Biden’s Indo-Pacific economic framework could shape race with China in 2022 – Asia and the Pacific

Kyodo News

Washington, United States ●
Sun, December 26, 2021

Asia and pacific
United States, China, Indo-Pacific, RCEP, TPP
To free

Amid China’s continued quest to expand its economic influence in Asia and beyond, the US administration of President Joe Biden will prepare next year to launch an “Indo-Pacific Economic Framework” to deepen engagement. with the region.

But the odds are not necessarily in Washington’s favor in the absence of a strong regional trade strategy, an area where the world’s second-largest economy seems increasingly keen to fill the void.

The idea of ​​expanding the economic framework was first announced by Biden at virtual regional summits in the fall, and it could take shape early next year following discussions with U.S. allies and partners. .

The framework remains loosely defined as an agreement that will pursue “shared goals”, including those on trade facilitation, the digital economy and technology, supply chains, clean energy, infrastructure, labor standards. and other priorities.

“The Biden administration needs to turn this economic framework into something real, and part of that means fleshing out the details,” said Matthew Goodman, international economic policy expert at the Center for Strategic and International Studies, a Washington think tank. .

What pushed the Biden administration toward launching a seemingly half-baked initiative appears to be China’s clear efforts to increase its influence over trade policy in the fast-growing region.

In September, Beijing asked to join an 11-member Pacific Free Trade Pact sealed under Japanese leadership known as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or CPTPP, following the withdrawal of the United States. United of the agreement in 2017 as initially envisaged.

China, along with Japan, South Korea, the 10 countries of the Association of Southeast Asian Nations and others, are also waiting for the Regional Comprehensive Economic Partnership to take effect on January 1 after years of free trade negotiations.

As attention grows on the importance of rules governing digital trade, China said in November that it had applied for admission to a digital economy partnership signed in 2020 between Singapore, Chile and New Zealand. -Zeeland – three of the four countries that laid the groundwork for what later became the CPTPP.

Doubts remain as to whether China, often accused of market-distorting practices such as the massive use of subsidies, will soon be accepted into the high-level CPTPP, with key members such as Japan and Australia reporting. of their prudence.

But experts suggest that Beijing’s move should not simply be dismissed, especially as the Biden administration continues to distance itself from key trade cadres in the region, as trade liberalization remains a politically sensitive issue on which it is difficult to win the support of Congress.

If the United States cannot make its presence felt and China continues to pressure CPTPP countries to let it in – perhaps by suggesting lower entry standards or implying threats. reprisals for a possible exclusion – the members could possibly have to seriously hear the authorities in Beijing. request, said Goodman.

Mireya Solis, trade expert at the Brookings Institution, another think tank in the US capital, said the Biden administration apparently viewed the new framework as “easier to get started” because it likely wouldn’t require congressional ratification. .

Washington appears keen to align like-minded countries by outlining the rules and standards it wishes to promote, given concerns about China’s subsidy policy, digital protectionism such as web censorship, and restrictions on data flows, and the erosion of certain democratic values.

“But I think it’s a halfway effort if you’re not ready to talk about a real trade deal with concrete, binding commitments for economic integration,” she said. .

Goodman said the framework should include US demands for “higher standards” in each of the areas in question, but that such a proposal should be balanced with “offers of tangible benefits” for its partners.

A meaningful framework would bring together not only allies and advanced economies that already have strong ties to the United States, but also less developed but strategically important economies like Vietnam, which shares concerns about China’s assertiveness. in the region, he said.

For example, under the Trans-Pacific Partnership, the original pact that later became the CPTPP, Washington had offered market access to Vietnam, reflecting the Southeast Asian country’s desire to sell more clothing and clothing. shoes to the world’s largest economy.

But such tariff reduction measures are unlikely to be part of the new framework when the administration apparently seeks to avoid the “hard political work” of securing market access concessions from Congress in favor of a combination of ‘other potential incentives such as investments in infrastructure and clean energy solutions, Goodman said.

“If the combined benefit for partner countries is positive, then maybe they will be ready to step up and accept some of America’s demands for higher standards on workers’ rights or the digital economy. But I think that’s a question, “he said.

Goodman said he hopes “political constraints” on trade will ease for the Biden administration, at least after the November midterm elections, and that it can take a more proactive stance on the issue. .

White House Indo-Pacific coordinator Kurt Campbell told a think tank event in November about the challenge of competing economically with China in the region without a positive trade strategy.

As the moderator described the situation in the United States as “one hand or two hands tied behind your back,” Campbell said, “It can be even more than that – maybe a foot tied there too.”

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