U.S. announces major Asia economic deal in effort to boost profile, counter China
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Joe Biden, the U.S. president, is pictured here with 12 initial partners on Thursday, April 21, 20,22.
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In a move to raise its economic profile and create another counterbalance to China within Asia, the United States announced on Monday the Indo-Pacific Economic Framework with Asian partners including Australia, Japan and the Republic of Korea.
This plan is broad and aims to expand America’s “economic leadership” within the Indo-Pacific. They want to create international regulations for digital economies, supply chains and decarbonization.
U.S. President Joe Biden stated that addressing inflation was a priority. This framework is intended to lower costs and make supply chains more resilient over the long term.
Importantly, however, the IPEF has not been deemed a free trade agreement. Biden is under pressure to not sign free trade agreements by both the right and left in America.
The agreement is also not a security pact, and it is distinct from the Quad defence group, which includes Australia, Japan, India, and the United States. Jake Sullivan, U.S. National Safety Advisor, stated this to reporters Sunday.
Biden met with leaders from the Quad region in Tokyo last week.
Boost competitiveness
Although the United States has avoided trade agreements, it wants to raise its profile in Asia’s financial realm. China still holds the majority position despite American allies South Korea, Japan, and South Korea having large economies. India, however, is growing rapidly as a Quad member.
Ali Wyne of Eurasia Group Senior Analyst for Global Macro says that the United States should “enhance their economic competitiveness” in the region.
Wyne explained that “even those countries which have growing concerns over China’s foreign strategy and strategic intentions appreciate that they can not meaningfully decouple with its economy in the short-term.” “Since the Biden administration will be working to maximize traction for Indo-Pacific Economic Framework,” Wyne added.
The U.S. has been very careful not to mention China during discussions on the IPEF. It has also denies that the IPEF is a closed group as China claims.
Global Times, a Chinese media outlet controlled by the Chinese government, stated Saturday that Biden’s visit to South Korea was intended to “form a new political posture against China through establishing an alliance with Washington in Asia-Pacific.”
Sullivan said to reporters that he wasn’t surprised by China’s concern about “the number and diversity of countries interested in, enthusiasm for IPEF.”
It’s a tough sell.
Yuki Tatsumi (senior fellow, Stimson Center Washington DC) said that it would prove difficult for the region to accept the plan when she appeared on CNBC’s Capital Connection Monday.
It is similar to the Trans Pacific Partnership which the U.S. pulled out of during Trump’s administration. This was when the countries in that region had difficulty obtaining membership.
Tatsumi added that America had a sharpened approach to China during the Obama administrations of Barack Obama, Donald Trump, and Barack Obama.
She stated that “So regardless what new policies Washington might adopt, the strategic rivalry between U.S., China will intensify.” The new framework will only likely accelerate this trend.
— This report was contributed by Ravi Buddhavarapu and Vicky McKeever, both of CNBC.
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