Unwilling to pursue trade agreements that are unpopular in the United States, President Joe Biden on Monday is rolling out a different type of economic agreement among Indo-Pacific countries.
Biden will announce in Tokyo the initial participants in his Indo-Pacific Economic Framework, an attempt to deepen economic engagement and cooperation in the region and help counter China’s growing economic and military influence.
The pact focuses on critical areas that the United States believes will be important in the 21st century including supply chains, digital trade, clean energy and anticorruption.
The Obama administration had hoped to assert U.S. leadership in the region through the Trans-Pacific Partnership, a comprehensive trade agreement among 12 Pacific Rim countries. But former President Donald Trump withdrew from the pact, before it was ratified, and declared an end to the era of multinational trade agreements.
Biden administration officials have acknowledged that trade deals are a tough sell back home.
But without offering access to the huge American market, the IPEF is mostly attractive to other countries as a way to keep the U.S. active in the region until the politics of traditional trade agreements change, according to experts.
"They wish that the U.S. would come back to TPP and they know that that is impossible now," said Scott Kennedy, a China expert at the Center for Strategic and International Affairs.
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Matt Goodman, a global economic expert at the Center for Strategic and International Studies who worked in the Obama administration, called it “absolutely critical” that the U.S. have a credible economic strategy in the Indo-Pacific.
“We’re a Pacific power but not an Asian country,” Goodman said. “To be considered a real partner and player in the region, we have to engage on all levels. And it’s not just about our military or our diplomatic capabilities.”
China has criticized the pact as an “exclusive clique” that will 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 is about offering a value proposition that we think countries are taking extremely seriously,” he said, also noting that the U.S. economy is poised to grow faster than China’s this year for the first time since 1976.
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The Biden administration did not provoke China further by including in the pact Taiwan, the self-ruled Island that China claims as its own.
Instead, the U.S. is working directly with Taiwan on high-technology issues, including semiconductors and supply chains, and other matters.
Biden also hasn’t decided whether to lift the trade tariffs the Trump administration imposed on China.
Sullivan said Biden is still studying the issue, particularly whether removing the tariffs would ease the sting of inflation by lowering prices.
Jason Furman, an economist at Harvard University and former Obama administration economic adviser, said Biden should lift the tariffs.
“I just think if you are the president and have made inflation, rightfully, your number one priority you want to leave no stone unturned,” Furman said on CBS’ “Face the Nation” Sunday, “and this is one of the bigger tools he has.”
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