The Biden administration wants to make the U.S. a major player in the Indo-Pacific economy again.
Why it matters: President Trump's withdrawal from the Trans-Pacific Partnership (TPP), a regional free-trade agreement the U.S. once championed, has left China as the largest economic player in the region.
Driving the news: President Biden's upcoming visit to Japan this month will "coincide with the formal launch" of a new U.S.-led regional economic framework, Japan's ambassador to the U.S. Koji Tomita said on Monday.
- Biden will travel to South Korea and Japan from May 20 to 24. The visits are aimed at advancing "rock-solid commitment to a free and open Indo-Pacific and to U.S. treaty alliances with the Republic of Korea and Japan," White House press secretary Jen Psaki said on April 27.
Background: Biden first announced plans to launch an Indo-Pacific economic framework last October, with further details about the scope of the framework released in February as part of the administration's Indo-Pacific strategy.
- The framework, now known officially known as the Indo-Pacific Economic Framework (IPEF), is expected to include trade, digital standards, labor issues, clean energy and infrastructure, but will not take the form of a "traditional trade agreement," Commerce Secretary Gina Raimondo has said.
- Japan has previously urged the U.S. to enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor to the TPP that came into effect in December 2018 and includes 11 countries in the region. But the application process is time-consuming and likely politically untenable in the U.S. amid bipartisan concerns about the effects of sweeping free trade agreements on American workers.
- China has applied to join the CPTPP and has also launched its own regional trade agreement, the Regional Comprehensive Economic Partnership (RCEP), which includes 15 member countries, including Australia and Japan. It became the largest free trade agreement in the world when it launched on January 1.
What's next: After the IPEF's launch, interested regional partners are expected to enter negotiations later this year, with an agreement of some kind signed after details are worked out.
Between the lines: The IPEF could include groundbreaking new standards, especially in the digital economy, but the scope of the trade pact that comes out of it is likely to be somewhat limited.
- "The administration plans to roll out the IPEF through executive action rather than as a traditional trade deal requiring congressional approval," Andreyka Natalegawa and Greg Poling of CSIS wrote last week.
- "This pathway will help the framework sidestep political obstacles that agreements like the Trans-Pacific Partnership faced before Congress, but it also means that the administration cannot offer increased market access or any other concessions that would require changes to U.S. law," they wrote.
What to watch: The Biden administration faces numerous trade-related issues that remain unresolved after the end of the Trump administration.
- The office of the U.S. Trade Representative stated in a report released last month that China was failing to meet its commitments to strengthen intellectual property protections promised under the 2020 trade deal with the U.S.
- Biden administration officials are considering removing some Trump-era tariffs on Chinese goods in a bid to lower consumer prices amid sky-high inflation. National security officials tasked with challenging China tend to oppose the move, while those tasked with preserving U.S. economic health are more likely to favor the move.
