Washington weaponizes Indo-Pacific Economic Framework (IPEF) even before it takes shape

 

 After a long period of public opinion hype, the first ministerial meeting of the Indo-Pacific Economic Framework (IPEF) led by the US and participated by a total of 14 countries is set to be held in Los Angeles from Thursday to Friday. Although officials in Washington claimed that this does not mean participating countries have to pick a side between China and the US, it is just a cover-up to appease people and an insincere statement - in related reports in the US and Western media, "anti-China" frequently appears in news headlines, and some even couldn't wait to tout that the IPEF is "the best way for US to counter China in the Indo-Pacific."

In May this year, US President Joe Biden announced the launch of the IPEF during his visit to Japan. Washington's boast that the IPEF "goes beyond typical trade deals" and will "have an affirmative economic agenda" in the region is just a guise to cover up the IPEF's "innate deficiencies." Its "non-typical" feature is that it does not include tariff relief, market access and other arrangements, which makes it difficult for member states to obtain substantial economic benefits from it; its "innovation" is that it does not require congressional approval, and member states can freely choose to participate in the four pillars. This means the IPEF lacks legal binding force.

More importantly, although the IPEF has been painted with "economic cooperation," its root is the "political framework" to contain China. Washington's real purpose is to create a small circle of supply chains and industrial chains in the Asia-Pacific region that is "decoupled" from China. This obviously harms the vital interests of Asia-Pacific countries, and this is what most countries are worried about and opposed to. At the same time, some member governments have not been able to explain to their citizens the "necessity" of participating in the IPEF. Most of them participated in the negotiation with a skeptical attitude, and some were coaxed by the US.

Washington has designed four "pillars" for the IPEF: trade, labor and digital economy; clean energy and decarbonization; resilience of supply chains; tax and anti-corruption. What is basically certain is that Washington will not offer any concessions to the participating countries. Based on past experience, what Washington will actually do is to ask for more. While inciting other countries to "decouple" from China's industry chain, it also attempts to quietly turn these countries into economic vassals of the US. Countering China has become Washington's open scheme, while creating more economic vassals and geopolitical minions at the same time is its secret plot. This should arouse high vigilance of Asia-Pacific countries.

Coincidentally, the IPEF has a high degree of overlap in terms of the members with the Regional Comprehensive Economic Partnership (RCEP) that came into effect earlier this year. Among the 15 member countries of RCEP, 11 countries have participated in the IPEF. Only four countries, including China, Cambodia, Laos and Myanmar, are not IPEF members. And among IPEF countries, apart from the US, India and Fiji, the remaining 11 countries have all joined the RCEP.

The US wants to use IPEF to hurt the foundation of RCEP and hollow out this regional free trade agreement. However, compared with RCEP, which has solidly promoted regional economic integration, IPEF is just a big empty shell. Each participating country has its own demands for interests, and it is impossible for all of them to follow US orders like Japan.

Most of the participating countries hope to obtain US commitment to open the market through the IPEF negotiation, but Washington is advertising that the IPEF negotiation will bring benefits to US labors, as well- as small and medium-sized enterprises. Washington has shown no interest in bridging the gap between different interest demands.

In addition, the IPEF faces a huge uncertainty - its progress is made only by the president's executive order. When the US government changes, the negotiated agreement may be overturned at any time. It is widely anticipated that once there is a political party rotation and if the Republican Party takes office, relevant content relating to fair trade, digital economy, and clean energy will be revised immediately and substantially. This means that three of the so-called four pillars of the IPEF could collapse overnight.

People still have a fresh memory of the TPP, and many people still use the TPP to benchmark the IPEF. In 2016, Washington pooled a lot of resources to building the TPP to contain China. Now that six years have passed, China and the international community, including the US, have become more deeply integrated. Washington is still obsessed with protectionism and unilateralism, and even blackmails the world at its whim. Before the IPEF takes shape, some people in the US are eager to install teeth on it, claiming that "an IPEF without teeth is bad for the US and catastrophic for our relationships in the region." Such bloc confrontational mentality and geopolitical evil thought have already determined the future of the IPEF.

