The Indo-Pacific Economic Framework (IPEF) signed by a total of 13 countries on May 23, 2022, in Tokyo is seen by many as a way to check China’s economic clout in Asia and send a message that states States are keen to strengthen economic ties with its Indo-Pacific allies and partners.
Many Chinese analysts themselves have called IPEF an “economic NATO”. China has also been uncomfortable with the Quadrilateral Security Dialogue (Quad) which includes the United States, Australia, Japan and India, and referred to Quad as an “Asian NATO” – although that the members of the grouping categorically denied that Quad was an “Asian NATO”. NATO’.
Countries that have joined the US-led IPEF include Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore , Thailand and Vietnam. These countries together account for 40% of global GDP. The four key pillars of the IPEF framework are; supply chain resilience; clean energy, decarbonization and infrastructure; taxation and the fight against corruption; and fair and resilient trade.
Launching the plan, US President Joe Biden said:
“We are here today for a simple purpose: the future of the 21st century economy will be largely written in the Indo-Pacific. Our region,’
US Secretary of Commerce Gina Raimondo, commenting on the IPEF, said it was important because it offered Asian countries an alternative to the Chinese economic model.
A few points should be kept in mind. First, many countries – Australia, Brunei, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam – that have signed up to IPEF are also part of the 15-country Comprehensive Economic Partnership (RCEP ) trade agreement of which China is a key driver (Indonesia, the Philippines and Myanmar have not ratified the RCEP). RCEP represents 30% of global GDP. Trade between China and other member countries saw a significant year-on-year increase in the first quarter of 2022.
Second, many countries in the IPEF have repeatedly stated that they would not like to choose between China and the United States. Singapore Prime Minister Lee Hsien Loong, who was among the first to hail IPEF, has repeatedly emphasized this point. In an interview at Nikkei Asian Review on May 20, 2022, Lee Hsien Loong reiterated this point. In fact, Lee Hsien Loong even advocated for China to be part of the Comprehensive and Progressive Partnership for Trans-Pacific Partnership (CPTPP) (the TPP, the precursor to the CPTPP, was the brainchild of the United States). The Prime Minister of Singapore said:
“We invite China to join the CPTPP.”
Here, it would be relevant to point out that China had submitted an application to join CPTPPIN in September 2021. In the interview, Lee Hsieng Loong said that countries in Asia should have good relations with the United States, Japan and Europe.
Indonesian Commerce Minister Muhammad Lutfi, who attended the signing of IPEF on behalf of President Joko Widodo, said he did not want to see IPEF as a tool to contain other countries.
One of the reasons many countries are skeptical of IPEF is the fact that it has no trade component. A number of ASEAN member states have indicated that the IPEF makes no mention of tariffs and market access as one of its main drawbacks. At the United States-ASEAN summit, held earlier this month, Malaysian Foreign Minister Ismail Sabri Yaakob raised this point. Like many other countries, Malaysia has welcomed IPEF, but immediately sees RCEP as a much bigger opportunity.
US President Joe Biden has not significantly deviated from the trade policies of his predecessor, Donald Trump, and the US is unlikely to return to the CPTPP, at least in the immediate future. Biden and senior officials in his administration have spoken of the need to check China’s growing economic influence, particularly in Asia, and offer an alternative model. While the United States and some of its Indo-Pacific partners have taken steps in this direction (it was only recently that the leaders of the Quad countries announced at their meeting in Tokyo that they would spend $50 billion in infrastructure aid and investment in the Indo-Pacific.
Given his low approval rating and dwindling political capital, he is unlikely to drastically change his approach to trade. US Trade Representative Katherine Tai said the TPP was “fragile” and there was no domestic support for it.
In conclusion, although the IPEF has symbolic importance, it is important to keep in mind that many signatories have close economic relations with China themselves and would not want to be trapped in inter-state competition. United and China. Unless the United States reconsiders its approach to trade, which is highly unlikely, and unless the countries that are part of the Indo-Pacific vision are able to strengthen their economic cooperation, China is expected to dominate the economic landscape. Asian – although skepticism is growing towards the same.