The U.S. announced May 23 the launch of the Indo-Pacific Economic Framework, which the White House said aims to strengthen U.S. ties to this region and “create a stronger, fairer, more resilient economy for families, workers, and businesses.” Commerce Secretary Gina Raimondo added that the IPEF will offer “an alternative to China’s approach” in the region.
Australia, Brunei, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam will be the initial participants in the IPEF, though they also invited others “that share our goals, interests, and ambitions for the region.” National Security Advisor Jake Sullivan said that while Taiwan is not among the IPEF participants the U.S. intends to “pursue a deeper bilateral engagement with Taiwan on trade and economic matters in the coming days and weeks.”
IPEF participants will seek to establish enforceable, high-standard commitments in the following areas.
- digital economy and e-commerce, including cross-border data flows, data localization, online privacy, and discriminatory and unethical use of artificial intelligence
- labor and environment issues and corporate accountability
- supply chain resiliency, including establishing an early warning system, eliminating bottlenecks in critical mineral supply chains, improving traceability in key sectors, and coordinating on diversification efforts
- accelerated implementation of the WTO Trade Facilitation Agreement
- facilitating agricultural trade through science-based decision-making and sound, transparent regulatory practices
- clean energy, decarbonization, energy efficiency standards, infrastructure, and methane emissions
- enforcement of effective tax, anti-money laundering, and anti-bribery regimes that include provisions on the exchange of tax information, criminalization of bribery in accordance with UN standards, and effective implementation of beneficial ownership recommendations
One notable omission is tariff liberalization, and U.S. officials said that’s by design and defended the decision. Sullivan said the IPEF is “not a traditional free trade agreement” because “the new landscape and the new challenges we face need a new approach.” U.S. Trade Representative Katherine Tai added that U.S. tariffs are already low and that the value “left to be unlocked in the global economy right now” is in the areas outlined above. Raimondo asserted that even without lower tariffs there will be “a very concrete benefit to countries in the region” for collaborating with the U.S. and each other on these issues.
Raimondo said participants will next commence work to determine “exactly what’s in each pillar and what each country will be committing to and signing up for.” Sullivan added that different elements of the IPEF “could end up moving at different speeds even as all of the pieces will end up fitting into a larger integrated framework.”
Tai said that whether Congress will ultimately need to vote to approve any initiatives that come out of IPEF will depend on “where these negotiations take us.”
For more information on IPEF, please contact Nicole Bivens Collinson at (202) 730-4956 or via email.
Copyright © 2022 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.