The United States wants to get back into the Asian trade game

The Biden administration wants to make the United States a major player in the Indo-Pacific economy again.

Why is this important: President Trump’s withdrawal from the Trans-Pacific Partnership (TPP), a regional free trade agreement the United States once championed, has made China the biggest economic player in the region.

Driving the news: President Biden’s upcoming visit to Japan this month will “coincide with the official launch” of a new U.S.-led regional economic framework, Japanese Ambassador to the United States Koji Tomita said Monday.

  • Biden will visit South Korea and Japan from May 20-24. The visits are aimed at promoting “a rock-solid commitment to a free and open Indo-Pacific and U.S. treaty alliances with the Republic of Korea and Japan,” White House press said. said Secretary Jen Psaki on April 27.

Background: Biden first announced plans to launch an Indo-Pacific economic framework last October, with more details on the scope of the framework released in February as part of the administration’s Indo-Pacific strategy.

  • The framework, now 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 said.
  • Japan has previously urged the United States to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor to the TPP which entered into force in December 2018 and includes 11 countries in the region. But the application process takes time and is likely politically untenable in the United States 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 was launched on January 1.

And after: Following the launch of the IPEF, interested regional partners are expected to begin negotiations later this year, with some kind of agreement signed once the details are worked out.

Between the lines: The IPEF could include revolutionary new standards, especially in the digital economy, but the scope of the resulting trade pact is likely to be somewhat limited.

  • “The administration plans to roll out IPEF through executive action rather than as a traditional trade deal requiring congressional approval,” CSIS’s Andreyka Natalegawa and Greg Poling wrote last week.
  • “This path will help the framework circumvent political hurdles that deals like the Trans-Pacific Partnership faced before Congress, but it also means the administration can’t offer increased market access or any other concessions that would require changes to US law,” they wrote.

What to watch: The Biden administration faces many trade-related issues that remain unresolved after the end of the Trump administration.

  • The Office of the U.S. Trade Representative said in a report released last month that China is failing to meet commitments to strengthen intellectual property protections promised under the 2020 trade deal with the United States.
  • Biden administration officials are considering scrapping some Trump-era tariffs on Chinese goods in a bid to lower consumer prices amid skyrocketing inflation. National security officials charged with challenging China tend to oppose the move, while those tasked with safeguarding the economic health of the United States are more likely to favor the move.

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