General

On May 23, US President Biden announced the launch of the "India Pacific economic framework" (IPEF) during his visit to Japan. 13 countries, including Japan, South Korea and India, will join the so-called New Asia Pacific Trade Initiative.

Biden opened his first visit to Asia since taking office last week. He announced the trade initiative in Tokyo. There are 13 founding member countries, namely the United States, Japan, South Korea, India, Australia, New Zealand, Vietnam, Malaysia, Indonesia, Singapore, Thailand, Brunei and the Philippines. According to White House data, these 13 countries together account for 40% of the world GDP.

Four key pillars

According to the official press release of the White House, the Indian Pacific economic framework will focus on four key pillars, namely, the interconnected economy, the flexible economy, the clean economy and the fair economy, corresponding to the digital economy, supply chain, clean energy infrastructure and anti-corruption measures respectively.

U.S. Commerce Secretary ramondo said at a press briefing that the supply chain bottlenecks and lack of transparency in the Indo Pacific region are triggering a chain reaction in the U.S. economy. For example, the shutdown of chips in Malaysia has led to the shutdown of U.S. automobile factories.

"If we had more transparency, more communication, more data sharing and an early warning system, this might not happen." She said that in IPEF, the United States is seeking to develop an unprecedented supply chain agreement to better predict supply trends and, more importantly, prevent supply chain disruption.

The White House press release said that in terms of supply chain, the United States plans to establish an early warning system, draw the supply chain map of key minerals, improve the traceability of key departments, and coordinate and strive for supply diversification.

In terms of clean energy, ramondo said that the United States will launch a series of measures through signing agreements, such as renewable energy targets, carbon emission reduction procurement commitments, energy efficiency standards and curbing methane emissions. The United States will work with its partners under the framework to make clean energy a driving force for job creation and economic growth in the future.

In a press release, the White House made no secret of its intention to vigorously launch the Indo Pacific Economic Framework: "this will enable the United States and its allies to formulate rules to ensure that American workers, small businesses and ranchers can compete in the Indo Pacific region."

According to the press release, in 2020, the total foreign direct investment of the United States in the Asia Pacific region exceeded US $969 billion, which has almost doubled in the past decade. Its trade with the Indo Pacific region has also provided more than 3 million jobs for the United States and brought nearly US $900 billion in foreign direct investment to the United States.

Tariff and market access free

In particular, unlike traditional trade agreements, the Indo Pacific economic framework does not have plans to negotiate tariffs and relax market access. For the United States, which is worried about the manufacturing industry in the United States, tariffs and market access are increasingly afraid to use.

The trump administration withdrew from the trans Pacific Partnership Agreement (TPP) promoted by the Obama administration in 2017 on the grounds of protecting local manufacturing industries.

However, the specific provisions of the trade initiative have to be negotiated by the original 13 founding members in the coming weeks. In terms of the inclusion of new members, US national security adviser Sullivan revealed that the admission of new members will be part of the preliminary discussions in the coming weeks.

The United States is keen on small circles

With regard to the "India Pacific economic framework" just announced, Chinese Foreign Ministry spokesman Wang Wenbin said in response to media questions today whether the United States is politicizing, weaponizing and ideologizing economic issues and using economic means to coerce regional countries to choose sides between China and the United States. The United States owes regional countries a statement.

He said that artificially manufacturing economic decoupling, technological blockade, industrial chain disconnection and aggravating the supply chain crisis will only bring serious consequences to the world, and the United States is no exception. The US side should know its mistakes and correct them instead of making mistakes again and again. The key to success in the Asia Pacific region is win-win cooperation, not zero sum confrontation. The Asia Pacific should become a highland for peaceful development, rather than a duel arena for geopolitics. All kinds of conspiracies to camp, NATO and cold war the Asia Pacific cannot succeed. Trying to isolate China with a framework will only isolate itself in the end.