What is Indo Pacific Economic Framework
Kalyan Raj Sharma PhD
Indo Pacific Economic Framework is an agenda led by the United States for participating countries to strengthen their relationships and engage in critical economic and trade matters in the area. During his maiden Asia tour, US President Joe Biden publicly announced the Indo-Pacific Economic Framework, Washington's long-awaited Asia-Pacific economic plan. The US will work with partners to build an Indo-Pacific economic framework that will define our common vision in areas such as trade facilitation, digital economy and technology standards, supply chain resiliency, de-carbonization and clean energy, infrastructure, worker standards, and other areas of mutual interest."
The United States, Australia, Brunei, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam are the member nations who joined the framework in order to prepare the country’s economies for the future. The participating countries' combined GDP accounts for 40% of global GDP. The Indo-Pacific region is home to around 60% of the world's population and is predicted to be the largest contributor to global growth over the next three decades. The Indo Pacific region "supports 3 million American jobs" and is "the source of approximately $900 billion in foreign direct investment in the United States,”. Furthermore, the United States is the region's "leading supplier of services."
The United States wishes to reestablish its economic leadership in the region and is "providing Indo-Pacific countries with an alternative to China's strategy." The US seeks to involve the Indo-Pacific economically and offset China's growing economic and political influence in the area.
The IPEF is not a free trade treaty. Although no market access or tariff reductions have been specified, experts believe it can open the way for trade agreements. It is believed to be the part of the USA’s "Indo-Pacific Strategy". Furthermore, some have expressed concern that American government is unwilling to jeopardize American jobs by providing the region with increased market access.
Chinese State Councilor and Foreign Minister Wang Yi also condemned the US for forming small clusters in the name of freedom and transparency, saying that its objective is to confine China. Wang stated that the framework intended to demolish the term "Asia-Pacific" as well as the region's functional regional cooperation architecture. "Facts will show that the so-called Indo-Pacific Plan is, at its core, an initiative that drives a wedge, incites conflict, and destroys peace. No matter how whitewashed or veiled the strategy is, it is doomed to fail."
Many experts say that the structure established by the US government promotes division rather than unity, and that obstructionism leads to conflict rather than regional solidarity for the welfare of the region.
The Indo Pacific Economic Framework promises to improve the region's "inclusive" growth is a deception. In order to be inclusive, all regional countries must have equal access to the initiative's opportunities and resources. However, the Washington-designed IPEF has consistently excluded China, the region's largest economic partner and an important contributor to regional stability and prosperity. The goals of the Indo-Pacific Economic Framework, appear to be less about promoting regional commerce and more about limiting China's economic power.
The United States' assertion that the IPEF is primarily concerned with "American workers" raises concerns about whether increasingly protectionist global trends would prevail. Each IPEF member country has significant trading interests in China, with the majority running big trade deficits. So it remains to be seen how much they are willing to pay to join the IPEF. Three ASEAN countries, Cambodia, Laos, and Myanmar, have already decided not to participate in the framework's debut.
The IPEF was created with the intention of forming another exclusive US-led economic bloc to control China. The IPEF is a "lose-lose economic arrangement." The IPEF made no mention of removing trade barriers or providing greater investments, two hard commitments that Washington might make to deliver substantial advantages to many Asian countries.
The IPEF's purpose appears to be to promote economic involvement between the U.s and the nations involved, both in terms of regulations and standards and trade volume. And perhaps success can be judged by evaluating trade divergence from China to the US. Generally, the primary path for influencing volume of trade has been to decrease tariff and non-tariff barriers – a missing feature of the IPEF – which limits the possibilities for more successful indicators. If IPEF is executed, the program will compel these participating countries to follow Washington's arbitrarily imposed regulations and reform their domestic economic policies to serve only US benefits.
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