Although the stage of the IPEF was set up, the play is not on yet. Washington cares only about its own hegemony and does not care about the interests of others, and this farce is only a temporary one. 

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Making sense of China’s Asia-Pacific FTA agenda

IN A surprise move, the Chinese government announced on April 30 that it will explore the possibility of pushing ahead the long-delayed Asia-Pacific Free Trade Agreement (FTAAP) in the coming Asia Pacific Economic Cooperation (Apec) meeting this year. To that, Beijing is mulling a working group to study the feasibility of the Pacific-wide free trade pact which is scheduled to be discussed among Apec trade ministers in the May forum.

In light of Obama's conclusion of his Asia trip without much achievement on the Trans-Pacific Partnership (TPP) agenda, Beijing's latest move is a clear response to Washington's "economic containment" of China in the form of TPP—a suspicion that is shared by many analysts worldwide. Nevertheless, considering China's multi-level and often complicated decision-making process, Beijing's latest overture is definitely more than just a timely response. In fact, it is a strategic response aimed to achieve strategic goals in both external and internal dimensions.

First, Beijing's FTAAP move is a departure from Hu-Wen administration's policy on the Pacific trade agreement. Whereas the previous administration's stance on this matter is both ambiguous and non-committal, the current Xi-Li leadership has obviously abandoned such a policy to the point that it is willing to push the FTAAP agenda as Apec host this year. Exerting such a leadership when the credibility of Apec as the framework for achieving Asia-Pacific economic community is being questioned, is a show of China's aspiration for a global role that commensurate its position as one of the world's economic power.

Second, Beijing's support for the FTAAP is a strategic counter to the US-led TPP which China does not belong to. Instead of focusing its sights on the Asean-centred Regional Comprehensive Economic Partnership (RCEP), Beijing is also looking at the FTAAP as its other tool to mitigate the adverse impacts arising from the TPP towards China, should the US-led trade pact successfully concluded. As FTAAP is the larger economic bloc that encompasses all 21 APEC members, pushing the proposal through will not just complement the TPP but also, absorb the 12-member TPP nations within the larger free trade bloc. This effectively puts China in the driving seat, seizing the global free trade initiative away from the US and breaking the TPP-induced predicament on Beijing.

Third, China's push for the FTAAP agenda will mean that the RCEP is firmly established as the other cornerstone of the nation's free trade policy. Simultaneously, such a decision will cast away any possibility of Beijing entering the TPP as some analysts have hope for.

From the statement made by the Chinese commerce ministry days ago, China is planning to utilise certain aspects of both the TPP and the RCEP frameworks, to be the building blocks for the eventual free trade pact in the Asia-Pacific region. By that, it means that the FTAAP, if it is successful, will not be the high quality FTA or Economic Partnership Agreement (EPA) as the TPP, but rather, a modest version between the TPP and the RCEP. In the long-run, this is more beneficial to China as it puts the country in a gradual course of economic opening up unlike the situation in the TPP.

Finally, Beijing is employing the FTAAP as an external force to speed up reforms at the domestic front. With the FTAAP poised to be a higher quality of FTA vis-à-vis the China-Asean Free Trade Area, it is expected that substantial rules and regulations will be rolled out to overcome the numerous tariff and non-tariff barriers as well as investment hurdles among participating nations. For China, the FTAAP can be a force used by the government to break the monopolies of state-owned enterprises in the telecommunications, banking and transport sectors, just to quote a few. With economic reform being the most important agenda for the leadership, the Xi-Li administration is borrowing the external force in the form of FTAAP, to further liberalise its economy and, thus, spur China into a more sustainable economic development in the coming years.

What is needed by China, however, will be policy consistency and close collaboration with Washington to push the FTAAP agenda through. Just as half-baked efforts will not produce any tangible results as shown during the Bush administration, pushing through a FTAAP that is more accommodative to the developing world may not work as well in this case. Close lobbying with the US and other developed countries is vital if Beijing is to push through the FTAAP agenda in Apec.

