Launch of the Indo-Pacific Economic Framework: Claiming to strengthen integration in four major areas is more like a U.S.-led political arrangement

【Global Times Comprehensive Report】US President Joe Biden ushered in the highlight of his Asian tour in Tokyo, Japan on the 23rd - announcing the launch of the "Indo-Pacific Economic Framework" (IPEF). The Associated Press said Biden's statement marked the imminent start of negotiations between IPEF participating nations to decide the final content of the framework. Although the framework needs to be refined, many media have reported that the framework "refers to China" or specifically mentions that there is "no China" among the members of the framework. The U.S. side boasts that the framework has 13 initial members such as the United States, Japan, and South Korea, and the GDP accounts for 40% of the world, but a number of media and scholars have reminded that the IPEF is "more like an open bar party", with no substantive interests, no tariff exemptions, no wider market access, and more like a "political arrangement" to serve the interests of the United States. In response to the launch of the IPEF by the United States, Chinese Foreign Ministry spokesman Wang Wenbin said on the 23rd that the United States should effectively act in accordance with free trade rules, rather than starting another stove and developing another set of ideas, impacting the current regional cooperation structure and opening a reverse train of regional integration. "Is the United States politicizing, weaponizing, and ideologizing economic issues, and using economic means to coerce regional countries to take sides between China and the United States?" The United States owes the regional countries a statement. ”

13 initial member states

"This framework is a commitment to work with our close friends and partners in the region to address the most important challenges of ensuring economic competitiveness in the 21st century." Biden said this at a press conference jointly held with Japanese Prime Minister Fumio Kishida on the 23rd. According to a statement issued by the White House on the same day, ipef has 13 initial member countries, namely the United States, Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam, with 13 member countries accounting for 40% of the world's GDP. The statement highlights four key pillars of IPEF's focus: an interconnected economy (trade), a resilient economy (supply chain), a clean economy (clean energy) and a fair economy (anti-corruption).

The Wall Street Journal said on the 23rd that IPEF is the most ambitious attempt to establish economic relations with Asian countries since the US government withdrew from the Trans-Pacific Partnership (TPP) in 2017. Unlike traditional trade agreements, IPEF has no plans to negotiate tariffs and ease market access — these are increasingly unpopular with U.S. voters and difficult to pass in the U.S. Congress, agency AFP said. Instead, the framework envisages bringing partners together through "agreed standards" in four key areas: the digital economy, supply chains, clean energy infrastructure, and anti-corruption measures.

It is worth noting that although China was not mentioned in the statement issued by the White House on the 23rd, a number of Western media analyzed that the framework was aimed at China when reporting on the matter. U.S. Commerce Secretary Raimondo also said IPEF offers Asian countries "an alternative to one China" on the above important matters.

"IPEF is by no means a framework concept for regional economic and trade integration in the traditional sense, nor is it a bilateral free trade agreement promoted by former US President Trump during his administration." Chen Jia, a researcher at the Institute of International Monetary Studies at Chinese University, told the Global Times reporter on the 23rd that the purpose of IPEF is very clear, that is, to establish a mechanism to fill the "vacuum" in the Indo-Pacific region caused by the Trump administration's withdrawal from the TPP. In addition, the Fact that the United States is not part of the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade agreement, has prompted the United States to seek to increase its presence in the region's economic architecture against China through IPEF.

"The day before the United States launched IPEF, the Chinese foreign minister warned that the US strategy in the Indo-Pacific region is 'doomed to failure'", Agence France-Presse said, Chinese State Councilor and Foreign Minister Wang Yi said after talks with Pakistani Foreign Minister Biraval on the 22nd that the US "Indo-Pacific strategy" is bound to be a failed strategy, and it is necessary to draw a big question mark on the US "Indo-Pacific economic framework".

Many countries do not want to show a posture of containing China

Some of the original member states were reluctant to understand IPEF from the perspective of "containing China." According to Reuters, the framework's initial members will need to negotiate issues such as the standards they want to comply with, how they will be implemented, whether domestic legislatures need approval and how to view future potential members, including China.

