EXPLAINED: What’s in Joe Biden’s proposed new Asia trade pact?

Ahead of the QUAD summit, US President Joe Biden launched a new Asia-Pacific trade initiative in Japan's capital deemed as a counterweight to China's aggressive expansion in the region. The newly-launched economic grouping for the Asia-Pacific, known as Indo-Pacific Economic Framework (IPEF) will involve at least 13 Asia-Pacific countries that account for 40% of the world's Gross Domestic Product (GDP). The member countries include the United States, India, Japan, Australia, Thailand, Vietnam, Singapore, South Korea, New Zealand, Brunei, Malaysia, Indonesia and the Philippines. 

What is the Asia-Pacific trade initiative?

The US maintains that the trade initiative is intended to demonstrate the country's commitment to the contested economic domain and to address the need for trade stability following the pandemic and Russia's invasion of Ukraine. Meanwhile, the member states said in a joint statement that the initiative will benefit them in cooperatively preparing their economies for the future after the pandemic and the war in Ukraine. The initiative also intends to provide the member states with a method to sort through major challenges such as climate change, supply chain resilience, and digital trade.

However, it does not provide tariff relief or market access to the countries. The framework will assist countries in negotiating many areas of trade as well as discussing how to take into account prospective future members. The programme envisages integrating partnership through mutually agreed standards in four primary areas: the digital economy, supply chains, renewable energy infrastructure, and anti-corruption measures. Meanwhile, IPEF has been hailed by the countries as a platform for what will eventually become a close-knit community of trading states. According to the White House, IPEF also aims to provide an alternative to China's rising commercial footprint in the Asia-Pacific region.

How US intends to divide work on negotiations with member states? 

The US trade representative and the commerce department will divide the work on negotiations with partner countries into four pillars. The talks on the "fair" trade pillar will be handled by the US trade representative. This would very certainly include attempts to protect US workers from job losses, as China's entry into the World Trade Organization (WTO) in 2001 resulted in massive manufacturing layoffs. Meanwhile, supply chain resiliency, infrastructure and climate change, and tax and anti-corruption will all be handled by the commerce department. 

China expresses concerns over the Asia-Pacific trade initiative

The White House has stated that the IPEF will be an open platform. However, the Chinese government has expressed concern that any accord could become an "exclusive" club, causing more instability in the region. There are also concerns about establishing IPEF with China, the world's second-largest economy. The pact excludes the self-governing island of Taiwan, which China claims as its own. This absence is notable because Taiwan is a prominent maker of computer chips, a critical component of the digital economy that will be discussed at the IPEF.

How long do negotiations on initiative take? 

According to a US official, the negotiations on the initiative are expected to last 12 to 18 months, which is an aggressive timeframe for a global trade deal. He further emphasised that creating consensus within the US would also be crucial. Meanwhile, China has lambasted the US' Indo-Pacific strategy, claiming that it is "bound to fail" as it is fiercely advocated by Washington to "contain" Beijing.

(With inputs from AP)

Image: AP