- Contributed Karl Lee CROSS BORDERS theSunDaily

Karl Lee is an analyst at Anbound Malaysia, the leading independent think tank in Mainland China. Feedback: lcleong@anbound.com.

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US and China tussle for trade dominance at Apec summit

United States stepped up efforts to reinforce its economic might in the Asia-Pacific at a regional leaders’ summit in Indonesia on Tuesday, amid warnings from an increasingly bold China.


US Secretary of State John Kerry. Photo: EPA 

The two-day Asia-Pacific Economic Co-operation (Apec) event at a five-star resort on the tropical island of Bali is aimed at breaking down trade barriers among all 21 member economies, but rival agendas by the world powers have overshadowed the talks.

Filling in for US President Barack Obama, Secretary of State John Kerry has lobbied for the quick signing of a mega free trade pact grouping 12 Apec nations but not China and summit host Indonesia.

“We need modern rules for a changing road, rules that keep pace with the speed of today’s markets,” Kerry said in a speech on the sidelines of the summit on Monday that was in large part a hard-sell for the planned Trans-Pacific Partnership.

China's President Xi Jinping, Photo: AFP

Kerry was set to meet the leaders of the 11 other nations involved in the TPP on Tuesday afternoon in a bid to hit an against-the-odds deadline set by Obama for a deal by the end of this year.

The United States has championed the TPP as setting “gold standards” to deal with complex changes to the 21st-century economy, such as how to police cloud computing and patents.

But China and even some developing nations included in the TPP have expressed concern that it will set down trade rules primarily benefiting the richest countries and most powerful firms.

“China will commit itself to building a trans-Pacific regional cooperation framework that benefits all parties,” Chinese President Xi Jinping said in a speech following Kerry at the Apec business forum

“We should enhance coordination... deepen regional integration and avoid the spaghetti bowl effect so as to build closer partnerships across the Pacific.

China will commit itself to building a trans-Pacific regional cooperation framework that benefits all parties -China's President Xi Jinping

Xi’s comments were interpreted in China’s state-run media on Tuesday as direct criticism of the TPP.

“The Trans-Pacific Partnership, featuring confidential talks and the highest free trade standard beyond mere lower tariffs, is widely considered a new step for the US to dominate the economy in the Asia-Pacific region,” the China Daily newspaper said in a front-page report on Xi’s speech.

Indonesia also signalled its irritation at the huge focus on TPP at the Apec summit, shunting the planned meeting on Tuesday afternoon of the 12 nations involved to a hotel outside the official venue.

“We mind actually, and one of the reasons, at the very least, is we don’t want any coverage that will overshadow APEC,” an Indonesian government official said, when asked about why the TPP countries had been told to meet outside.

Meanwhile, China and Indonesia are involved in plans for a rival free trade pact involving 16 countries around the region and being spearheaded by the Association of Southeast Asian Nations.

Negotiations for that pact are expected to be discussed at an East Asia Summit in Brunei this week.

One of the biggest issues at Apec has been the absence of Obama, who had to cancel an Asian tour that would have also taken him to Brunei, Malaysia and the Philippines because of the week-long US government shutdown.

Obama and the Democrats are engaged in a potentially catastrophic battle of nerves with the Republicans over the president’s health care law, which could lead to an unprecedented US default.

Obama’s decision not to come to Asia has reinforced sentiments that his high-profile diplomatic, economic and military focus on the region, known as the “pivot”, is in tatters.

Kerry has been forced at Apec to repeatedly insist that the Asia-Pacific remains a top priority.

“I want to emphasise that there is nothing that will shake the commitment of the rebalance to Asia that President Obama is leading,” Kerry told the business forum on Monday.

Meanwhile, Xi filled the Obama vacuum with high-profile state visits to Jakarta and Kuala Lumpur ahead of Apec.

He then used the Apec business event to outline a Chinese vision for the region of a “united and prosperous” family.

