When officials who have been sitting at the negotiating table for a potentially far-reaching international agreement with the United States are asking “what is this thing?”, serious questions need to be asked about why they are even there.
Some version of that question was asked of me as a “stakeholder” by three different delegations during the first round of negotiations on the US-driven Indo-Pacific Economic Framework (IPEF) last week in Brisbane.
IPEF is the centrepiece of the US’s strategy to counter the influence of China in the Asia Pacific, alongside the explicitly security-focused Quad with Japan, Australia and India. The four pillar framework of trade, resilient supply chains, clean economy and fair economy (tax and corruption), is split between the US Trade Representative (Pillar 1) and the Commerce Department for the rest.
China is never mentioned, but the subtext is hardly subtle. A recent statement from Australia’s Defence Department explicitly laid out the security objectives of the specific items on the IPEF agenda, from rules on data and targeting telcos such as Huawei, “resilient supply chains” intended to marginalise China, and bans on export controls such as those applied to semi-conductors.
While IPEF focuses on the Asian region, the US is moving to reassert influence and counteract China through parallel Americas Partnership for Economic Prosperity and US-Taiwan Initiative on 21st-Century Trade, a Pacific Partnership Strategy with the Pacific Islands countries, and a three-day summit last week with African leaders.
Three other factors are driving the US approach. As host for APEC in 2023, the US just announced the theme “Creating a Resilient and Sustainable Future for All”, which contains almost every element of IPEF. Clearly, Biden will want some deliverables by the Leaders’ summit in San Francisco in November.
Second, the Biden Administration needs to satisfy corporate and some congressional demands for free trade deals, while placating staunch critics of the Trans-Pacific Partnership Agreement (TPPA) and similar deals by other Democrats, crucial union and environment constituencies over offshoring of jobs and lowering labour and environment standards.
Third, the administration describes the legal form as an “executive agreement” that does not require Congressional approach – a view strongly disputed by leading Democrats like Senator Elizabeth Warren.
Hence, IPEF is not a “traditional” free trade agreement that grants market access to the US. In Brisbane, its chief negotiator portrayed IPEF as a new and innovative economic arrangement to address 21st century challenges. Close US allies, such as Japan, dutifully echoed their excitement about this innovative new approach and its references to gender, indigenous peoples and labour.
Some governments seemed reassured by the US’s lower-key approach in Brisbane. The context belies that. The US invented the idea of IPEF and has vice-like control. It secured support from the Quad and now has 14 participatory countries from across the region – some, I suspect, as part of quid pro quos.
Participating governments could only access documents after they signed a draconian agreement that keeps negotiating documents secret for five years after the outcome enters into force. The US chairs all the negotiating committees, except that on “inclusivity” (co-convened by Australia and New Zealand). The US has set the agenda for meetings of each chapter and tabled the early drafts for discussion. Those drafts, including some texts, reflect the pro-corporate provisions in the TPPA, US Mexico Canada Agreement (USMCA) and other recent negotiations.
That reflects the demands of the US corporate lobby, which has reinvented itself as the American Association of the Indo-Pacific. Corporate speakers at the Brisbane stakeholder session, such as Amazon and Citi, focused narrowly on their wish list for digital, digital, digital. So did a joint statement to the round from services industries, including Business NZ and the Australian Services Roundtable.
While the US objectives are clear, the “thing” itself is a mess. The US has adopted a Nike-approach of “Just do it”. There is no coherence across the four pillars, despite significant overlap, or even for the elements within each. Some topics are advanced, because they largely cross-reference existing texts, while others are embryonic. Meeting in fragmented, simultaneous silos puts a massive burden on small delegations like Fiji.
No-one yet knows what legal form any IPEF agreements might take, whether some or all parts would be enforceable, whether countries can pick and choose different elements, how sensitivities can be protected, what development flexibilities might be permitted and resources would be made to implement them. Effectively, governments are being asked to negotiate a pig in a poke.
Above all, there is no evidence that IPEF will be of any value to any participating countries beyond showing willing to the US in its geo-political strategy to counter China. We deserve a much clearer explanation for why they are there.
