President Joe Biden is greeted by Rahm Emanuel, the American ambassador to Japan, at the Yokota Air Base in Tokyo. Photo / Doug Mills, The New York Times
President Joe Biden has enlisted a dozen Asia-Pacific nations to join a new loosely defined economic bloc meant to counter China's dominance and reassert US influence in the region five years after his predecessor withdrew the United States from a sweeping trade accord that it had negotiated itself.
The alliance will bring the United States together with such regional powerhouses as Japan, South Korea and India to establish new rules of commerce in the fastest growing part of the world and offer an alternative to Beijing's leadership. But wary of liberal opposition at home, Biden's new partnership will avoid the market access provisions of traditional trade deals, raising questions about how meaningful it will be.
"We're writing the new rules for the 21st-century economy," Biden said Monday in Tokyo during the launch for what he has termed the Indo-Pacific Economic Framework. "We're going to help all of our country's economies grow faster and fairer."
The president sat alongside Prime Minister Narendra Modi of India and Prime Minister Fumio Kishida of Japan for the rollout of the initiative, while other leaders joined the event by videoconference. The new alliance represents the centrepiece not only of Biden's first trip as president to Asia but also of his broader strategy in the region at a time when China has increasingly filled the void left when President Donald Trump pulled the United States out of the Trans-Pacific Partnership in 2017.
"It is by any account the most significant international economic engagement that the United States has ever had in this region," Commerce Secretary Gina Raimondo, who will lead some of the negotiations triggered by the agreement, told reporters Sunday. "And the launch of it tomorrow here in Tokyo marks an important turning point in restoring US economic leadership in the region and presenting Indo-Pacific countries an alternative to China's approach to these critical issues."
In addition to the United States, India, Japan and South Korea, the 13 members of the framework will include Australia, Brunei, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Together, the participating nations represent about 40 per cent of the world economy and any specific agreements that emerge from the grouping could go a long way toward setting standards even beyond its membership.
Amid uncertainty and scepticism in the region about what the new framework would actually mean, US officials scrambled in recent weeks to line up enough major countries to commit in hopes of making a big impression with a splashy kickoff. Privately, they said all of the nations they had been seriously targeting agreed to join, but some analysts wondered whether assurances or trade-offs proffered to entice participation would diminish the scope of the new bloc.
The new Biden initiative comes less than five months after the China-led Regional Comprehensive Economic Partnership officially went into force, linking 15 Asia-Pacific economies in the world's largest trade bloc. Most of the countries that Biden signed up for his framework already belong to the bloc with China.
For the United States, the new framework effectively replaces the more expansive Trans-Pacific Partnership as the main vehicle to shape the flow of goods and services in the region. President Barack Obama, with Biden as his vice president, negotiated the TPP, only to have Trump abandon it on his first full weekday in office, leaving the bloc to proceed without its largest member.
But rather than simply rejoin the partnership, as Japan, Singapore and other countries wanted him to do, Biden essentially abandoned it, too, in deference to opposition within his own party. To assuage his liberal base, the new framework, unlike TPP and other traditional free trade pacts, will not reduce tariffs.
Business executives say the China-led bloc has now done more to define trade in the region, even though it asks little of its members and focuses mainly on limiting red tape. The US vision for the region, in contrast, is ambitious, aiming to raise labour and environmental standards. But without offering more access to its market, analysts say, the United States does not have a lot of carrots to encourage those changes.
"It is going to be difficult to convince Asian governments to change rules in ways that may be disruptive to their political economies without the promise of increased access to the American market," said Aaron Connelly, a research fellow at the International Institute for Strategic Studies in Singapore.
While many of the leaders heaped praise on the US-led initiative Monday, some at the rollout made clear they expect others to join the bloc soon. Beijing has recently criticized the framework for benefiting only a limited group of nations.
"Inclusive economic cooperations will have positive impact in the long run," said Muhammad Lufti, Indonesia's trade minister. "We do not wish to see IPEF merely be an instrument to contain other countries."