Sources: AFP

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ASEAN plans world’s largest trading bloc in Asia, the Regional Comprehensive Economy Partnership (RCEP) and the U.S. Secrecy in Trans-Pacific Partnership (TPP)

The leaders of Asean have succeeded in persuading their top trading partners to start negotiations on the Regional Comprehensive Economic Partnership (RCEP) to create the world’s largest trading bloc.

Cambodian Prime Minister Hun Sen formally launched the negotiations on the RCEP during the Asean Summit and Related Summits yesterday at a meeting at the Peace Palace in the western part of Phnom Penh.

The leaders of the 10-member regional grouping and their six major trading partners agreed to create a trading bloc that will comprise more than three billion people and with a combined GDP of US$15 trillion, roughly equal to that of the US.

Asean also launched the US-Asean Expanded Economic Engagement initiative, aimed at expanding trade and investment ties with the US and smoothing a path for the Trans-Pacific Partnership.

Trade Minister Gita Wirjawan said that plans for the RCEP would be welcomed by world leaders from Australia, India and the US as an amazing tool of economic integration that might become the benchmark for other regions.

“The spirit is not that of a zero-sum game. The economic integration of other regions is complementary to the economic integration among [Asean] member countries,” Wirjawan told The Jakarta Post on the sidelines of the event.

“Many Asean member nations are conducting bilateral talks that are just fine, because they are complementary [to the RCEP],” Wirjawan said.

The minister has previously said that the RCEP would “rewrap” five current free trade agreements (FTAs) with Asean’s six major trading partners, China, Japan, India, South Korea, Australia and New Zealand.

Asean’s FTA with Australia and New Zealand covers both nations.

Wirjawan said that the prospects for the RCEP were currently brighter than of the Trans-Pacific Partnership (TPP) free trade agreement touted by the US, as Asean already had FTAs in place, albeit mostly on goods and tariffs, with most of the nations involved.

The RCEP will expand upon existing FTAs to include agreements covering services and investment.

Asean is currently in discussions to expand its FTA with India, which it expects to complete in time for the Asean-India Commemorative Summit next month in India. Similar negotiations will follow with Japan.

Earlier in the day, there was a global dialogue between Asean leaders with the heads of world financial institutions, including Asia Development Bank President Haruhiko Kuroda, IMF Managing Director Christine Lagarde, World Bank Managing Director Caroline Anstey, UN Conference on Trade and Development Secretary-General Supachai Panitchpakdi and World Trade Organisation Director-General Pascal Lamy.

Wirjawan said that the leaders agreed that Asean had shown itself to be resilient amid the global financial crisis, becoming a model for other economic zones.

“Also discussed were efforts to face financial crises, such as the Chiang Mai Initiative pool of funds, which has been increased from $120 million to $240 million,” Wirjawan said.

Another important decision that was made during meetings and summits in Cambodia between November 15 and 20 was to start additional talks on implementing the Asean Economic Community on Dec. 31, 2015, to aid member nations in their preparations.

Asean’s leaders also adopted the Asean Human Rights Declaration, despite critics who said that the document was not up to universal standards of human rights protection, promotion, monitoring and enjoyment.

At the end of the closing ceremony, Hun Sen presented the gavel to Brunei Darussalam Sultan Hassanal Bolkiah to mark the handover of Asean’s rotating chair from Cambodia to Brunei starting on January 1.

Bolkiah said it would be the fourth time that Brunei would hold Asean’s chair, and that the nation had chosen a motto of “Our People, Our Future Together” for Asean for 2013.

Asean Secretary-General Surin Pitsuwan of Thailand also brought to an end to his term. He will be replaced by Vietnamese deputy foreign minister Le Luong Minh, who has been endorsed by Asean’s member nations.
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An alternative to US President Barack Obama’s Trans-Pacific Partnership, the 16-member Regional Comprehensive Partnership (RCEP) is the newest concept for an economic union between ASEAN and six major trading partners, China, Japan, India, South Korea, Australia and New Zealand.

The RCEP is supposed to be a trading bloc that will comprise more than three billion people with a combined GDP of $20 trillion, or almost one-third of the global economy. Officials hope to have the talks concluded by the end of 2015.

