pillar of trade. This would likely include efforts to protect American workers from job losses, as China’s entry into the World Trade Organization in 2001 led to severe layoffs in the manufacturing industry. These job losses shattered parts of the U.S. the position in 2017.

The Commerce Department will oversee negotiations on the other three pillars: supply chain resilience, infrastructure and climate change, and taxes and the fight against corruption. Secretary of Commerce Gina Raimondo flew with Biden to Air Force One in Japan. He also sided with the president during his stay in South Korea, where he highlighted investments in US factories by automaker Hyundai and electronics giant Samsung.

An added wrinkle is that countries can choose which pillars they want to belong to, according to an administration official. They are not required to support all four.

Who else can join the club?

The White House has said IPEF will be an open platform. But it has faced criticism from the Chinese government that any deal could be an “exclusive” clique that would lead to further unrest in the region.

And there are sensitivities with China, the second largest economy in the world, in the creation of the IPEF. The self-governing island of Taiwan, which China claims to be its own, is being excluded from the pact. This exclusion is noteworthy as Taiwan is also a leading manufacturer of computer chips, a key element of the digital economy that will be part of the IPEF negotiations.

White House National Security Adviser Jake Sullivan said Sunday that any trade negotiations with Taiwan would be done one by one.

How long will it take?

Once talks begin, negotiations are expected to last 12 to 18 months, an aggressive deadline for a global trade deal, according to a government official. The official insisted on anonymity to discuss the plans and added that building consensus in the United States will also be key.