U.S. President Joe Biden is nurturing economic ties this week with Asia, but he is not signing any trade deals at a regional summit in San Francisco.
This fact – no trade deals – reveals much about the status of U.S. politics, the evolving global economy and the Biden administration’s ambitions. U.S. negotiators say they have finalized agreements with 13 other countries on three parts of the Indo-Pacific Economic Framework. The operative word is “framework,” a label that allows Biden to bypass Congress in reaching agreements in IPEF (pronounced EYE-pef).
“It’s a framework because the administration wanted to have something it could do by executive agreement,” said Robert Holleyman, a former deputy U.S. trade representative.
Many U.S. voters have negative opinions about trade deals they see as having caused industrial job losses, a prevailing sentiment in the 2016 presidential election that carries over to next year’s 2024 race. IPEF can partially fill that gap by sidestepping some of the domestic politics while addressing issues such as supply chains and climate change that have historically been outside trade deals.
What Is IPEF?
Biden formally announced IPEF during a May 2022 trip to Tokyo. It has four major pillars: supply chains, climate, anti-corruption, and trade.
Besides the U.S., there are 13 members in IPEF that represent 40 percent of global gross domestic product. The other members are Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam, according to the U.S. government. Members are free to engage – or disengage – on any of the four pillars. India, for example, has been reluctant to sign on to the trade pillar.
“We’re writing the new rules for the 21st century economy,” Biden said when the initiative was unveiled. But unlike a traditional trade deal, the framework is not about expanding market access or laying out penalties for unfair practices.
The trade pillar is being overseen by U.S. Trade Representative Katherine Tai; the other three are under Commerce Secretary Gina Raimondo.
The United States and its partners are announcing a signed agreement on supply chains and agreements in principle on climate and anti-corruption, while negotiators work through parts of the trade pillar, according to people who are tracking the talks.
Raimondo told reporters on a call that the U.S. had largely been absent from the Indo-Pacific and that the coronavirus pandemic showed that supply chain problems could damage the American economy.
“We all learned during COVID that supply chain disruptions can hurt American workers,” Raimondo said. “And that’s exactly why the president said we need to get back into the region with our partners in the Indo-Pacific.”
What’s in the IPEF Agreements?
Matthew Goodman, director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations, said before the leaders’ meeting that the White House has been “signaling” the terms of the various agreements. Each pillar is negotiated separately.
On trade, there will be some language on agriculture and expanding trade…