This statement alone is likely to provoke protests in Beijing. Because it runs counter to the previous “strategic vagueness” of the USA, which recognizes the one-China policy but supports Taiwan.
Shortly thereafter, Biden presented his actual declaration of war, with which he wants to counter China’s economic influence in the region: the “Indo-pacific Economic Framework”, IPEF for short. In English: the Indo-Pacific Economic Framework.
“We are here for one simple reason,” Biden said to the heads of state and government from the twelve participating countries in the region, most of whom had joined the kick-off online. “The future of the 21st century economy will be largely written in the Indo-Pacific region.” And the participants would now write the rules for the new economy.
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As a goal, Biden defined an Indo-Pacific region “that is free, safe and resilient”. The US has also identified several areas that are key brakes on the world’s largest economy.
It’s about these points:
- Develop common rules for the digital economy,
- develop resilient supply chains for critical components such as semiconductors,
- Promote investment in clean energy and decarbonization of the economy,
- curb corruption, among other things, through fair rules.
However, many things that make up modern free trade agreements are being suppressed, above all duty-free access for participants to the US market. But even without this bait, Biden wants to raise the participation hurdles. The key to success will be a framework that focuses on high standards and inclusivity, he says.
In theory, he left the door open to China. But in Asia, the IPEF is widely seen as a US attempt to counter China’s huge economic clout. And not by accident.
China is already a member of the regional economic partnership RCEP, the largest free trade area in the world. In addition, the US rival has applied to be included in the successor to the Trans-Pacific Partnership Agreement TPP, from which Biden’s predecessor Donald Trump withdrew in 2017. The IPEF should now smooth out this embarrassment. Over the weekend, Biden’s national security adviser clearly described the claim “that we want to be at the center of the agreement”.
IPEF is set to be the highlight of Biden’s five-day trip to Asia
At first glance, the starting signal for the new agreement seems like a success: the participants represent 40 percent of world trade, namely Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
>> Also read here: South Korea is getting into Joe Biden’s Asia strategy – and thus risking a dispute with China
The location and timing of Biden’s presentation also underscored the importance of the IPEF. It was the highlight of Biden’s five-day trip to Asia. First, he promised the East Asian allies South Korea and Japan greater security cooperation and rallied their support for his new strategic economic initiative.
The summit of the Quad, a loose alliance of the USA, India, Australia and Japan, follows on Tuesday. In addition to security policy initiatives, there will also be questions of economic security, two aspects that are the focus of the IPEF.
India’s Prime Minister Narendra Mori, who was sitting next to Biden next to Japan’s Prime Minister Fumio Kishida, promised: “India will work with you all to build a resilient and inclusive IPEF.” Trust, transparency and time horizons are important.
For Asia’s participants, the IPEF is just plan B
Only the mood is more complicated than the words of greeting showed. Not even the most important US ally, Japan, celebrates unreservedly. Tobias Harris, East Asia expert at the think tank Center for American Progress, puts it this way: “Tokyo’s disappointment is obvious.”
Japan’s Prime Minister Kishida, in the presence of Biden, expressly welcomed the USA’s Indo-Pacific strategy. In an interview with the business newspaper “Nikkei”, however, he spoke from the heart of other governments: Japan would still prefer the USA to return to the Transpacific Partnership Agreement TPP.
The agreement was originally initiated by the USA in order to reduce China’s economic influence in Southeast Asia through freer access to the US market. After Trump’s departure, Japan and Australia then saved the remainder of the agreement, which has now come into force as the CPTPP. But Biden, who as Vice President was responsible for the TPP, is undeterred in continuing Trump’s US-centric course.
The problem: Without legally secured free access to the US market, many governments in the region lack the economic incentive to fully commit to binding rules on trade, labor and environmental law. Furthermore, IPEF’s advantage of not requiring parliamentary approval is also a disadvantage. A new US president could remove it with one signature. This is more difficult with a free trade agreement.
>> Also read here: Europe and Japan join forces in digitization
However, Japan’s support also reflects thinking in the region. The IPEF is endorsed as Plan B. His government will continue to press the US to return to the TPP, but at the same time promote cooperation through the IPEF, Kishida explained in the “Nikkei” interview.
On the one hand, the federal states want to try to influence the new set of rules. On the other hand, the USA is at least partially filling the economic vacuum in the region that Trump had left behind. The countries hope, however, that this will not force them to choose between China and the United States.
Instead, they wish to avoid any one-sided dependence on either of the two economic giants. As Singapore’s Prime Minister Lee Hsien Long put it, “It is important that IPEF remains open, inclusive and flexible, allowing members to work with many other partners in overlapping collaborations.”
Finally, he wished, barely concealed, that the United States would finally overcome its aversion to free trade agreements. He hopes that IPEF “over time will lead to an even greater and more ambitious economic engagement between the United States and the region.”
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