Source: Investvine
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Association of Southeast Asian Nations

The First ASEAN summit was held in February 1976 in Bali.

The most recent 21st Summit was held from November 18-20, 2012 in Phnom Penh, Cambodia
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Video: ASEAN agenda


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Video: Opening Ceremony of the 21st ASEAN Summit


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Trans-Pacific Partnership

On November 12, 2011, the Leaders of the nine Trans-Pacific Partnership countries – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States – announced the achievement of the broad outlines of an ambitious, 21st-century Trans-Pacific Partnership (TPP) agreement that will enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs.

INCREASING AMERICAN EXPORTS, SUPPORTING AMERICAN JOBS

President Obama announced in November 2009 the United States’ intention to participate in the Trans-Pacific Partnership (TPP) negotiations to conclude an ambitious, next-generation, Asia-Pacific trade agreement that reflects U.S. priorities and values. Through this agreement, we are seeking to boost U.S. economic growth and support the creation and retention of high-quality jobs at home by increasing American exports to a region that includes some of the world’s most robust economies and that represents more than 40 percent of global trade. The Obama Administration has been working in partnership with Congress and consulting closely with stakeholders around the country to ensure TPP addresses the issues that American businesses and workers are facing today, and may confront in the future.

The Trans-Pacific Partnership Framework

The United States, along with Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam are working to craft a high-standard agreement that addresses new and emerging trade issues and 21st-century challenges. The agreement will include:

• Core issues traditionally included in trade agreements, including industrial goods, agriculture, and textiles as well as rules on intellectual property, technical barriers to trade, labor, and environment.

• Cross-cutting issues not previously in trade agreements, such as making the regulatory systems of TPP countries more compatible so U.S. companies can operate more seamlessly in TPP markets, and helping innovative, job-creating small- and medium-sized enterprises participate more actively in international trade.

• New emerging trade issues such as addressing trade and investment in innovative products and services, including digital technologies, and ensuring state-owned enterprises compete fairly with private companies and do not distort competition in ways that put U.S. companies and workers at a disadvantage.

Leading Asia-Pacific Regional Integration Initiative

The TPP is the most credible pathway to broader Asia-Pacific regional economic integration. After nine rounds of negotiations, the nine countries made solid progress and have now achieved the broad outlines of an agreement. During their meeting on the margins of the APEC meeting in Honolulu, the TPP Leaders agreed to seek to conclude the agreement as quickly as possible and instructed their negotiators to expedite their work. The nine countries also welcomed the interest expressed by other countries in joining the agreement and will begin bilateral processes with these interested countries to discuss their readiness and ambition to meet the standards and objectives of the TPP. Once these bilateral processes have concluded, all current Parties will decide on inclusion of new members by consensus.

American Competitiveness in the Asia-Pacific

The TPP is a key element of the Obama Administration strategy to make U.S. engagement in the Asia-Pacific region a top priority. The huge and growing markets of the Asia-Pacific already are key destinations for U.S. manufactured goods, agricultural products, and services suppliers. As a group, TPP countries are the fourth largest goods and services export market of the United States. U.S. goods exports to the broader Asia-Pacific totaled $775 billion in 2010, a 25.5 percent increase over 2009 and equal to 61 percent of total U.S. goods exports to the world. U.S. exports of agricultural products to the region totaled $83 billion in 2010 and accounted for 72 percent of total U.S. agricultural exports to the world. U.S. private services exports totaled $177 billion in 2009 (latest data available), 37 percent of total U.S. private services exports to the world. America’s small- and medium-sized enterprises alone exported $171 billion to the Asia-Pacific in 2009 (latest data available).

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Video: Trans-Pacific Partnership negotiated in secret


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Video: Dennis Kucinich discusses the secrecy of the Trans Pacific Partnership
Dennis Kucinich (Democrat) is a member of the U.S. House of Representatives from Ohio’s 10th district
October 18, 2012 before the elction of the U.S. President took place on November 6, 2012


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Sources: Novan Iman Santosa The Jakarta Post

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