Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
US President Joe Biden on Monday unveiled the Indo-Pacific Economic Framework (IPEF) with a dozen Asian partners, namely Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
“This framework is a commitment to working with our close friends and partners in the region on challenges that matter most to ensuring economic competitiveness in the 21st century,” Biden said while announcing the trade bloc during his visit to Tokyo on Monday.
Led by the US, the 13 countries account for 40% of the world’s gross domestic product (GDP) and would usher in new economic and trade agreements. Biden said the bloc’s top priority right now is to tackle inflation, while lowering the costs of supply chains in the long term.
The White House in a statement said that the US has invested $969 bn in foreign direct investment (FDI) in the region in 2020. It acknowledged the importance of the Indo-Pacific for global growth and said that three million American jobs and $900 bn in FDI for the US come from the region.
US looks to find its Asia footing
The trade bloc will have four key aspects that the White House believes will bolster US’ economic ties with the region. Connected Economy aims to deal with data privacy and digital economy, Resilient Economy will focus on supply chains and prevent disruptions, Clean Economy will bolster clean energy and decarbonization, and lastly Fair Economy will enact new taxes, anti-money laundering, and anti-bribery measures.
“The United States and our partners in the region believe that much of our success in the coming decades will depend on how well governments harness innovation — especially the transformations afoot in the clean energy, digital, and technology sectors — while fortifying our economies against a range of threats, from fragile supply chains to corruption to tax havens,” the White House said in a statement.
China is not part of the IPEF, whereas eleven of the 13 countries (barring India and the US) are part of the Regional Comprehensive Economic Partnership (RCEP) with China.
However, Biden during the announcement said the IPEF will be “open to others who wish to join in the future,” indicating that new members may join later.
Previously, an insight paper on the IPEF by the US Congressional Research Service had said that IPEF is not a traditional trade agreement. Member countries need to sign up for all the components of the modules mentioned above but do not have to participate in all modules. The trade agreement does not talk about tariffs or trade barriers and instead focuses on “Administrative arrangement”.
The move is being seen as a US effort to regain its place in the Asia Pacific after former President Donald Trump pulled out of the Trans-Pacific Partnership (TPP). The TPP has now evolved into the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, of which China is an influential member.
“We believe that expanding U.S. economic leadership in the Indo-Pacific through vehicles like IPEF is good for America — American workers and businesses as well as for the people in the region,” said Jake Sullivan, US National Security Advisor.
