Uncharted

A dozen countries have now joined with the United States to launch a new economic initiative known as the Indo-Pacific Economic Framework for Prosperity (IPEF). The governments of Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam are all “initial partners” in this American-led initiative—widely understood as an attempt to counter China’s influence in a part of the world where, as U.S. President Joe Biden put it, “the future of the 21st-century economy is going to be largely written.” Biden announced the framework in Tokyo on May 23, during his first trip to Asia since taking office, saying the participating states would write new economic rules to “help all of our countries’ economies grow faster and fairer.” (The White House subsequently confirmed that a fourteenth country, Fiji, would also join.) Yet, speaking for skeptics, David Adelman, the former U.S. ambassador to Singapore under President Barack Obama, said there’s “no teeth” to the new effort—and a lot remains uncertain, not least in the region, about the specific commitments and outcomes the IPEF will produce over the coming months and years. What can we understand about it now?

Wendy Cutler is the vice-president of the Asia Society Policy Institute, who worked for nearly three decades as a diplomat and negotiator in the Office of the U.S. Trade Representative, where she was a senior negotiator on the Trans-Pacific Partnership (TPP), the abandoned trade deal negotiated by the Obama administration. Cutler sees a wide range of possibilities for this new endeavor at the outset; it could coalesce into a large, meaningful initiative or splinter into smaller efforts of lesser significance. In her telling, part of the uncertainty comes not just from a current lack of details about the IPEF—to be worked out over a lengthy period of negotiation—but from questions about who will shape those details and whether the U.S., with its polarized domestic politics, will even remain committed to the framework. Cutler says the United States will have a special challenge on its hands, holding together such an unconventional foreign policy while navigating the likelihood of intensified Chinese economic engagement in Indo-Pacific Asia.

Graham Vyse: What’s been driving the U.S. to create the IPEF?

Wendy Cutler: The Biden administration wanted to focus on the Indo-Pacific region early on. It’s a dynamic, growing region, where a lot of innovation is happening. But as the administration was stepping up its engagement there, its partners were saying, You’re doing a lot on the security front, but your approach to economics is weak. Many of America’s trading partners would prefer that the U.S. return to the TPP, but the Biden administration isn’t interested in that, so the administration developed something new.

Now, the announcement of this framework indicates that the actual negotiations haven’t begun yet—that all these countries have committed to, so far, is to open discussions on shaping the pillars of negotiation. That process will launch immediately, with the goal of concluding it by the summer, holding a minister-level meeting to bless an agreed-on outline for negotiations, and then beginning those negotiations around four pillars: We know there will be one pillar for establishing resilient supply chains; another for clean energy, decarbonization, and infrastructure; a third related to taxes and anti-corruption measures; and a forth concerning trade, dealing with digital trade, labor and environmental issues, and regulatory practices.

Vyse: What’s motivating more than a dozen Asia-Pacific countries to join this framework?

Cutler: It’s a good turnout. Generally, these countries are motivated by a desire to see increased U.S. economic engagement in the region. There was a void there when the U.S. left the TPP in 2017, and China has been actively trying to fill that void, but many of the countries joining the new framework want America back with an economic agenda in the region. Some will say they want it as a counterweight to China. Others won’t say that out loud, but it’s what they’re thinking.