The Biden administration announced the launch of the Indo-Pacific Economic Framework (IPEF) on Monday, May 23, which is designed to promote financial and economic stability in Asia and Oceania. The pact follows the initiation of the Regional Comprehensive Economic Partnership (RCEP), a trade deal spearheaded by China in January of 2022, and primarily noted for blunting the United States’ influence in the region.
Alongside the United States, member nations of IPEF include Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together, these 13 countries account for 40% of the world’s GDP, dwarfing the 30.5% represented by the nations of RCEP. Notably, China, Cambodia, and Myanmar were not invited to participate in IPEF. Taiwan was also not included despite bipartisan calls from Congress for its participation, however experts note that Taiwan’s inclusion would likely agitate China and consequently discourage other nations from joining.
Unlike RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), IPEF is not a free trade agreement and will not lower tariffs, a move that some analysts have argued will deter other countries from participating. Instead, IPEF will focus on four main pillars to stimulate growth and commercial partnership in the area: clean energy, global trade, tax and anti-corruption initiatives, and supply chain sustainability. Negotiations on the specifics of each of these pillars have yet to commence, but are expected to begin shortly after Monday’s announcement.
The lack of clarity regarding the next steps for IPEF have led to questions about whether this new economic partnership will be up to par with more established trade agreements in the region. The United States was formerly a member of the Trans-Pacific Partnership, however withdrew under the Trump administration in 2017 and has yet to rejoin; meanwhile China was able to assert itself as an influential trade partner, and renegotiated regional trade agreements sans the United States. Whether the IPEF will sufficiently replace the United States as a power player in Asia and Oceania has yet to be determined.
Have a question? Contact Jordan Perri, Allyn International.
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