Biden’s big Indo-Pacific trade deal is a baby step
The administration should view the pact the way other countries do: as a bridge back to real free-trade agreements
Biden administration officials certainly sound enamored with their new Indo-Pacific Economic Framework for Prosperity. It's a "rethink" of "what trade policy can be in the 21st century," says US Trade Representative Katherine Tai, grandiosely.
It would be wiser to view the pact a bit more modestly: as a small step forward for an administration that has so far all but ignored free trade.
The White House deserves credit for getting 13 other countries to join in launching the framework this week, including trade skeptic India and seven Southeast Asian nations. Together with the US, they represent more than 2.5 billion people and roughly 40% of global gross domestic product. The length of the list reflects the intense desire within the region for greater US engagement and economic leadership.
What it means beyond that, however, is unclear. Signatories have agreed only to discuss what should be negotiated within each of the framework's four pillars — trade; supply chains; green energy, decarbonization and infrastructure; and tax and anti-corruption measures. It remains to be seen which nations will participate in which pillars once negotiations begin, let alone which will sign up to any final agreements, or how binding those commitments will be.
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Moreover, the US approach to this framework has its shortcomings. Talks will be disjointed, with responsibilities split between the trade representative's office and the Commerce Department. Designed to avoid the need for congressional approval, the deal could easily be abandoned by a new administration. Above all, the White House still refuses to offer participants greater access to the US market, which leaves open the question of why they should make any difficult compromises on issues such as workers' rights, climate targets and corruption.
These flaws can be mitigated to an extent. President Joe Biden should consider appointing a coordinator to keep talks moving, harmonize the efforts of USTR and Commerce, and bring in other departments as needed. US officials should appreciate the skepticism they're facing and offer substantial incentives to make up for the lack of new market access.
They should also be willing to rethink the outlines of the framework. In particular, while several countries are likely to be interested in signing a digital-trade agreement, some may beg off if that also requires agreeing to tough US demands on labor and the environment. It may make more sense to break out a standalone digital pact with wide support, rather than signing up only a few advanced countries, such as Japan and Singapore.
Most important, US officials can't rest on their laurels. Even a successfully negotiated framework — far from a sure thing — will not offer Indo-Pacific nations what they really want: a way to reduce their growing economic dependence on China. The best way to meet that desire remains for the US to open its markets by joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which seven out of its 13 partners already have.
The US should use these negotiations to help find a path back to CPTPP. The talks can serve as a useful sounding board. In discussions with the overlapping CPTPP members, the US should explore ways to make that pact more attractive politically. White House officials should keep their promises to consult regularly with Congress, seeking to rebuild a bipartisan consensus around trade. Publicly, they should use this time to hammer home arguments in favor of greater engagement and stop demeaning the very idea of free-trade agreements.
If nothing else, this initiative is one sign that the administration recognizes the importance of trade to the region. It shouldn't be the last.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.
