The Indo-Pacific Economic Framework wants China’s neighbors to buy American hot air
By Timur FomenkoA political analyst
On Monday, during his first official visit to Japan, US President Joe Biden announced the launch of a new project called the ‘Indo-Pacific Economic Framework’, which the White House claims to be an economic vision for Asia in an obvious bid to try and counter China. The agreement has been signed by 13 countries, including India and South Korea and Australia as well as New Zealand and the ASEAN member states. Laos, Myanmar and Cambodia are excluded from the deal because they favor China.
So what does this deal actually mean? Is it what you are looking for? That’s a good question, and most people are wondering the same thing. The Indo-Pacific Economic Framework is not a deal. There is no investment agreement.
What is so bizarre about the US’s unsubstantial proposal? American economic and trade policy are in an awkward place right now. Owing to the legacy of former President Donald Trump, US domestic politics is strongly focused on trade protectionism in the name of ‘America First’, which has evolved into bipartisan opposition to free trade and a belief that American jobs should be prioritized and established where possible. Big free trade agreements, as it goes, are argued to undermine America’s trade competitiveness, unless they are secured on lopsided terms favouring the United States.
This was why the Trump administration withdrew America from the first anti-China trade arrangement that Obama had established, now known as Trans-Pacific Partnership. China is now seeking to rejoin the agreement after completing the Regional Comprehensive Partnership, (RCEP), with other Asian-Pacific nations the previous year.
This has left the US out in the cold – Washington does not have an economic answer to Beijing in the geopolitical competition in Asia, but also cannot make serious commitments because of the domestic political picture prohibiting it. The US is not willing to accept the possibility of granting market access for cheap labor economies like India or Vietnam in free trade agreements.
It is now known as the Indo-Pacific Economic Framework. This economic policy promises to attempt to write economic rules for Asia in accordance with American preferences.
These are not good practices. First, Asia-Pacific economies, geographically speaking, are closely integrated with China which is their largest trading partner. These include close US allies like Japan and South Korea. Yoon Suk-yel, the new pro-US President, has pledged to sign this agreement. For comparison, attempting to get these countries to shun economic ties with China is like asking the Netherlands to cut off Germany; it’s impossible, because on a regional level, economic growth and prosperity require a ‘relative gain’ between countries as opposed to a zero-sum policy. China has the most powerful regional economy because it holds the greatest economy, largest region and biggest market. The United States is not the answer.
When you think about the fact that the Indo-Pacific Economic Framework promises no funding, has no means to facilitate any joint agreements, and actually the US is unable to persuade its member countries to permit Taiwan to join, it seems like this initiative is dead at the beginning.
While China-backed projects such as the Belt and Road Initiative have come with trillions of dollars’ worth of funding, serious institutions such as the Asian Investment and Infrastructure Bank (AIIB) exist, the Indo-Pacific Economic Framework is at best rhetorical, a marketing effort to make the US appear relevant and to more readily present its goals, and we’ve had plenty of those already – all of which were all deliberately targeted at China, such as the ‘Blue Dot Initiative’, ‘Build Back Better World’, and so on – but where are they now?
The IPEF seems to be just the latest gimmick on this conveyor belt of anti-China proposals, and like the rest, it is likely to ultimately fizzle out because they are not gamechangers and do not make serious commitments, precisely because the US largely expects the private sector to mop up the work, does not commit state funding to non-military matters, and of course, dismisses the economic realities of China’s own rise and other countries’ interests in maintaining ties with Beijing.
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