US President Joe Biden announcing the Indo-Pacific Economic Framework (IPEF) inauguration meeting in Tokyo, with Prime Minister Fumio Kishida and Prime Minister Modi of India on May 23, 2022. (©Sankei by Ryosuke Kawaguchi.)
The United States-led economic initiative Indo-Pacific Economic Framework, IPEF, is likely to focus heavily on digital trade, says William Alan Reinsch, a Senior Adviser and Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, DC.
Responding to questions from the Sankei Shimbun and JAPAN Forward at the end of May, the former high level official at the US Department of Commerce in the Bill Clinton administration analyzed the Biden administration’s statements, saying, “It Looks like their primary regulatory focus will be on digital trade.”
Launched in Tokyo on May 23, the IPEF is based on the four pillars of:
- Connected Economy (trade),
- Resilient Economy (supply chains),
- Clean Economy (clean energy, decarbonization, and infrastructure), and
- Fair Economy (tax and anti-corruption).
President Biden announced the IPEF alongside Japanese Prime Minister Fumio Kishida and Indian Prime Minister Narendra Modi, who was in Japan at the same time on May 23.
Twelve partner countries, including seven ASEAN members, were part of the initial group with the US at the launch. Mr Reinsch commented that in addition to the US itself, “12 [partner] countries is an impressive beginning.”
After welcoming Fiji, the Pacific Island nation a few days later, the IPEF now includes 14 countries.
Market Access Perspectives
Mr Reinsch commented on India’s announcement of participation in the new framework, analyzing: “I think the absence of market access negotiations may make it easier for India to join, rather than harder, because it means India will not be expected to lower its tariffs – something it has historically been reluctant to do.”
“It is also more likely India will join some of the three pillars led by the Commerce Department rather than the trade pillar,” he said.
Continuing, he added that the “IPEF is being criticized in the US for its absence of market access negotiations for precisely that reason.”
Small and medium-sized nations which are seeking access to bigger markets especially benefit from IPEF participation, he explained, adding: “That will make it less attractive to the other countries.”
Prime Minister Kishida previously called on President Biden to return to the Trans-Pacific Partnership (TPP). Mr Reinsch said, “I think the Japanese government is right, that the best thing the US could do would be to return to the TPP or join the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership).”
At the same time, he added “I would not rule out the possibility of that happening eventually. But at the present moment, the Biden administration has made clear it does not intend to do that.”
Reflecting, he noted, “In the short term [the US] will proceed with the IPEF, and we will all have to wait and see how that turns out.”
Mr Reinsch pointed out that, “Japan in recent years has taken on an increased leadership role on economic issues in the region, most notably its efforts under Prime Minister Abe to put together the CPTPP.” He added, “I am optimistic the current government will continue to play a leadership role.”
RELATED:
- Science and Technology: Analyzing the US-Japan and Quad Leaders Summits
- INTERVIEW | US Envoy Introduces Proposed New Indo-Pacific Economic Order
- Analyzing US-Japan Technology Developments in Q1 2022
(Read the article in Japanese at this link.)
Author: Mizuki Okada
