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The Unfathomable Indo-Pacific Framework

May 30, 2022
  • Tao Wenzhao

    Honorary Member of the Chinese Academy of Social Sciences; Fellow, CASS Institute of American Studies

On the afternoon of May 23, U.S. President Joe Biden formally launched the Indo-Pacific Economic Framework along with 13 countries as founding members, including the United States, South Korea, Japan and India.

“This framework is a commitment to work with our close friends and partners in the region on challenges that matter most to ensure economic competitiveness in the 21st century,” Biden said. He was being reserved: He didn’t say it was meant to challenge China.

The framework generally covers four areas: connected economy (trade), resilient economy (supply chain), clean economy (clean energy) and fair economy (anti-corruption). The intent behind launching the IPEF in Japan was clear.  Japan is the largest economy among U.S. allies, and the Biden administration wants Japan to play a leading role in the framework. But even U.S. Ambassador Rahm Emanuel himself knew little about the IPEF, so he just emphasized its symbolic significance, claiming it shows that the U.S. is a solid player in the Pacific region economically. Thus, Biden’s launch marked only the beginning of consultations between the U.S. and related countries. As to the framework per se, in Emanuel’s own words, details will be added in the process of consultations. 

Why is such a framework needed? 

The Trump administration put forward the “Indo-Pacific Strategy,” and the U.S. Defense Department issued a report on the subject in June 2019. But there was no mention of the regional economy. It was nothing unusual for a U.S. DoD report to exclude economy. Note that the previous administration had made no special statements about economic issues in the Indo-Pacific during Donald Trump’s term of office. People felt nothing strange, given that administration’s chaotic, random and irregular nature.

In February, the Biden administration published its Indo-Pacific Strategy in the form of a White House document, an ambitious report that attempts to both evaluate geopolitical competition in the region in a broad sense and “focus on every corner of the region” — although it didn’t explain how it planned to do that. According to the report, the U.S. would put forward an economic framework for the Indo-Pacific region, mentioning a few aspects only briefly. Officials from different departments under Biden have mentioned the framework over the past few months, but only in an off-and-on manner. Even ranking officials of Cambodia, which holds the ASEAN rotating presidency, had been complaining that they lacked knowledge about many specifics.

The Biden administration now faces a dilemma: Lacking an economic framework, its Indo-Pacific strategy will be incomplete, and proposing one will be really difficult, because the RCEP and CPTPP are already in the region.

The CPTPP derived from TPP, which was originally masterminded by the Obama administration. Obama made it clear from the start that the U.S. wanted to create such a mechanism because “we have to make sure the United States — and not countries like China — is the one writing this century’s rules for the world’s economy.” Yet Republicans thought otherwise, and the Senate refused to approve it.

Trump had done everything possible on the campaign trail to denigrate the TPP, describing it as the worst agreement the U.S. had ever negotiated. He announced the U.S. withdrawal from the group immediately after his inauguration. So, what if the Biden administration rejoins it? No, Democrats won’t forget the lesson they learned from the Trump administration’s withdrawal from TPP, and for political reasons they would not want to be involved again. Instead, they were forced to choose a murky, unfathomable framework that doesn’t have to go through Congress. In this way, they don’t have to engage with Republicans again. 

Probability of IPEF success 

So far, the framework remains unfathomable, having no specific content. But one thing is certain: It will not likely succeed for several reasons:

First, after the smooth implementation of RCEP and CPTPP, many countries in the region, U.S. allies included, have become more closely connected. The two multilateral mechanisms are of critical significance to their respective economies; thus, the U.S. has lost its dominance over the regional economy and trade.

Second, countries in the region have their own calculations on trade with the U.S. The U.S. hopes to restrain and check China by enhancing its ties with regional countries, while countries in the area hope to have more access to the U.S. market. Protecting jobs at home — which was one of Trump’s main reasons for dumping the TPP — is also a concern of the Biden administration, which has offered no plan to further open America’s super large market. The IPEF, therefore, will not be very attractive to countries in the Indo-Pacific region.

Some officials and scholars have already noted that the proposed framework the U.S. has come up with asks for too much and gives too little — meaning it’s not mutually beneficial. In economy and trade, only mutual benefits can guarantee success.

Third, the U.S. won’t be able to sabotage China’s economic relations within the region. For a long time, China has been the largest trading partner of ASEAN, Japan and South Korea. Such strong economic relations have great potential because of China’s economic scale and super large market, as well as its continuous growth. Singapore’s Prime Minister Lee Hsien Loong has on many occasions said China offers opportunities for ASEAN's development. He pointed out again the other day that the Chinese economy has a larger share of the world economy, and those who do not develop trade with China will not only pay a high price but will also create more friction. This is a voice of reason.

Fourth, supply chain cooperation with regional countries is a clear focus of the Biden administration. The first stop on Biden’s recent Asia trip was a visit to South Korea’s Samsung Electronics, where he said it had become clear from the Russia-Ukraine conflict that only by strengthening supply chains will it be possible to avoid reliance on countries whose values differ on economy and national security.

Obviously an important reason for the Biden administration to propose the IPEF is to enhance supply chain relations with regional countries and estrange them from China. However, no individual or government can create or remodel supply chains at will, as they have emerged naturally in longstanding, effective economic practice in the process of globalization. Once formulated, they have relative independence and stability, and they influence all parties’ economic activities.

The ongoing pandemic has been a heavy blow to global value and supply chains, but it hasn’t weakened China’ position in the chains. On the contrary, it has confirmed China’s importance. The U.S. won’t succeed in artificially manipulating supply chains. 

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