U.S. President Joe Biden’s Indo-Pacific Framework for Prosperity (IPEF) is the economic arm of his administration’s Indo-Pacific Strategy, aimed at countering China’s influence in the region.
Despite its lofty pronounced goals, IPEF’s shortcomings expose a disconcerting lack of political will, inconsistent trade policies, and U.S. inability to match China’s infrastructure initiatives.
Bull in a China shop?
Launched in Japan in May 2022, IPEF was widely touted as the Biden administration’s better follow-up to Trump’s withdrawal from Obama’s Trans-Pacific Partnership (TPP).
Many had anticipated a robust reply to China’s growing economic influence in the region, particularly following U.S. depiction of the Regional Comprehensive Economic Partnership (RCEP) as an instrument of Chinese expansion.
China may well stand to benefit most from RCEP by virtue of its size and economic relations with the region. But outside the U.S. echo chamber, RCEP is seen as truly East Asian led. It has involved not only ASEAN leadership, but also Japan, South Korea, Australia, New Zealand and Singapore, all long-term U.S. allies.
In sharp contrast, IPEF has disappointed many. It seems to be little more than a half-hearted economic cooperation appendix to the Biden administration’s Indo-Pacific strategy.
The alternative U.S. infrastructure initiative—coordinated with NATO allies in Europe—is small potatoes compared to the Asian Infrastructure Investment Bank, which—unlike most of its allies—the U.S. has attacked from the outset.
Also, the U.S. has no answer to China’s flagship ‘Belt and Road Initiative’ (BRI)—which succeeded ‘One Belt One Road’ (OBOR) and earlier Chinese Silk Road initiatives. BRI ostensibly focuses on critical transport and communications infrastructure like internet cables, roads, ports and railways.
These projects are seen as directly contributing to economic development, making them highly attractive to developing nations. In contrast, IPEF offerings appear more like diplomatic gestures with little for infrastructure development.
The chasm between IPEF’s lofty rhetoric and its actual content shines light on modest U.S. capacities and commitment. U.S. inability to offer substantial benefits through IPEF not only jeopardizes its standing, but also cedes influence to China.
Domestic quagmires bog down IPEF
The hasty negotiations are seen as catering to the Biden’s re-election campaign. This is a far cry from what U.S. allies were expecting, to signal greater commitment to the region. In its current form, IPEF offers little in tangible benefits.
As a Biden White House initiative without Congressional support, IPEF is dismissed in some circles—especially in the U.S.—as part of Biden’s re-election strategy. It will most certainly be dropped if he does not secure a second term.
The irony is palpable: while there is bipartisan agreement to ‘contain’ China, U.S. politics is so mired in partisan squabbles that it fails to act, even when interests are aligned. This lack of political will is not just a domestic failing; as a result, the international community sees the U.S. as unreliable.
No more trade liberalization?
Despite decades of ‘free trade’ rhetoric from the U.S., its NATO allies, the Bretton Woods institutions and others, U.S. commitment to trade liberalization has long not been taken seriously, especially since the Trump administration.
Before that, the Obama White House had blocked appointments to the World Trade Organization’s dispute settlement panel, effectively rendering the WTO’s most important component dysfunctional.
IPEF’s modest content is largely due to increasingly hostile U.S. public sentiment on trade liberalization. By 2016, most presidential candidates seeking to succeed Obama—from both major parties—opposed the TPP.
While most U.S. voters know nothing about IPEF, ‘outsourcing’ manufactured imports is widely seen as behind the decline of U.S. manufacturing, as well as related ‘good’ jobs and incomes.
While many initially expected a more Obama-like approach from the Biden administration, policy developments so far suggest Trump’s ‘America first’ rhetoric and policies are here to stay.
Unsurprisingly, the White House has promised IPEF would “ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific”. U.S. domestic re-industrialization efforts have already triggered more blatant protectionism since Trump.
Biden’s Inflation Reduction Act denies Hyundai, the Korean industrial conglomerate, as well as other foreign automotive brands, the significant tax credits available to domestic electric vehicle manufacturers.
Outdoing Trump, the Biden administration has broadened technology bans and restrictions, e.g., in its ‘microchip war’ with China. U.S. allies—notably the Netherlands and South Korea—have largely agreed to restrict chip technology exports to Chinese companies.
Ceding regional hegemony
While initially welcomed despite qualms, IPEF has not been attractive to the region, especially to developing countries, including India. It does not even offer U.S. market access, a staple of earlier free trade agreements. Instead, it mainly seeks to impose new standards associated with the new U.S. protectionism.
IPEF’s lack of tangible benefits is unlikely to be of much interest to member governments and prospective members, let alone their publics. Worse for the U.S., IPEF’s modest offer may unwittingly strengthen longer term concerns about U.S. hegemony and leadership, instead of restoring confidence in it.
The largely cool and ambivalent reception to IPEF reflects a divide. On one side, the U.S. and its allies seek to strengthen their hegemony in the region. On the other are the mixed interests and ambivalent attitudes of others, mainly developing countries, coping with U.S.-China rivalry.
IPEF’s fate is compounded by domestic political constraints on U.S. foreign policy, which have reduced its room for manoeuvre. To be attractive to the region, IPEF needs to offer more tangible benefits to current and prospective members, especially developing countries.
Thus far, it has appealed to fears of Chinese expansionism and its alleged ‘debt traps’. For all but the staunchest U.S. allies, however, concerns about privacy, surveillance or sovereignty are secondary to the need for finance and economic development.
China understands this, often sweetening its infrastructure deals, and making them more attractive to developing countries. Without a more generous response, it will be difficult to overcome IPEF’s current reputation as a low-cost means to enhance U.S. dominance of the region.
Currently, the U.S. is imposing itself on, rather than trying to be supportive of the region. Hence, the IPS and IPEF run the risk of simply being the latest in a series of U.S. hegemonic initiatives from the first Cold War’s Southeast Asian Treaty Organization (SEATO) in the 1950s to Obama’s TPP.
Ong Kar Jin is an independent researcher and writer focusing on the socio-political dimensions of technology.