According to South Korea's KBS TELEVISION, South Korean President Yoon Seok-yue attended the IPEF kick-off meeting by video on the afternoon of the 23rd. Because IPEF is considered to have a "containment of China" nature, there are concerns in South Korea about China's protests or economic retaliation. In response, the South Korean presidential office said that IPEF's focus is to maintain supply chain stability, "not to exclude specific countries such as China." Yin Xiyue said on the 23rd that the content of IPEF has not been determined, and it is now in the process of formulating relevant rules for the economy and trade of the Indo-Pacific region. South Korea's "Asian Economy" reported that South Korean Foreign Minister Park Zhen also said on the 22nd that it is unrealistic to talk about the Indo-Pacific economy without China, and South Korea can play a guiding role in attracting China to participate in relevant rules and orders.

India's "Economic Times" commented on the 23rd that IPEF is ultimately a "political arrangement" led by the United States. India has also been hesitant to join the framework. After days of intense contacts between U.S. and Indian officials to revise the text of the official statement in the United States to show that the framework is still in the negotiating phase and will continue to be open to other countries, India finally agreed to participate in the launch of the IPEF, the Deccan Herald said. India is caught in a dilemma over joining IPEF because it is reluctant to be seen as joining forces with the United States to contain China.

"Japan Economic News" said on the 23rd that in the context of Sino-US competition, Singapore strives to maintain a neutral stance. In an interview with the newspaper, Prime Minister Lee Hsien Loong said Singapore's participation in the US-led IPEF was a valuable signal for the Biden administration to recognize the importance of economic diplomacy in Asia. Singapore also supports China's Belt and Road Initiative and global development initiative and is a member of the Group of Friends of the Global Development Initiative. China's share of the global economy has increased, and if it does not develop trade with China, it will not only pay a great price, but also create more friction. He also said that the fledgling IPEF is not a complete substitute for the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). "Ideally, you would want the U.S. and Asian countries to have a free trade agreement, but they (the U.S.) can't do it. IPEF is not a FTA, but a framework that reflects the intention of both parties to cooperate on region-related projects. He said.

"Whether IPEF can survive until the end of Biden's term is a big question."

While U.S. officials say the Indo-Pacific economic framework represents a "new way of cooperation that goes beyond traditional trade deals," some experts believe its impact on Asian economies is unclear and less attractive to other countries.

U.S. President's National Security Adviser Sullivan specifically mentioned at a press conference on the 23rd that a number of ASEAN countries joined the IPEF as initial members. According to the US Consumer News and Business Channel (CNBC) reported on the 23rd, an Asian diplomat said that some ASEAN member countries could have participated in the launching ceremony of IPEF, but according to Japanese Finance Ministry officials, due to the lack of practical incentives such as tariff reductions in the framework, many countries in the region are not willing to join. Goodman, a trade expert at the Center for Strategic and International Studies, said, "It looks like the White House has decided to make the IPEF launch more like an open bar party where everyone is invited." But in the end, if you want other countries to get on board, you must give more substantial benefits. ”

Chen Jia said the impact of IPEF on the entire Asian economy is unclear. For example, the essence of IPEF's so-called "stable supply chain" is to reconstruct the supply chain and disperse the supply chain originally from China to various member countries, but whether this can truly stabilize the global and regional supply chain is a big problem. What's more, IPEF is a framework that needs to be established for a long time, but whether it can "live" to the end of Biden's term is another big question.

"The key problem with Biden in Asia is that he's constrained by U.S. domestic trade politics," said Thomas, a China analyst at Eurasia Group, a political risk consultancy. According to the analysis of the Nihon Keizai Shimbun, for the participating countries, IPEF lacks the attractiveness of the US market opening. In addition, the Biden administration does not need congressional approval if it does not include tariff relief negotiations in the IPEF consultation area. There is widespread concern among participating countries about whether the agreement will be effectively respected once there is a regime change in the United States.

Wang Wenbin commented on the 23rd that China believes that no matter what the name of the regional cooperation framework, it should promote free trade and should not engage in disguised protectionism; it should help the recovery of the world economy and should not undermine the stability of the industrial chain; it should promote open cooperation and should not create geopolitical confrontation. "Artificially creating economic decoupling, technological blockade, industrial chain disconnection, and exacerbating the supply chain crisis will only bring serious consequences to the world, and the United States is no exception." The US side should know and correct its mistakes, rather than making mistakes again and again. ”

[Yue Linwei, Zhang Jing, Xin Bin, Special Correspondent of Global Times in Japan, South Korea and Singapore, Global Times Reporter Xie Jun]

Source: Global Times