Biden’s Indo-Pacific framework reflects new attitudes on free trade

Under President Trump, America witnessed four years of skepticism and a general disdain for multilateral agreements and free trade deals. Biden campaigned successfully promising the exact opposite. He assured the American people that America would reenter agreements that Trump withdrew from and not be an isolationist on the world stage if he was elected to the Oval Office.  

Over the past two years, he has partly fulfilled those campaign promises by rejoining the Paris Climate Accords and the World Health Organization and by committing to support Ukraine in the Ukraine-Russia conflict. However, his mantra of “America is back” does not seem to apply to trade deals. A case in point is Biden’s Indo-Pacific Economic Framework for Prosperity (IPEF).  

In May, Biden made his first trip to Asia as president. Stopping in Tokyo, at the backdrop of the Quad summit, he emphatically launched the IPEF, which covers the U.S. and 12 partner nations in the Indo-Pacific region. Is this America’s reentry into the Asia trade architecture? Not quite.  

It is certainly an entry into the “Indo” part of the Indo-Pacific strategy. The IPEF is not an agreement nor a free trade deal, but a framework. It sets standards for cooperation on supply chain resiliency,  environmental concerns, labor laws and corruption. It does not offer market access nor does it have stringent requirements that were once part of the U.S.-led Trans-Pacific Partnership (TPP). With this level of flexibility in the framework, coupled with the most enticing part of any trade arrangement — access to the American market — missing, the IPEF is clearly designed to accommodate partners who have historically been hesitant to sign on to deals that involved trade and tariff liberalization, such as India.  

On multiple occasions, Biden has referred to the relationship with India as the most important one for the United States. He did so again in Tokyo.  

While the IPEF is a product of the times — i.e. a response to the populist backlash against globalization and the neoliberal model of trade and development practiced since China’s ascent to the World Trade Organization — it is also designed to win the approval and support of new partners and allies such as India to address various challenges. These challenges range from China’s assertiveness in the Indo-Pacific region to global challenges such as climate change. Through the Quad security grouping, the U.S. is leveraging India’s capabilities to manufacture and deliver over 1 billion vaccines to countries in South East Asia. Similarly, this initiative has the potential to leverage India’s position in the region to address supply chain and environmental issues.   

Nevertheless, the framework does not deliver on one major front to have a coherent Indo-Pacific strategy — enticing countries in South East Asia to choose the U.S. over China. Nations in South East Asia, East Asia and Oceania are signatories to one of the largest trade blocs in the world — the Regional Comprehensive Economic Partnership (RCEP) — which includes China. Similarly, the Comprehensive Progressive Agreement for Trans-Pacific Partnership (CPTPP) marches on without the U.S. Given that there are already two major trade blocs in the region, countries may not be as excited about the IPEF, which offers no market access nor addresses tariff barriers. Furthermore, next to China’s trillion-dollar Belt and Road Initiative (BRI) for infrastructure, Biden’s $50 billion infrastructure assistance plan with the Quad doesn’t stand to make a dent.

Through two consecutive presidential elections in 2016 and 2020, it has become abundantly perspicuous that the midwestern states are a strong deciding factor in who gets to the oval office. Based on Biden’s agenda of advancing a “foreign policy for the middle class” and the IPEF, it seems his administration has become patently aware of the risks associated with continuing the trade policy of the Obama, Bush or Clinton eras.   

As witnessed over the past two months with the midterm election campaigns of candidates in the Rust Belt states of Pennsylvania, Ohio, West Virginia and Wisconsin, China is a prominent feature amongst both Democrats and Republicans. They tried to outcompete one another in taking swipes at China. However, the discussions were in the context of China eating America’s lunch as opposed to any form of security challenges coming from Asia.  

These domestic pressures have forced Biden’s hand into making amends for the trade policy pitfalls of his predecessors over strengthening alliances in Asia by reentering trade deals such as CPTPP. Consequently, this development has given birth to frameworks such as IPEF, that can get the buy-in from hesitant partners in the region but do not offer old allies much in substance.  

With IPEF, it is clear that Obama/Bush/Clinton-era free trade is becoming a thing of the past and the forms of trade cooperation that populist leaders propose in the future will put their nation’s workers first.

Akhil Ramesh is a fellow with the Pacific Forum. He has worked with governments, risk consulting firms and think tanks in the United States and India. Follow him on Twitter: Akhil_oldsoul.