Announced in 2021, the IPEF is Biden’s signature trade policy for this region. New Zealand is oneof the 14 countries in the region that have signed up to the deal. It includes four pillars: supply chains, clean economy, fair economy, and trade.
The Biden administration had hoped to conclude negotiations and announce the deal at the Apec summit in San Francisco this week, but it now appears anti-trade anxiety in the US has scuppered talks on the trade pillar of the deal, arguably the most important part for New Zealand.
On Monday evening San Francisco time, US Treasury Secretary Janet Yellen said the trade pillar was not yet complete.
“It appears not to be complete,” she said, though “significant progress” has been made, she said in remarks reported by Politico.
Executive director of the New Zealand Business Forum and Apec Business Advisory Council Stephen Jacobi told the Herald he suspected the considerable concessions IPEF made to trade sceptics on the American side were “never going to be enough”.
“There’s such opposition right throughout the body politic in the United States,” Jacobi said.
Former Prime Minister Jacinda Ardern signed New Zealand up to the IPEF. Photo / Joy Asico
“I feel very sorry for our negotiators. I spoke with them in San Francisco the other night, they do feel somewhat deflated,” Jacobi said.
The most recent negotiating round occurred in San Francisco, just prior to the Apec meeting in the city, and covered trade, clean economy and fair economy pillars.
A report from New Zealand’s MFAT said negotiations under the trade pillar would continue. The supply chains pillar was signed in San Francisco, and negotiations on the clean economy and fair economy pillar were been substantially concluded.
The United States has a tortured relationship with trade. After being an enthusiastic participant in talks to create the Trans-Pacific Partnership (now the Comprehensive and Progressive Trans-Pacific Partnership), the new Trump administration withdrew from the TPP after an anti-trade campaign.
The Biden administration has opted not to rejoin the agreement, fearing backlash from critical swing states where it is popular. However, it looked to draw up a new agreement, knowing trade engagement with Pacific countries is critical as it looks to counter growing Chinese power in the region.
Biden attempted to do this with the IPEF agreement. It offers substantially less. Unlike the TPP, it includes no greater market access. This feature allows it to bypass ratification by the bitterly divided and dysfunctional US Congress, allowing it to take effect by presidential executive order.
Despite this fact, Congressional politics appear to have put the trade part of the agreement on ice, with Democratic Senator Sherrod Brown, of Ohio, who is up for reelection next year, attacking the deal for what it would do to his state.
This week, Brown took credit for getting the trade pillar removed from the deal for now, arguing it would undermine American jobs.
“I’ve made it very clear that the trade portion of the Indo-Pacific Economic Framework is unacceptable, and I’m glad it’s not moving forward. Instead of negotiating trade deals behind closed doors, we should be working to strengthen enforcement so that American workers can compete on a level playing field,” Brown said in a statement.
A trade official, speaking anonymously to Politico, said the Biden administration was taking time to “do right by” Brown, given he was up for re-election next year in a state heavily affected by the anti-trade sentiment whipped up by former US President Donald Trump, who is himself seeking election next year.
Jabobi said the fact the American side could not even get a relatively modest trade deal over the line “spoke volumes” about the domestic political situation in the United States.
“I don’t think it stops us diversifying our trade, but it does stop us concluding closer trading arrangements with the United States,” he said.
He said there would be some frustration on the other pillars of IPEF, because they imposed such heavy obligations on countries like New Zealand, including participation in resource-heavy working groups.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
