In curbing China, Malaysian scholars argue that the meaning of the IPEF Elastic Supply Chain Agreement is not to avoid "chain disruptions" in China | United States | Supply Chain

Introduction

In May of this year, the flexible supply chain agreement of the Indo Pacific Economic Framework was signed in the United States. However, the purpose of this agreement is not to avoid potential supply chain disruptions, but to establish a multilateral framework parallel to the Regional Comprehensive Economic Partnership Agreement in the Asia Pacific region to curb China's economic influence in the region. The US has not fulfilled any commitments to reduce tariffs and expand US market access. The IPEF is just a geopolitical tool used by the US to cover up its concerns about China's competition with it, and cannot truly promote trade liberalization and regional economic integration.

In May this year, the trade ministers of 14 participating countries in the Indo Pacific Economic Framework, led by the United States, held a meeting in Detroit, Michigan and signed the first supply chain agreement, which attracted global attention. This flexible supply chain agreement, touted by the Biden administration as the world's first multilateral supply chain agreement, was finally finalized one year after the IPEF was launched.

It, along with three other agreements to be released before the APEC summit in November this year, namely the Trade, Clean Energy, and Fair Economy Agreement, laid the foundation for the United States to jointly build this "Indo Pacific Economic Framework" with 13 other participating countries.

The participating countries have never attempted to conceal their implicit agenda of establishing a multilateral framework parallel to the Regional Comprehensive Economic Partnership Agreement in the Asia Pacific region to constrain China's economic influence in the region. The member countries of the supply chain agreement include the United States, Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Except for the United States, India, and Fiji, the other 11 countries are all members of RCEP.

The high degree of overlap between the member countries of these two agreements inevitably raises doubts about the United States' goal of strengthening economic integration in the Asia Pacific region through this framework. Because it only replicates the functional role of RCEP, but does not show any form of complementarity.

The United States has yet to commit to tariff reductions and greater market access, although the other 13 IPEF member countries have expressed disappointment, their collective concern for supply chain resilience is real. The COVID-19 led to the interruption of the global supply chain, forcing enterprises to pursue supply chain diversification. At a time when geopolitical competition between China and the United States is intensifying, the United States is taking advantage of this and exaggerating the risk of excessive dependence on China.

After the Detroit meeting, although the final text has not yet been released, the US Department of Commerce quickly announced that the proposed agreement will establish an emergency communication channel for partners to seek support in the event of future supply chain disruptions. It also helps to promote information sharing and collaboration among members during crises, enabling faster and more effective responses and minimizing negative impacts on the economy to the best of its ability.

This seems to hit the pain point, but the actual effectiveness remains to be seen. At present, no one can draw conclusions about the proposed crisis response mechanism. Indeed, information sharing and collaboration are crucial for addressing any global challenge, but the top priority is to find alternative supply chains.

Although the US claims that IPEF is inclusive, it clearly excludes Cambodia, Laos, and Myanmar from China and ASEAN, which is itself an irony of inclusivity.

In fact, China has not been spared the impact of supply chain disruptions during the pandemic. Cambodia, Laos, and Myanmar, the three least developed economies in ASEAN, have been particularly affected. Assuming the supply chain is facing a new round of disruptions, what the world needs then is comprehensive cooperation. Any behavior that insists on excluding a specific country is unacceptable to everyone.

Upon careful consideration of its implications, it is not difficult to find that the widespread concern about "supply chain disruptions" is actually just an excuse for the US to conceal its anxiety in the face of Chinese competition. The ASEAN's least developed countries, which are considered pro China, have been rejected by the IPEF and are at best just "collateral sacrifices" in the US plan.

It is quoted that US Secretary of Commerce Raymond said that during the COVID-19, the shortage of semiconductors led to the interruption of US auto production and the unemployment of thousands of workers. However, this does not seem to be sufficient evidence to support supply chain agreements.

After all, the semiconductor supply chain has long been in the hands of so-called "like-minded allies" in the United States. Even without a crisis response mechanism, the US can still mobilize its allies to work together to mitigate the impact of supply chain disruptions, although this may not necessarily save the overall situation.

In recent days, with the emergence of this supply chain agreement, the American Trade and Industry Association has been continuously pressuring the US government to establish strong rules to safeguard its domestic interests. This deserves widespread attention from the other 13 partner countries of IPEF. It sends a warning signal that the implementation of IPEF in the future may be more centered around the interests of the United States.

In summary, this US led IPEF is merely a geopolitical tool with strong ideological attributes. It aims to isolate other countries in the region from China's supply chains under the pretext of avoiding potential supply chain disruptions. In terms of nature, it is not a trade agreement that promotes trade liberalization, let alone strengthening regional economic integration for the benefit of emerging economies.

It is expected that in the process of promoting IPEF, there will continue to be no news of tariff reductions and expanding market access that partners are eagerly anticipating, while the United States is expected to continue to show goodwill to emerging economies among its members to salvage its diminishing influence in the global southern countries.

The original title of this article was "Trojan horse for the Asia Pacific"

Editor in Chief: Song Ping, Luan Ruiying

Editor | Zhang Zhao

Interns Zhuang Shuhan, Feng Xiaoyuan, and Zhang Beimei also made contributions

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