President Joe Biden on Monday is set to launch a new Indo-Pacific trade pact designed to signal U.S. dedication to the region and address the need for stability in commerce after the chaos caused by the pandemic and Russia's invasion of Ukraine.
The White House says the new Indo-Pacific Economic Framework will help the United States and Asianeconomies work more closely on issues including supply chains, digital trade, clean energy, worker protections and anticorruption efforts. The details still need to be negotiated among the member countries, making it difficult for the administration to say how this framework can fulfill the promise of helping U.S. workers and businesses while also meeting global needs.
Countries signing on to the framework were to be announced Monday during Biden's visit to Tokyo for talks with Prime Minister Fumio Kishida. It's the latest step by the Biden administration to try to preserve and broaden U.S. influence in a region that until recently looked to be under the growing sway of China.
Biden is in the midst of a five-day visit to South Korea and Japan — the first trip to Asia of his presidency — that wraps on Tuesday. The White House announced plans to build the economic framework in October as a replacement for the Trans-Pacific Partnership, which the U.S. dropped out of in 2017 under then-President Donald Trump.
The new pact comes at a moment when the administration believes it has the edge in its competition with Beijing. Bloomberg Economics published a report last week projecting U.S. GDP growth at about 2.8% in 2022 compared to 2% for China, which has been trying to contain the coronavirus through strict lockdowns while also dealing with a property bust. The slowdown has undermined assumptions that China would automatically supplant the U.S. as the world's leading economy.
“The fact that the United States will grow faster than China this year, for the first time since 1976, is a quite striking example of how countries in this region should be looking at the question of trends and trajectories,” said White House national security adviser Jake Sullivan.
Critics say the framework has gaping shortcomings. It doesn't offer incentives to prospective partners by lowering tariffs or provide signatories with greater access to U.S. markets. Those limitations may not make the U.S. framework an attractive alternative to the Trans-Pacific Partnership, which still moved forward after the U.S. bailed out. China, the largest trading partner for many in the region, is also seeking to join TPP.
“I think a lot of partners are going to look at that list and say: ‘That’s a good list of issues. I’m happy to be involved,’" said Matthew Goodman, a former director for international economics on the National Security Council during President Barack Obama’s administration. But he said they also may ask, "Are we going to get any tangible benefits out of participating in this framework?”
It is possible for countries to be part of both trade deals.