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Economy

Biden’s Indo-Pacific Economic Vision

Feb 16, 2022
  • Zhang Monan

    Senior Fellow, China Center for International Economic Exchanges

The United States will not come back to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership but is set to hold formal talks with Indo-Pacific countries over its planned Indo-Pacific Economic Framework, or IPEF, according to U.S. Secretary of Commerce Gina Raimondo. “We absolutely do not envision this to be a traditional trade agreement,” she said.

Since the IPEF is not a free trade agreement, it’s different from traditional regional cooperation frameworks. Instead of focusing on open, fair and multilateral free trade, it has been trumpeted by the U.S. to counter China’s influence in the region.

The IPEF looks to be a perfect fit for Washington’s existing Indo-Pacific strategy, which lacks an economic bond. In multiple rounds of talks with leaders in the Asia-Pacific region, U.S. President Joe Biden expressed his intent to construct a new regional economic framework in the Indo-Pacific like the IPEF. Though more details have yet to be revealed, the framework has presented some clear vision. Its contents will be fleshed out on trade facilitation, standards for the digital economy and technology, supply chain resiliency, export controls, infrastructure, worker standards, decarbonization, clean energy, taxation and anti-corruption.

In the first place, the IPEF, based on the so-called alliance of common values, is not a multilateral alliance in which all parties are on an equal footing. With American interests at its core, it goes against the values of liberalism and multilateralism. If the U.S. wants this initiative to be more attractive, it must allow countries involved to have equal market access and offer them concessions or benefits instead of paying lip service only.

The Biden administration underlines that Washington will not join any traditional trade agreement. But how the IPEF could be structured remains pending. “What regional and other multilateral trade commitments would best serve U.S. economic and strategic interests in the region?” “Will the announced framework be primarily cooperative in nature, or will it seek specific and enforceable commitments, such as those included in the CPTPP, in key areas to advance economic growth through greater market access and rules-based trade in the region?” Such questions were listed in a document released by the Congressional Research Service last December. The answers will determine the fundamental nature of the framework.

In Biden’s strategic blueprint, the CPTPP is no longer the best option. Joining the CPTPP would help the world’s biggest economy tap into the Asian market with lower tariffs and fewer trade barriers but at the cost of loss of support from labor unions and environmental organizations. Therefore, Washington intends to shed its reliance on multilateral mechanisms and form an economic framework based on bilateral consultations.

Such a framework, constructed on a bilateral partnership or a small-scale multilateral relationship, is more of a contract aimed at solving particular issues than it is an agreement to ratchet up economic integration.

Furthermore, the TPEF, which serves as a vehicle for Washington’s economic engagement in the Indo-Pacific region, is designed to dent Beijing’s influence. With China’s growing economic clout in this vital region, a geopolitical rivalry between the world’s two economic titans is bound to last for a long time into the future.

The U.S. has gotten used to keeping its technological edge by consolidating its economic hegemony and system of alliances, as we can see in recent history — from the Coordinating Committee for Multilateral Export Controls to the Wassenaar Arrangement and the Five Eyes.

The TPEF is no exception. It will be closed, confrontational and exclusive, as featured in most U.S. strategic and security frameworks such as the Quad and AUKUS. Building a U.S.-dominated global supply chain is the main purpose of the TPEF.

Raimondo reiterated on various occasions that the TPEF encompasses coordinating export controls to restrict exports of sensitive products to China, as well as formulating technological rules and standards for artificial intelligence and cybersecurity. Hence, with the framework, Washington eyes securing its tech industry supply chain and dominating the region’s technological development.

Nonetheless, for everyone else, multilateralism remains the order of the day. An exclusive, confrontational economic coterie runs counter to the open, liberal position most Indo-Pacific countries hold onto. As such, the “cooperative” framework in Washington’s mind can hardly take shape. 

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