Trade representative Katherine Tai and United States Secretary of Commerce Gina Raimondo hosted an Indo-Pacific Economic Framework for Prosperity (IPEF) Ministerial meeting in Los Angeles, Calif., on Sept. 8-9. This was the first in-person ministerial meeting — there were virtual meetings with 13 Indo-Pacific partners earlier this year after President Biden officially launched the IPEF to develop a high-standard and inclusive economic framework to reenter the Asian trade architecture.
The IPEF has four key pillars, largely focusing on: trade, supply chains, clean energy (decarbonization and infrastructure) and anti-corruption.
All members but India agreed to cooperate on all four pillars. India decided to recuse itself from the trade pillar citing that, on balance, it did not benefit it. Other nations signed with enthusiasm, especially given that the U.S. was out of the Asian trade architecture while China was advancing through its Regional Comprehensive Economic Partnership and its application to enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
While the IPEF was initially regarded by critics as all frosting and no cake — a framework that laid out ambitious plans and cooperation on various fronts, but not a trade agreement that would provide the incentive of preferential access to the American market or provisions that will lift tariff barriers — participants were energized that the U.S. was at least thinking about the region. In the Trump years, the Indo-Pacific witnessed American isolation and the governments were not certain if the U.S. would ever again get involved with the region.
Biden has proven otherwise. He has returned to the Asian trade architecture but in a much more politically expedient manner than his former boss did. Obama’s Trans-Pacific Partnership (TPP) could have been a game changer in the region with high standards and potential for increased trade between the participants. However, the TPP did not sit well with Middle America.
President Biden, walking in the footsteps of his predecessor, has taken into account the concerns of Midwestern voters by not offering more market access or shipping American manufacturing overseas. His domestic policies are indicative of that position.
Former President Trump railed against the never-ending wars in the Middle East, relocating U.S. manufacturing jobs to Asia, — primarily China — and trade deals that benefited Wall Street and shareholders of major American corporations over the workers in Michigan and Pennsylvania. Biden, in a surprising act of policy continuity, has enacted policies that would suggest that the U.S. is not going back to the pre-Trump era of free trade deals and democracy promotion projects in the Middle East.
However, Biden departs from Trump on energy and issues of race, gender and healthcare, proving that one can have their cake and eat it too. Biden’s policies address the concerns of Midwestern America without the hyperbole and incendiary language that Trump relied on to rally people behind him. Moreover, Biden has succeeded in achieving what Trump merely campaigned and spoke of. Biden has been victorious with the CHIPS and Science Act, the Inflation Reduction Act and the PACT Act for veterans’ health care, addressing job creation, increased renewable energy and righting historic wrongs, respectively. Global corporations from Korea, Japan and Taiwan are investing in small-town America, creating jobs in critical technology and clean energy.
On the back of these victories, Biden’s IPEF presents the “just good enough” option for America to reenter the Asian trade architecture. The four pillars will assist in setting standards of trade in the region, increasing the adoption of renewable energy and addressing major supply chain issues that have come to the forefront as a result of the COVID-19 pandemic. The pillars will assist in promoting the China-plus-one strategy of diversifying supply chains out of China and onto friendlier shores in the Indo-Pacific region and reshoring some of them to revive manufacturing in America.
With President Biden’s legislative victories coupled with the IPEF, we might be beginning to witness his “foreign policy for the middle class” in action.
Akhil Ramesh is a fellow with the Pacific Forum. He has worked with governments, risk consulting firms and think tanks in the United States and India. Follow him on Twitter: Akhil_oldsoul.