Unwilling to pursue unpopular trade deals in the United States, President Joe Biden on Monday put forward a different kind of Indo-Pacific economic agreement.
Biden will announce in Tokyo the first participants in his Indo-Pacific economic framework, in an effort to deepen economic participation and cooperation in the region and Help counter the growing economic and military influence of China.
The agreement focuses on critical areas that the United States believes will be important in the 21st century, including supply chains, digital trade, clean energy, and anti-corruption.
The Obama administration had hoped to assert US leadership in the region through the Trans-Pacific Partnership, a comprehensive trade agreement between 12 Pacific Rim nations. But former President Donald Trump withdrew from the agreement, prior to its ratification, and declared the end of the era of multinational trade agreements.
Biden administration officials acknowledged that business deals are hard to sell at home.
But without providing access to the huge US market, the IPEF is mostly attractive to other countries as a way to keep the US active in the region until the policies of traditional trade agreements change, according to experts.
“They wish the United States would return to the Trans-Pacific Partnership and they know that is now impossible,” he said. said Scott Kennedy, a China expert at the Center for Strategic and International Affairs.
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Matt Goodman, a global economist at the Center for Strategic and International Studies who worked in the Obama administration, described it as “extremely important” for the United States to have a credible economic strategy in the Indo-Pacific region.
“We are a Pacific power but we are not an Asian country,” Goodman said. To be considered a true partner and player in the region, we have to be involved at all levels. And it’s not just about our military or diplomatic capabilities.”
China criticized the agreement, calling it an “exclusive clique” that would create “turmoil and chaos in the region.”
Jake Sullivan, Biden’s national security adviser, said the Indo-Pacific economic framework is not about forcing countries to choose between the United States and China.
“But it’s about making a value proposition that we think countries take very seriously,” he said, also noting that the US economy is set to grow faster than China this year for the first time since 1976.
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The Biden administration has not provoked China further by including Taiwan, the self-governing island that China claims as its own, in the agreement.
Instead, the United States is working directly with Taiwan on high-tech issues, including semiconductors, supply chains, and other issues.
Biden has also not decided whether to raise the trade tariffs the Trump administration has imposed on China.
Sullivan said Biden is still examining the issue, particularly whether removing tariffs would mitigate inflation by lowering prices.
Jason Furman, an economist at Harvard University and a former economic advisor to the Obama administration, said Biden should raise tariffs.
“I think if you’re president and you really make inflation your number one priority, you want to leave no stone unturned, and that’s one of the biggest tools he has,” Forman said on CBS’s “Face the Nation” Sunday.
