Biden outlines economic framework for US, Asian nations

Clean energy and decarbonation are among the goals

President Joe Biden and Japanese Prime Minister Fumio Kishida shake hands during a summit meeting in Tokyo on Monday. (David Mareuil/Getty Images)
President Joe Biden and Japanese Prime Minister Fumio Kishida shake hands during a summit meeting in Tokyo on Monday. (David Mareuil/Getty Images)
Posted May 23, 2022 at 9:18am

President Joe Biden announced an economic framework involving the U.S. and a dozen other countries,  including several members of a trade agreement the Obama administration could not get through Congress and from which the Trump administration withdrew.

Administration officials touted the “Indo-Pacific Economic Framework for Prosperity” as an alternative to traditional free trade agreements that focused on tariff reduction and market access, but resulted in economic loss for some U.S. industries and their workers. 

The administration said Monday the Indo-Pacific framework underscores the U.S. commitment to a growing region where China is a major competitor for influence.

“The United States is deeply invested in the Indo-Pacific,” Biden said at a news conference in Tokyo. “We’re committed for the long haul, ready to champion our vision for a positive future for the region together with friends and partners, including the nations in this room and on the screen.”

He said the initial members and any additional nations that join the IPEF will all “share the same goal of ensuring a free and open Indo-Pacific that will deliver greater prosperity and greater opportunity for all of our children.”

The  administration said negotiations will take place over an unspecified period of time to secure agreements among members on elements of the framework’s four pillars: supply chain resilience; infrastructure, clean energy and decarbonization; tax and anti-corruption; and digital and emerging technologies. It is unclear if Congress would review or vote on any resulting agreements. 

Japan’s Prime Minister Fumio Kishida joined Biden for the unveiling of IPEF.  Japan held together the remaining members of the Trans-Pacific Partnership after President Donald Trump made good on a campaign promise in 2017 to leave the agreement negotiated by the Obama administration. The 11 remaining countries revised provisions and renamed the trade pact the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

The new Biden framework includes seven CPTPP members — Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam — as well as India, Indonesia, the Philippines, South Korea and Thailand.

The administration has resisted calls from agriculture and other industries to revive the Trans-Pacific Partnership to expand market access. U.S. Trade Representative Katherine Tai has said the 2016 agreement was flawed and generated bipartisan opposition.  

More robust than TPP

In a briefing call ahead of the announcement, Tai said the Trans-Pacific Partnership was a fragile agreement and that the Biden administration believes it can deliver a more robust product with trade as one element and with participation by labor, environmental and climate groups along with traditional business interests.

Tai said concentrating on uniformity in standards and policies could be more valuable than lowering tariffs. Agricultural exporters, for example, would benefit from certainty of standards based on science rather than variable requirements designed to keep products out, she said. 

The framework outlines the administration’s views on the priorities and challenges for the 13 members that together constitute 40 percent of the world’s gross domestic product and 60 percent of the global population. Biden first announced the framework in Oct. 27, 2021, and the Office of the U.S. Trade Representative and the Commerce Department solicited public comments in March 2022 on the guiding principles. 

National Security Advisor Jake Sullivan said on the briefing call that past trade agreement models didn’t fully address supply chains, clean energy, digital and technology sectors, corruption or other challenges “leaving our workers, businesses, and consumers more vulnerable. Our fundamental view is that the new landscape and the new challenges we face need a new approach, and we will shape the substance of this effort together with our partners.” 

Commerce Secretary Gina M. Raimondo said the administration would be breaking new ground with its approach to economic and trade issues. 

“This has never been done before, in terms of the ambition and inclusivity across a broad range of regional partners. And I’m confident that there’ll be benefits for U.S. businesses,” Raimondo said. 

Asked if Congress would vote on agreements generated under the framework, Tai said, “Let’s see where these negotiations take us, and let’s see where the discussions go. Regardless, we have to keep Congress close, and Congress needs to be a part of shaping what we do with our partners here.” 

Senate Finance Chairman Ron Wyden, D-Ore., and ranking member Michael D. Crapo, R-Idaho, and four other senators raised concerns in a May 10 letter to Tai about what they said has been insufficient notice to Congress about negotiations with several World Trade Organization members on a proposal to waive intellectual property rights for U.S.-developed COVID-19 vaccines to increase production and access to the drugs in lower-income countries.

The lawmakers cited trade negotiations under the Indo-Pacific Economic Framework as falling under their purview since the Finance Committee oversees trade.

“The mere fact that changes to U.S. law may not be required to implement a final agreement or that ideas are being exchanged in a ‘white paper’ does not excuse USTR from fulfilling its obligation to consult — in detail, including by sharing any and all text and specific proposals — in a timely fashion, throughout a negotiation,” Wyden and Crapo wrote.

Organizations and individuals that objected to the Trans-Pacific Partnership raised alarms amid speculation about which countries would be among the initial members of the framework.

In April, the Labor Advisory Committee for Trade Negotiations and Trade Policy submitted a letter during the public comment period that identified Malaysia, India, Indonesia, the Philippines and Thailand as potentially problematic members because of poor records on human rights, child labor and labor rights. The committee, one of 26 advisory panels to USTR, also flagged international organizations’ conclusions that the South Korea has interfered with independent trade union activities. 

“Given the scale and scope of worker rights abuses the IPEF must include strong and enforceable labor standards and corporate accountability measurers integrated throughout each of the framework’s modules or pillars,” the labor panel wrote, adding that the labor provisions in the United States-Mexico-Canada Agreement on trade offered a model. 

In Monday’s announcement, the White House said the Indo-Pacific framework is built on the goals of developing a connected economy especially in e-commerce, online privacy and artificial intelligence rules.

The administration also said the U.S. will pursue strong labor and environmental standards through trade. The trade pillar falls under the jurisdiction of USTR.

The Commerce Department will be responsible for three other pillars:

  • Developing a resilient economy by tackling supply chain problems with an early warning system that anticipates and prevents potential disruptions, mapping critical mineral supply chains and coordinating efforts to diversify supply sources.
  • Developing a clean economy by seeking commitments on clean energy, decarbonization and infrastructure. Framework members will pursue targets to accelerate efforts to tackle the climate crisis, including in renewable energy, carbon removal, energy efficiency standards, and new measures to combat methane emissions.
  • Developing a fair economy with commitments to enact and enforce effective tax, anti-money laundering, and anti-bribery regimes that are in line with existing multilateral obligations.