Biden's IPEF Is Where US Foreign Policy Puts on a Trade Garb

The new block comes in the wake of two mega-agreements already in force in the region: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). For the record, let's do a quick recap of the context.

The Trans-Pacific Partnership (TPP) was essentially then US President Barack Obama's way of containing China's increasing rise as an economic superpower in the aftermath of the 2008-09 crisis. The TPP was mired in secret parleys and concerns over both loss of US jobs and labour issues (besides many others). The TPP was signed between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the IS signed in February 2016.

The first thing that Donald Trump did, after being elected president, was to withdraw from the pact, as he had promised during his election run. The remaining 11 TPP partners revived the deal and rechristened it as the CPTPP in March 2018. What is now forgotten is that the TPP began as an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) by Brunei, Chile, New Zealand and Singapore in 2005. The others joined in 2008, and the US thereafter drove the negotiations.

The RCEP, on the other hand, was conceived at the 2011 ASEAN Summit in Bali, Indonesia, and negotiations began during the 2012 ASEAN Summit in Cambodia. The RCEP at the onset was not China-driven, and India was the other major power during the negotiations. India opted out in November 2019, and the partnership was signed a year later with all ten members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam), the three East Asian members of ASEAN Plus Three (China, Japan, South Korea) and the two Oceanian members of ASEAN Plus Six: (Australia, New Zealand). The RCEP has been effective since 1 January 2022.

[Note: Countries which are members of both CPTPP and RECP include Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam. Indonesia, Myanmar and the Philippines are yet to ratify the RCEP. China, Ecuador, Taiwan and UK have applied for membership to the CPTPP, while Bangladesh and Hong Kong have applied for accession to the RCEP.]

But ground realities have changed since 2011 when the race between the TPP and RCEP started, and neither the CPTPP nor the RCEP have been able to set the world on fire. The pandemic has considerably diminished China's clout as the world's manufacturing powerhouse, and forced most other countries to revise their supply chain strategies and rethink about putting all their eggs in the China basket. And,matters are now in utter disarray with the Russia-Ukraine war, leaving gas and food supply chains particularly in a shambles. Inflation worldwide has been shooting up, and it is a major concern in Biden's own land. The US has already spent hundreds of billions on funding Ukraine and is in desperate need for markets, just as other countries are in need for some economic solace. And there, politics meets trade.

It is not clear how long it will take for the negotiations, which begin today, to reach a conclusion. News reports speculate the timeframe to range from 12 to 18 months.

The framework is built on four "pillars" with trade being one of them. The statement said this about trade: "We seek to build high-standard, inclusive, free, and fair trade commitments and develop new and creative approaches in trade and technology policy that advance a broad set of objectives that fuels economic activity and investment, promotes sustainable and inclusive economic growth, and benefits workers and consumers.  Our efforts include, but are not limited to, cooperation in the digital economy." The other three pillars are supply chains; clean energy, decarbonisation, and infrastructure; and tax and anti-corruption.

The joint statement does not say much, but a "fact sheet" released by the White House outlines the Biden administrations interests. A few samplers:

• "The United States is an Indo-Pacific economic power, and expanding U.S. economic leadership in the region is good for American workers and businesses — as well as for the people of the region."
• "Trade with the Indo-Pacific supports more than three million American jobs and is the source of nearly $900 billion in foreign direct investment in the United States."

It's all about US jobs and US leadership.