What the Indo-Pacific Economic Framework (IPEF) Is and Isn’t
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Indo-Pacific Economic Framework
One, for the US to push through a non-trade agreement into Asia. Since the IPEF is not a traditional regional trade agreement, there is no need for Congressional approval. As previous experiences show, there has been little domestic support for anything that involves lowering tariffs and opening US markets.
The proposed trade agreements with Kenya, the UK, and the Environmental Goods Agreement (EGA) have all been scaled back or stalled. Through the IPEF, the Biden administration gets to establish a regional presence while pursuing a foreign policy that focuses on worker-centric trade policies.
Two, the à la carte system tries to make-up for market access and tariff liberalisation shortcomings by providing a flexible framework. Developing economies in South and Southeast Asia might seek cooperation in the lucrative areas of digital trade, but they may not be as keen to equally prioritise the high-standard provisions of decarbonisation and clean energy.
So, through its ‘soft-law’ framework, the IPEF serves as a middle ground for Biden to ensure an Indo-Pacific presence. It simultaneously helps him avoid a messy political battle back home, with midterm elections around the corner in November.
Pitfalls and Opportunities
The IPEF will have varying degrees of appeal for member countries. Some common reservations are about the lack of detailed objectives and clear policy actions, a complex negotiation process, an absence of tariff reduction, and the likelihood of the initiative surviving US election cycles.
Previous initiatives spearheaded by the US—like the Blue Dot Network, Build Back Better World, and First Movers Coalition—have made little progress, and as a result, a lingering trust deficit overshadows the latest initiative.
The IPEF will appeal to the larger Indo-Pacific only if its structural flaws are addressed and it can actually deliver tangible economic benefits instead of solely advancing US security interests.
[Riya Shah is a Research Intern with IPCS’ China Research Programme (CRP)].
