What you need to know about Biden’s new trading block in Asia

TOKYO — President Joe Biden faces a dilemma in Asian trade. He was unable to rejoin the Trans-Pacific Partnership (TPP), which his predecessor pulled out of the United States in 2017. Regardless of their content, many of the relevant trade agreements were politically poisonous. To American voters who have linked it to unemployment.

So Biden offered an alternative. The United States was due to announce countries joining the new Indo-Pacific economic framework on Monday while former Vice President Biden visited Tokyo. It is best known by its initials IPEF in the tradition of trade deals.

What will IPEF do?

It’s still an issue to figure out. Monday’s announcement is largely a hopeful statement for now as it means that a dialogue has begun between participating countries to ultimately decide what will be included in the framework. In a broad sense, this is a way of placing a sign that the US is willing to maintain its leadership in Asia.

White House National Security Adviser Jake Sullivan said, “The IPEF is focused on further integration of the Indo-Pacific economy, particularly in new areas such as the digital economy, where we strive to set standards and rules and ensure that secure and resilient supply chains exist. .”

The idea that a new standard for world trade is needed is not just about dissatisfaction among American voters. Awareness of how the pandemic has disrupted the entire scope of supply chains, closed factories, delayed cargo ships, blocked ports, and caused higher inflation worldwide. These vulnerabilities became more evident after Russian President Vladimir Putin ordered an invasion of Ukraine in late February, causing dangerously high food and energy costs in many parts of the world.

U.S. President Joe Biden holds a meeting with President Yun Seok-yeol at the Blue House in Yeouido, Seoul on May 21, 2022.

Yeonje Jeong – Getty Images

Who will finalize the details?

Negotiations with partner countries revolve around four pillars or topics, with the US Trade Representative and the Department of Commerce sharing the work.

The US Trade Representative will handle the talks on the “fair” trade pillar. This could include efforts to protect American workers from job losses as China’s accession to the World Trade Organization in 2001 caused serious manufacturing layoffs. These job losses have destroyed parts of America, upset voters, and fueled the political rise of Donald Trump, who withdrew the United States from the Trans-Pacific Partnership upon taking his oath of office in 2017 as president.

The Department of Commerce will oversee negotiations on three other pillars: supply chain resilience, infrastructure and climate change, and taxes and anti-corruption. Commerce Secretary Gina Raimondo flew to Japan with Biden on Air Force One. She was also with the president while in South Korea, where he highlighted the US plant investments of automaker Hyundai and electronics giant Samsung.

Who can join the club? not Taiwan

The White House says the IPEF will be an open platform. However, the Chinese government faces criticism that any agreement could become a “monopoly” faction, which could lead to even greater chaos in the region.

And China, the world’s second-largest economy, is showing a sensitive reaction to establishing an IPEF. Taiwan, over which China claims sovereignty, is also excluded from the treaty. This exclusion is noteworthy as Taiwan is also a leading manufacturer of computer chips, a key component of the digital economy that will be part of the IPEF negotiations.

Sullivan said all trade negotiations with Taiwan will be 1:1.

Sullivan said, “We intend to deepen our economic cooperation with Taiwan, including on high-tech issues including semiconductor supply.” “But we are pursuing it on a bilateral basis first.”

How long will it take?

Once the talks begin, negotiations are expected to take 12 to 18 months, an aggressive timeline for a global trade deal, according to US administration officials. The official requested anonymity to discuss the plan, he added, adding that building consensus in the United States is also key.

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