The Indo-Pacific Economic Framework (IPEF) signed by a total of 13 countries on May 23, 2022, in Tokyo is seen by many as a way to check China’s economic clout in Asia and send a message that states States are keen to strengthen economic ties with its Indo-Pacific allies and partners.
Many Chinese analysts themselves have called IPEF a “Economic NATO”. China has also been uncomfortable with the Quadrilateral Security Dialogue (Quad) which includes the United States, Australia, Japan and India, and referred to Quad as an “Asian NATO” – although that the band members categorically denied that Quad was a “Asian NATO”.
Countries that have joined the US-led IPEF include Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore , Thailand and Vietnam. These countries together represent 40% of world GDP. The four key pillars of the IPEF framework are; supply chain resilience; clean energy, decarbonization and infrastructure; taxation and the fight against corruption; and fair and resilient trade.
During the launch of the plan, US President Joe Biden said:
“We are here today for a simple purpose: the future of the 21st century economy will be largely written in the Indo-Pacific. Our region,’
US Secretary of Commerce Gina Raimondo commenting on IPEF said that it was important because it offered Asian countries an alternative to the Chinese economic model.
A few points should be kept in mind. First, many countries – Australia, Brunei, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam – that have signed up to IPEF are also part of the 15-country Comprehensive Economic Partnership (RCEP ) trade agreement of which China is a key driver (Indonesia, the Philippines and Myanmar have not ratified the RCEP). RCEP represents 30% of global GDP. Trade between China and other member countries has increased significantly, year on year in Q1 of 2022.
Second, many countries in the IPEF have repeatedly stated that they would not like to choose between China and the United States. Singapore Prime Minister Lee Hsien Loong, who was among the first to hail IPEF, has repeatedly emphasized this point. In an interview at Nikkei Asian Review on May 20, 2022, Lee Hsien Loong reiterated this point. In fact, Lee Hsien Loong even advocated for China to be part of the Comprehensive and Progressive Partnership for Trans-Pacific Partnership (CPTPP) (the TPP, the precursor to the CPTPP, was the brainchild of the United States). Say it Prime Minister of Singapore:
“We invite China to join the CPTPP.”
Here, it would be relevant to point out that China had submitted an application to join CPTPPIN in September 2021. In the interview, Lee Hsieng Loong said that countries in Asia should have good relations with the United States, Japan and Europe.
Indonesian Minister of Commerce muhammad lutfi who attended the signing of IPEF on behalf of President Joko Widodo said he did not want to see IPEF as a tool to contain other countries.
One of the reasons many countries are skeptical of IPEF is the fact that it has no trade component. A number of ASEAN member states have indicated that the IPEF makes no mention of tariffs and market access as one of its main drawbacks. At the US-ASEAN Summit, held earlier this month, Malaysian Foreign Minister, Ismail Sabri Yaakob had mentioned this point. Like many other countries, Malaysia has welcomed IPEF, but the immediate future sees RCEP as a much greater opportunity.
US President Joe Biden has not significantly deviated from the trade policies of his predecessor, Donald Trump, and the US is unlikely to return to the CPTPP, at least in the immediate future. Biden and senior officials in his administration have spoken of the need to verify China growing economic influence, particularly in Asia, and to offer an alternative model. While the WE with some of its Indo-Pacific partners has taken steps in this direction (it was only recently that the leaders of the Quad countries announced at their meeting in Tokyo that they would spend $50 billion, in aid and investment in infrastructure, in the Indo-Pacific.
Given its low approval rate, and diminishing political capital, it is unlikely to significantly change its approach to trade. U.S. Trade Representative Katherine Tai said the TPP was ‘brittle’and that there was no internal support for the same.
In conclusion, although the IPEF has symbolic importance, it is important to keep in mind that many signatories have close economic relations with China themselves and would not want to be trapped in inter-state competition. United and China. Unless the United States reconsiders its approach to trade, which is highly unlikely, and unless the countries that are part of the Indo-Pacific vision are able to strengthen their economic cooperation, China is expected to dominate the economic landscape. Asian – although skepticism is growing towards the same.