TOKYO – In an effort to boost its economic profile and counter China within Asia, the United States on Monday announced the Indo-Pacific Economic Framework with Asian partners including India, Australia, Japan and the Republic of Korea.
It is a comprehensive program designed to help develop U.S. ‘economic leadership’ in the Indo-Pacific region. But the framework seems hollow as no provision of enhanced market access or any other economic cooperation has been announced. The group only on general terms seeks to impose international rules on the digital economy, supply chains, carbon emissions and labor regulations.
US President Joe Biden said coping with inflation was a priority and the framework was designed to help lower costs by making supply chains less sustainable in the long run.
Importantly, the IPEF is not a free trade agreement. Biden faces political pressure from the left and right in the United States to avoid free trade agreements.
It is also not a security agreement and is different from the Quad defense team that includes the United States, Japan, India and Australia, “US national security adviser Jake Sullivan told reporters Sunday.
Biden is in Tokyo this week meeting with regional leaders about the IPEF and Quad.
Increase competition
Despite avoiding trade agreements, the United States wants to increase its profile in the Asian economic zone only on paper, where China is the dominant country despite American partners Japan and South Korea boasting huge economies and India, a Quad member, growing rapidly with borders.
The United States needs to “improve its regional economic competitiveness,” according to Ali Wyne, senior analyst at Eurasia Group’s Global Macro practice.
“Even those countries with significant and growing fears about China’s foreign policy and strategic objectives are so grateful that they will not be able to erode their economies in the short term,” Wyne said, “so Biden’s management will work towards greater Indo-Pacific Economic Framework.
U.S. officials have been careful not to mention China in the IPEF talks and have denied it a “closed” party, as China has said.
Chinese government-controlled media The Global Times on Saturday said “the main purpose of Biden’s trip to South Korea and Japan is to try to create a new political climate against China, by establishing a coalition in Washington in the Asia-Pacific region.”
Sullivan told reporters on Sunday that he was not surprised “that China is concerned about the number of countries, the diversity of countries that have expressed interest and enthusiasm for the IPEF.”
A difficult move?
Speaking to CNBC’s “Capital Connection” on Monday, before the IPEF details were released, senior partner at Stimson Center in Washington DC Yuki Tatsumi said the program would be difficult to sell in the region.
He said it was similar to the Trans Pacific Partnership that the US withdrew from the Trump administration, in which countries in the region struggled to qualify.
In addition, Tatsumi said the U.S. has sharpened its way to China under the rule of former President Donald Trump and Barack Obama.
“So whatever new policy plans emerge from Washington, the strategic competition between the US and China will intensify,” he said, adding that the new framework would accelerate that process.