ASEAN Ministers Attend U.S.-led Indo-Pacific Economic Framework Negotiations

From September 8-9, 2022, economic ministers from several ASEAN countries attended the first official meeting of the U.S.-led Indo-Pacific Economic Framework (IPEF) in Los Angeles.

The IPEF marks Washington’s first pan-Asia trade engagement in nearly a decade, but the IPEF does not provide access to the U.S. market, nor does it offer to cut tariffs.

The ministers announced a consensus on four pillars of cooperation — trade, supply chain, clean economy, and fair economy.

The first official ministerial meeting of the Indo-Pacific Economic Framework (IPEF) partner countries was held between September 8-9 in Los Angeles, the United States, marking Washington’s first pan-Asia trade engagement in nearly a decade.

The United States Trade Representative Katherine Tai hosted counterparts from the 13 partner countries (Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam) which together with the U.S. represents some 40 percent of global GDP.

What is the Indo-Pacific Economic Framework?

Launched during President Joe Biden’s visit to Japan in May 2022, the IPEF is a framework that seeks deeper cooperation between participating members in crucial investment and trade matters. Importantly, the IPEF is not a free trade agreement (FTA) and no tariff reductions or access to the U.S. market have been outlined in the framework.

What was achieved during the meeting?

The two-day meeting kicked off negotiations centering around four pillars of the framework and concluded the ministerial statements for each.

• Trade;
• Supply chain;
• Clean economy; and
• Fair economy.

Trade

Under the trade pillar, IPEF partners aim to seek the highest standards in areas such as labor, digital economy, agriculture, inclusivity, the environment, and good regulatory practices, among others.

The IPEF partners will seek provisions that benefit workers and ensure fair trade that contributes to inclusive and sustainable economic growth, in addition to promoting trusted cross-border data flows.

Supply chain

IPEF members will coordinate to mitigate future supply chain disruptions by supporting investments in new digital and physical infrastructure and upskilling workers. Further, IPEF members will identify sectors and products deemed critical to national security, and the health and safety of citizens, and collaborate to make these sectors more resilient.

Fair economy

Under the fair economy pillar, IPEF members have agreed to create a level playing field for businesses by combatting corruption, tax evasion, and enhancing transparency. Through this, IPEF members can improve the investment climate and boost the flow of trade and commerce, while also advancing a free and open Indo-Pacific.

India was the only country to not join the trade pillar as it had concerns over the potential restrictions on issues surrounding the environment, labor, public procurement, and digital trade.   

No access to the U.S. market and tariff cuts

As mentioned, the IPEF offers no tariff relief to the countries that join. The Biden administration mentioned that the IPEF is not designed in a way that requires congressional approval, and thus increased access to the U.S. market is effectively off the table. Increasing access to the prized U.S. market for ASEAN countries is vital if the U.S. wants to counter ASEAN’s growing dependency on trade with China. The Biden administration has shunned new trade deals and has mainly focused on negotiations with the European Union on non-tariff issues such as labor.

After the US spent the last five years withdrawing from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the 10 ASEAN members, South Korea, New Zealand, Japan, and China signed the Regional Comprehensive Economic Partnership (RCEP), which is officially the world’s largest trading bloc, accounting for 30 percent of global GDP.

The IPEF is demonstrative of a wider ‘America first’ policy that has been continued by the Biden administration, particularly given the perception among the U.S.’ powerful labor unions that free trade agreements result in the loss of blue-collar U.S. jobs.

The Biden administration has also not indicated renewing the Trade Promotion Authority (TPA), which expired on July 1, 2021. The TPA was first enacted in 1974 and gives the President the authority to enter trade agreements, while Congress must introduce implementing legislation for the agreement. Moreover, the TPA gives the President the authority to negotiate tariff-only agreements. The last renewal of the TPA was in 2015 and since its expiration in July 2021, only the U.S.-Mexico-Canada Agreement (USMCA) was approved.

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