Indo-Pacific Economic Framework explained Indo-Pacific Economic Framework explained

Indo-Pacific Economic Framework explained

    NHK Senior Economic Commentator /
    NHK World Special Affairs Commentator
    United States President Joe Biden officially launched the Indo-Pacific Economic Framework, or IPEF, during his first presidential visit to Japan.

    Here's some explanation of its role and outlines why it is being met with a mixed reception by some Asian countries.

    President Biden and Japanese Prime Minister Fumio Kishida have agreed to work together on strengthening ties with their regional partners, including Association of Southeast Asian Nations, or ASEAN, members and India.

    A group of 13 countries — the US, Japan, India, Australia, Brunei, Thailand, Malaysia, New Zealand, Indonesia, South Korea, the Philippines, Singapore, and Vietnam — plan to sign on to the IPEF.

    IPEF officially launched in Tokyo, May 23, 2022.

    The IPEF is not a free trade agreement and is completely different from the Trans-Pacific Partnership Agreement (TPP)

    The framework is unique from other economic agreements.

    In comparison with the TPP, which was originally a US-led economic trade pact, the IPEF is merely an economic "framework."

    The Biden administration has made it clear that it will not address market access, meaning that IPEF signatories cannot expect to see the US lower tariffs as part of the initiative.

    That has led some countries to consider the merits of joining.

    The Biden administration has also noted that it will not seek congressional approval for the IPEF, something that has stoked uncertainty about the level of US commitment.

    Kishida, in a joint news conference with Biden, showed strong support for the IPEF but also reiterated that Japan still wants the US to return to the TPP.

    US President Joe Biden and Japanese Prime Minister Kishida Fumio participating a launch event of the Indo-Pacific Economic Framework (IPEF) in Tokyo.

    US offers a "pick-and-choose" approach

    The IPEF consists of four main pillars:

    • Fair and Resilient Trade
    • Supply Chain Resiliency
    • Clean Energy, Decarbonization and Infrastructure
    • Taxation and Anti-Corruption

    The US says members may choose which pillar(s) they want to join. Japan is joining all four, but many Southeast Asian countries may end up choosing to engage with only one or two, especially avoiding the trade pillar.

    India's decision to join the IPEF demonstrates the "pick-and-choose" approach may have worked in terms of engagement.

    The possible participation of Taiwan could lead to increased tension between the US and China

    Taiwan had already expressed its willingness to join the IPEF prior to Biden's visit to Japan, but the territory was not included in the list of initial partners.

    Meanwhile, China has been pressuring ASEAN countries not to join the IPEF.

    Is the IPEF an anti-China strategy?

    While the IPEF is an opportunity for the US to demonstrate its reengagement and leadership in the Indo-Pacific region, some Washington foreign policy experts are noting that it should not be viewed as an explicitly anti-China strategy.

    At a joint news conference in Tokyo this week, Biden suggested that the US would defend Taiwan militarily should China attack the island. But he also said that he was considering lowering tariffs on Chinese goods on the back of rapid inflation.

    Biden appears to be balancing short-term interests with broader goals, and may want to focus on the positive influence of IPEF, rather than directly antagonizing China.

    US President Joe Biden adressing the new economic framework during his first trip to Asia in office, in Tokyo, on 23 May, 2022.

    The IPEF is still under construction

    The White House has boasted that the 13 members of the IPEF represent 40 percent of global GDP. But already there is division about how to approach some issues, including digital trade and decarbonization. It is early days for the framework that needs broad engagement to succeed.