During his first trip to Asia as president on May 23, Joe Biden formally presented the Indo-Pacific Economic Framework for Prosperity (IPEF), a document that lays out the United States long-awaited economic technique for the Asia-Pacific region.
In addition to the United States, the IPEF incorporates a dozen other initial partners collectively representing forty per cent of the global GDP. Following setbacks from the coronavirus pandemic and the Russian invasion of Ukraine, the joint statement promises that the IPEF will assist member countries in future-proofing their economies.
The IPEF is a US-led framework for participating countries to strengthen their relationships and engage in crucial economic and trade matters affecting the area, such as constructing resilient supply chains battered by the pandemic.
For US voters concerned about the future of domestic manufacturing, IPEF is becoming an increasingly unpalatable alternative to traditional trading blocs because members have no plan to negotiate tariffs and ease market access. Instead, the programme will focus on integrating partners through mutually agreed-upon standards in four primary areas: anti-corruption measures, supply chains, the digital economy, and clean energy infrastructure.
However, this is not a security pact like the one between the United States and the other four nations that make up the Quad group (Australia, India, Japan, and the United States).
Because Biden, who is known to be a natural, free-trade internationalist, wanted to work with Beijing to lift trade and wealth for the US, but he faced China hawks in Congress, protectionist sentiments in the US, and even a possible resurgence of Donald Trump, the launch of IPEF has been significantly influenced by domestic compulsions. This is because Biden wanted to work with Beijing to lift trade and wealth for the US, but he faced protectionist sentiments in the US.
In addition, his administration concluded that its near-onlooker status in the regional trade arrangements, which had China’s imprint all over them, did not match its strategic objectives in the Indo-Pacific region, which prompted work on a new framework for conducting business in the international marketplace. The goal was to reassume economic leadership in East Asia without appeasing regional rivals or domestic interest groups.
Biden’s plan to exert more economic influence in the Indo-Pacific region finds a happy medium in the IPEF. It is especially considering China’s position as the hub of the supply chains in the region. Moreover, given that this would not be a trade agreement, Biden would not need to seek approval from or face opposition from within Congress to see it through.
The United States, Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam are the initial 13 members of the Indo-Pacific Economic Framework for Prosperity; together, they account for 40 per cent of global GDP and serve as four pillars of the framework.
The IPEF’s final terms and details are still being worked out, but for now, here are its four pillars:
- Trade that takes into account the digital economy and new technologies, labour commitments, the environment, trade facilitation, transparency and good regulatory practices, corporate accountability, and data localization and flow standards across borders.
- Resilience in the supply chain is being developed into “a first-of-its-kind supply chain agreement” to anticipate and avert disruptions.
- Clean energy and decarbonization will include agreements on “high-ambition commitments,” such as targets for the use of renewable energy, commitments to purchase carbon removal technology, energy efficiency standards, and new measures to combat methane emissions.
- Taxation and anti-corruption measures, with obligations to enact and enforce “effective tax, anti-money laundering, and anti-bribery schemes in line with the values of the Constitution.
The intention of the Indo-Pacific Economic Forum (IPEF) is to provide US allies with an alternative to China’s growing commercial presence across the Asia-Pacific region. The IPEF is being promoted as a counterweight to China’s aggressive regional expansion. “The 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,” said Vice President Joe Biden.