Ahead of President Joe Biden’s official launch of the Indo-Pacific Economic Framework (IPEF) in Tokyo next week, the United States on Friday said that a “wide-ranging and comprehensive” set of countries are set to join the initiative and it will represent a significant milestone in US engagement in the region.
Speaking to reporters, US National Security Adviser (NSA) Jake Sullivan acknowledged that the IPEF is not a trade agreement, but suggested that this was a “good thing”.
He said it was a “modern negotiation designed to deal with modern challenges” since it will entail significant investments and provide a new thrust to economic initiatives in the Indo-Pacific region.
IPEF is widely seen an American initiative to compete with China’s economic and trade footprint in the region and compensate for the Washington’s absence from the key trading arrangements in the region. The framework has four pillars — fair and resilient trade (including digital, labour, environmental and other standards); supply chain resilience; infrastructure, decarbonisation and clean energy; and tax and anticorruption.
According to an HT report last week, the US proposed what experts have called a “pick and choose” formula: where participating countries are free to opt for the pillars they want to collaborate on.
India has not made an official decision on joining the pact, but New Delhi is examining the framework “positively”. There is a likelihood that India will join the framework in principle, even as discussions on specific pillars continue after the launch. Finance minister Nirmala Sitharaman, during a visit to Washington DC in April, called the IPEF a “fantastic thought”.
Amid criticism that the IPEF is a weak alternative to a free trade pact, which entails market access, Sullivan, who is accompanying Biden on his trip to South Korea and Japan, focused on the nature of the framework and the diverse participation the US was expecting.
“I think you’re going to see a really impressive display of energy and enthusiasm by a significant number of countries in the Indo-Pacific for the launch of the Indo-Pacific Economic Framework,” he said.
“And that diversity and breadth of participation, in our view, actually vindicates the basic theory behind IPEF, which is — you’re right — it is not a traditional free trade agreement. And that’s a good thing. It is a modern negotiation designed to deal with modern challenges.”
The IPEF will serve as a “new model of economic arrangement that will set the terms and rules of the road for trade and technology and supply chains for the 21st century,” he said.
“I would say, two months ago, there was a lot of, like, ‘Well, is this real? Is it not real? Is it something that’s meaningful or not meaningful?’ Week by week, as we have built out the substance working with these countries, they have not only come on board, but they have gotten increasingly invested in and motivated by the elements of it,” Sullivan added.
IPEF will involve significant resources around infrastructure and trade facilitation.
“There will be the opportunity to organise regulatory approaches that will make trade significantly easier. And there will be the opportunity for us to set the rules of the digital economy for the 21st century,” he said.
At the end of Biden’s first term, Sullivan said, IPEF’s launch will be viewed as the moment where US engagement in the Indo-Pacific got “kicked into a different gear”.