The framework will focus on four main goals: harmonising efforts to secure supply chains, expanding clean energy, fighting corruption and paving the way for greater digital trade. With Monday's kickoff, negotiations in each of these areas will soon ensue, led by Raimondo or Katherine Tai, the US trade representative.
Each of the 13 participating countries will be allowed to choose in which of the four areas to pursue deals without having to commit to all of them. Parameters for the negotiations should be set by late June or early July, and the administration hopes to wrap up any agreements within 12-18 months to then submit to each government for ratification.
As officials prepared for the new venture, it was clear that the scars of TPP run deep in the Biden administration. Tai acknowledged bluntly Sunday that "the biggest problem" with TPP was that even before Trump was elected, "we did not have the support at home to get it through" Congress.
"There was a very, very strong lesson there, that TPP, as it was envisioned, ultimately was something that was quite fragile and that the United States was not able to deliver on, and that informs very much our thinking," she said.
Tai said labour and environmental groups would "have premier seats at the table" in the new framework but demurred on whether agreements emerging from it would be submitted to Congress for approval.
"Let's see where these negotiations take us," she said.
But other administration officials, speaking on condition of anonymity to discuss internal deliberations, said separately that without tariffs on the table, it most likely would not be necessary to go to Congress.
The kinds of agreements currently envisioned, some binding and some not, could be accomplished through executive agreements, they said. Nonetheless, one of the officials added that the administration would consult with Congress as if approval were needed in hopes of rebuilding trust following the TPP experience and establishing durable bipartisan support for any eventual deals.
The membership in the new framework overlaps the TPP membership but not precisely. Seven countries will belong to both, but several members of TPP did not sign onto the framework. For two of them, Canada and Mexico, it could be less imperative since they have their own North American Free Trade Agreement with the United States, recently updated by Trump.
Raimondo said the new framework goes above and beyond a "same-old, same-old" free-trade agreement, but partners in Asia still want a same-old trade agreement. Countries such as Singapore have tried to persuade the United States to use the framework as a steppingstone to rejoin the TPP, a nonstarter for the Biden team.
But rather than simply rejoin the partnership, as Japan, Singapore and other countries wanted him to do, Biden essentially abandoned it too, in deference to opposition within his own party. To assuage his liberal base, the new framework, unlike TPP and other traditional free-trade pacts, will not reduce tariffs. Still, Kishida said Monday, "We think it's desirable for the United States to return to the TPP."
Even the more limited Biden framework will require deft management of Democratic constituencies. Labour groups in the United States are already sceptical of any broad new commitments, including digital provisions that could lead to more outsourcing in fields such as medicine and other service industries.
The kickoff came during a busy two days for Biden, who will meet separately with each of those three leaders in addition to a summit gathering of all four of them representing the Quad, a security-oriented bloc formed years ago out of growing anxiety about China's military footprint in Asia and parts of the Indian Ocean.
Economic issues, however, have clearly been front and centre on Biden's mind throughout his trip to South Korea and Japan. Before flying to Tokyo on Sunday, Biden joined Euisun Chung, executive chair of Hyundai Motor Group, to celebrate the company's plan to build a new US$5.5 billion electric vehicle and battery manufacturing plant in Savannah, Georgia. Before that, he touted Samsung's decision to build a new manufacturing plant in the United States during a tour of a similar semiconductor plant.
With prices rising, stock markets falling and fears of recession spreading at home, the president is eager to demonstrate that he is focused on stabilising the economy, especially with midterm elections five months away.
During separate news briefing with Kishida on Monday, Biden said he did not believe a recession was inevitable.
"Does that mean we don't have problems? We do," Biden said. "We have problems the rest of the world has. But less consequential than the rest of the world has because of our internal growth and strength."
This article originally appeared in The New York Times.
Written by: Peter Baker and Zolan Kanno-Youngs
Photographs by: Doug Mills
© 2022 THE NEW YORK TIMES
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