U.S. President Joe Biden announced his long-planned Indo-Pacific Economic Framework for Prosperity (IPEF) in Tokyo with the backing of a dozen countries from the region who seek U.S. economic leadership as a counterbalance to China’s influence.
But while Biden basked in the warm words of support he received from IPEF member leaders at Monday’s launch of the framework, getting the pact to work as advertised could prove a daunting task once he returns to Washington. Adding to the challenge, the U.S. president faces declining poll numbers less than six months before November's congressional midterm elections.
There are four pillars to the framework: trade, supply chains, clean energy, and tax and anti-corruption.
For the first pillar, the goal is to have standardized, inclusive, free and fair trade commitments, especially for the digital economy. For the others, members are working to improve the transparency, diversity, security and sustainability of supply chains, to promote clean energy and environmentally friendly infrastructure projects and to adopt tougher measures against money laundering and bribery.
“We share a commitment to a free, open, fair, inclusive, interconnected, resilient, secure, and prosperous Indo-Pacific region,” the leaders said in a statement following the launch.
The U.S., Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam are the IPEF’s initial members.
While members may have committed themselves to various goals, they have agreed only to an informal network, not a full-fledged trade pact. In the U.S., that means the president does not have to submit the plan to Congress for approval, and therefore run the risk of having it voted down.
Instead, the IPEF is an executive agreement under the president. But Melinda St. Louis, director of the Washington D.C.-based Public Citizen's Global Trade Watch, which monitors international trade agreements and provides policymaking advice to Congress, says that doesn’t mean the American legislature is likely to sit on the sidelines.
“United States Trade Representative Ambassador Katherine Tai has said the Biden administration doesn’t intend to negotiate tariff lines or areas that would change U.S. law. So Congress would not necessarily have the same role for IPEF as it would with a formal treaty," she said. "But we’ve talked to members of Congress who are watching IPEF closely and do not want to be cut out of this deal.”
Two members of Biden’s own Democratic party have already begun asking the administration sharp questions about the IPEF: Sens. Elizabeth Warren and Robert Casey, Jr. In April, the two sent a joint letter to the USTR and the Commerce Department, which took the lead on negotiating the IPEF, to express a number of concerns about what the framework would consist of and who it will benefit.
“We are concerned that you have not articulated how this framework will help U.S. workers. You have also said that IPEF will be inclusive and flexible. We’re concerned that this means you intend to include trading partners with low labor and environmental standards, while giving them flexibility to not improve their treatment of these vital issues,” the two senators said in the April 11 letter to Secretary of Commerce Gina Raimondo.
“We worry that IPEF could repeat the mistakes of previous trade policy and conflict with the administration’s commitment to a worker-centric trade policy,” the letter said.
With the congressional midterm elections looming and inflation running rampant, Democrats skeptical about the IPEF’s protection of workers and of U.S. jobs are one issue Biden will have to deal with. The other is to come up with a framework that will benefit U.S. businesses, who have so far been lukewarm in their reception of the IPEF.
The U.S. Chamber of Commerce still hopes that America will eventually join a major 11-member trade pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Washington withdrew from its predecessor — dubbed the Trans-Pacific Partnership Agreement, or TPP — in 2017 under then-President Donald Trump.
“The American business community supported the TPP and is, first and foremost, in favor of seeking to strengthen and rejoin it,” the chamber said on Feb. 25. "The IPEF lacks the precision, specificity, economic impact, and enforceability of that clear first choice."
Many world leaders also wish the U.S. would reconsider its stance on the trade pact, including Prime Minister Fumio Kishida, who said as much at a joint news conference with Biden on Monday. But U.S. officials have said America has no intention of joining the CPTPP.
Saori Katada, a professor of international relations at the University of Southern California, gives the IPEF a mixed review overall. Non-U.S. members have key unanswered questions about how the Biden administration will sell it to the American public and its potential as a strong regional trade bloc, she said.
“Smaller Asian countries may ask 'Where’s the beef?' regarding market access and binding commitments from the U.S. On the other hand, IPEF is much better than nothing," Katada said. "Asia is worried about the U.S. economy turning inward due to economic security issues and the rise of populism — this time from the left on Biden — especially at the time of midterm elections.
“At least, though, the U.S. is trying to emphasize economic means to engage Asia, which is sorely needed.”
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