China said on Monday that it is willing to work with members of the Association…
Biden resurrects the ‘pivot to Asia’ in order to limit China’s dominance.
President Barack Obama’s “pivot” or rebalancing policy for Asia has been reinvigorated by US Vice President Joe Biden’s announcement of the formation of a new economic grouping for the Asia-Pacific, which would have 13 original members.
Donald Trump withdrew from the Trans-Pacific Partnership (TPP) pact shortly after taking office, and this decision comes five years later.
About 40% of the world’s gross domestic output is accounted for by the new grouping (GDP).
The US, Japan, India, South Korea, Australia, Indonesia, Thailand, Singapore, Malaysia, the Philippines, Vietnam, New Zealand, and Brunei are the first 13 members of the Indo-Pacific Economic Framework (IPEF), according to the Biden administration.
The rebirth of Asia’s economic grouping is considered a revival of Asia’s rebalancing plan, with India and Japan serving as anchors at opposite ends.
Despite the fact that IPEF is an economic alliance, similar to the TPP, the US has left no doubt that it is intended to contain China’s growth through more political and economic cooperation with regional allies.
In her remarks, US Commerce Secretary Gina Raimondo referenced China, stating that the group’s formation marked “a crucial turning point in restoring US economic leadership in the area, as well as providing Indo-Pacific countries with an alternative to China’s approach to critical challenges.”
The Trans-Pacific Partnership (TPP) was a 12-nation trade agreement that was reached after seven years of discussions, with the goal of liberalizing the flow of commodities between Pacific Rim countries while also countering China’s development in the region.
It was hailed as Barack Obama’s signature achievement since it reduced tariffs on tens of thousands of commodities while also aiming to harmonize copyright laws among its members.
Biden stated at the opening event in Tokyo that the Indo-Pacific will write the future of the 21st-century economy.
He explained, “We’re writing the new regulations.”
The new partnership is built on four pillars.
The IPEF will focus on increasing collaboration between the US and its Asian partners along four pillars, according to US officials: supply chain resiliency, renewable energy and decarbonization, tax and anti-corruption, and trade.
The IPEF will focus on four policy pillars, including the connected economy, resilient economy, clean economy, and fair economy, according to a document distributed at the Tokyo summit.
India agreed to join the new US-led framework after withdrawing from the 15-member Regional Comprehensive Economic Partnership (RCEP), an Asia-Pacific free trade agreement, due to concerns about the impact of free trade on its farmers and companies.
The Regional Comprehensive Economic Partnership (RCEP), which includes China, Japan, South Korea, New Zealand, Australia, and the ten Asean member nations, went into effect in January 2022.
According to Raimondo, countries in the region that have joined the IPEF will have an advantage in attracting American enterprises, as many of them are eager to relocate from China.
Biden’s visit to Tokyo resulted in conversations on economic and security problems, in addition to restoring the trade alliance that had been buried by his predecessor Trump. He promised to invest $50 billion in infrastructure development to counter China’s growing influence in the area.
He also announced a marine partnership with India, Japan, and Australia at the Quadrilateral Security Dialogue, popularly known as the Quad conference.
Climate change, technology, Covid-19, and the impact of Russia’s invasion of Ukraine might all be discussed at the informal coalition formed to respond to China’s economic and military strength.
The Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA), a new maritime surveillance effort, will collaborate with regional partners to respond to humanitarian and natural disasters, as well as prevent illegal fishing.
Job and investment opportunities are available.
With 60% of the world’s population, Asia-Pacific is expected to contribute the most to global growth over the next 30 years.
According to US National Security Advisor (NSA) Jake Sullivan, the IPEF will support more than three million American jobs and help the US economy attract over USD900 billion in foreign direct investment.
Experts argue the IPEF has a number of flaws, including the fact that, unlike the RCEP, it does not guarantee free trade between countries.
According to Aidan Arasasingham, a program coordinator at the Washington-based Center for Strategic and International Studies (CSIS), the deal will not have incentives for regional partners due to the lack of enforcement mechanisms and the promise of expanded access to US markets.
According to Indian officials, a ministerial summit of all member countries will be held in mid-summer to continue negotiations. They anticipate completing the negotiations in 12–18 months, paving the stage for the signing of an agreement.
New alliance challenges
According to CSIS scholars, the Asia-Pacific Economic Cooperation (APEC) summit in November 2023 in Washington could be a deadline for the conclusion of IFEF accords.
Analysts, on the other hand, foresee difficulties once the countries begin formal negotiations. They will look to the United States for incentives. The level of incentives that the US may be able to offer, given its own domestic economic challenges, remains to be seen.
India was a member of the RCEP drafting committee since its beginning in 2011, but opted to withdraw in November 2019 to preserve its domestic sector. A rapid opening of the country’s marketplaces to foreign agricultural products is also thought to put farmers at a disadvantage.