Joe Biden's Indo-Pacific Economic Framework Is a Flop - Bloomberg
The US Can’t Beat China If It’s Scared of Trade
There’s a reason the Biden administration’s flagship economic proposal for the Indo-Pacific has been met with disappointment and even derision in the region.
Good atmospherics but not much else.
Photographer: Saul Loeb/AFP/Getty Images
By
Mihir Sharma
May 24, 2022, 11:30 PM UTC
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Mihir Sharma is a Bloomberg Opinion columnist. A senior fellow at the Observer Research Foundation in New Delhi, he is author of “Restart: The Last Chance for the Indian Economy.” @mihirssharma
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President Joe Biden and his administration presumably hoped that the White House’s latest attempt to woo Asia, its Indo-Pacific Economic Framework for Prosperity, would be seen as a dramatic return for the United States to a region where allies have felt largely neglected since 2016. In this part of the world, however, the sprawling and unwieldy framework has been met at best with polite silence — and, behind closed doors, with disappointment and even derision.
The White House stressed that it had gotten a dozen other countries to sign up, “representing 40% of world GDP,” and that the framework would “deepen US economic engagement in the region” along four pillars: trade, supply chains, the green transition and anti-corruption measures. These are perfectly reasonable priorities. But, for each of them, IPEF brings little concrete to the table. Even now, signatories still have to decide what will be negotiated within each pillar and which ones they want to participate in.
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While the initiative was first announced seven months ago, we have heard little about it until this week. Clearly, US officials wanted it out there before Biden met his Quad counterparts in Tokyo on Tuesday. Launching a new program aimed at multiple countries alongside the Japanese and Indian prime ministers certainly makes for good atmospherics. But, if anything, the joint statement from the Quad leaders — focusing on initiatives to create green shipping, clean hydrogen and investment in sustainable infrastructure — is of far more significance for the region.
As an attempt to counter Beijing’s influence, the IPEF falls laughably short of what’s needed. Countries in the Indo-Pacific want two things: access to bigger markets and infrastructure investment. Chinese Foreign Minister Wang Yi, addressing the United Nations Economic and Social Commission for Asia and the Pacific shortly after the IPEF was launched, pointed out that China was already providing both, by signing up to the Regional Comprehensive Economic Partnership free-trade pact and investing in its Belt and Road Initiative. That, he said meaningfully, was “practical action.”
This is the second missed opportunity in just a few weeks for the US in the region. Earlier this month, Biden hosted the leaders of the Association of Southeast Asian Nations in Washington for a special summit. The White House proudly announced “$150 million in new initiatives” for ASEAN, which princely sum would be just about enough to build 1.6 kilometers of the new (Japanese-funded) Jakarta subway. ASEAN’s leaders know that the Biden administration’s efforts are nowhere near enough: Malaysia’s prime minister said in Washington that “the US should adopt a more active trade and investment agenda with ASEAN, which will benefit the US economically and strategically.”
But more market access, in particular, appears to be off the table for the US. The Biden administration’s fear that any movement on trade could lead to political attacks at home from left and right is palpable. Even the official announcement of the IPEF began by describing it as “rules of the road that ensure American workers, small businesses and ranchers can compete in the Indo-Pacific.” The framework, it pledged, would “protect us against costly disruptions that lead to higher prices for consumers.”
For the countries of the Indo-Pacific, this is a wake-up call. The US economy is booming, with unemployment in much of the country hitting record lows. Almost three-fourths of Democrats think that trade is an opportunity, not a threat. If an administration that prides itself on its outreach to strategically important partners is still too scared to increase their access to US markets, then why would any country imagine that closer relations with the US are important to its future? If, under such circumstances, US leaders can’t show leadership at home, it is presumably futile to expect the country to lead abroad.
Everyone knows what the US needs to do if it is to re-emerge as a credible alternative to China in the region: Increase its infrastructure investment in the Indo-Pacific manifold and re-examine former US President Donald Trump’s decision to exit the high-standard Trans-Pacific Partnership trade agreement. After all, the TPP was negotiated — when Biden was vice-president — with the interests of Democratic constituencies in mind and included stringent protections for labor and the environment.
If the US remains too paralyzed by fear and indecision to do so, then it might as well accept that the only Indo-Pacific economic framework that matters will be the one on offer from Beijing.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Mihir Sharma at msharma131@bloomberg.net
To contact the editor responsible for this story:
Nisid Hajari at nhajari@bloomberg.net
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