The three major hard wounds are destined to prevent the "Indo Pacific Economic Framework" from going far. China | the United States | the hard wounds

Recently, the 14 member countries of the Indo Pacific Economic Framework held their second ministerial meeting in Detroit, USA, and reached an agreement to make supply chains "more flexible and secure". The US claimed to "reduce dependence on China" through this.

This is the first agreement reached one year after the launch of IPEF. Analysis suggests that given the close economic and trade ties between China and regional countries, the impact of the IPEF agreement is still uncertain. The Nihon Keizai Shimbun said that due to many differences in the interest demands of the parties, the next relevant negotiations may reach an impasse.

Experts point out that IPEF, under the guise of cooperation, is trying to establish US led trade rules, restructure the industrial chain system, and decouple regional countries from the Chinese economy. IPEF has multiple hard wounds, destined to be unstable and unable to go far.

Congenital deficiency——

Strong geopolitical color, fundamentally different from free trade agreements

Recently, when discussing the IPEF, US Commerce Secretary Raymond pointed out that the US hopes to restore its economic leadership position in the region, "providing an alternative to China for Indian Ocean Pacific countries," once again exposing the exclusivity, isolation, and adversarial characteristics of the IPEF.

In October 2021, US President Biden proposed the concept of IPEF while attending the East Asian Summit via video. In May 2022, during Biden's visit to Japan, he announced the official launch of IPEF.

"IPEF is a product of temporary patchwork by the United States." Tu Xinquan, Dean and Professor of the China World Trade Organization Research Institute at the University of International Business and Economics, pointed out in an interview with our reporter that during the Obama administration, the United States led the promotion of the "Trans Pacific Partnership Agreement", and after the Trump administration took office, it withdrew from the TPP; The Biden administration had considered rejoining the Comprehensive and Progressive Trans Pacific Partnership Agreement, but was constrained by protectionist political forces within the United States. For a long time, using trade as a tool to consolidate leadership and build alliances has been a common practice in the United States. The Biden administration also attempted to launch a vision in the economic and trade field, highlighting the United States' presence and influence in the Asia Pacific region, which led to the emergence of the IPEF. It is not a product of careful consideration by the Biden administration, nor can it be considered a "strategic" concept. It can only be considered a "hasty decision", lacking substantive content and having inherent shortcomings.

Zhang Zhongyuan, Director of the International Economic Relations Research Office of the Asia Pacific and Global Strategy Research Institute of the Chinese Academy of Social Sciences, analyzed to our reporter that in the Asia Pacific region, recent US governments have never stopped their containment and checks and balances against China. After the Biden administration took office, it inherited and deepened the concept of "Indo Pacific strategy" proposed by the Trump administration. This strategy invests a significant amount of resources in the security sector, but there are shortcomings in the economic sector. The Biden administration is attempting to use IPEF to compensate for its shortcomings and serve the Indo Pacific strategy.

British international relations analyst Tom Foddy once pointed out that IPEF has no actual content, is just a slogan, and will ultimately be baseless. Because it ignores geographical and economic realities, it is entirely based on ideological and wishful thinking fantasies.

According to The New York Times, American business groups also hold a reserved attitude towards IPEF. In a recent open letter to the US government, more than 30 American business groups, including the American Chamber of Commerce and the National Manufacturers Association, stated that the IPEF negotiations have overlooked traditional trade priorities that benefit American businesses. The agreement attempts to portray China as a "disruptor" of the global supply chain, rather than a party that can bring substantial benefits to businesses in the United States and other countries, which is clearly not in line with the facts.

"IPEF is a so-called 'economic arrangement' that excludes China. The United States is attempting to build a value alliance against China, encouraging Asia Pacific countries to 'decouple' from China, in order to lead the Asia Pacific economy, maintain their own hegemony, and contain China." Zhang Zhongyuan believes that IPEF, under the banner of 'economic cooperation,' is actually engaging in an 'economic cold war,' which has a strong geopolitical color and seriously deviates from the concept and spirit of Asia Pacific cooperation. Some Asia Pacific countries are cautious or even skeptical of the framework, unwilling to take sides in the geopolitical confrontation provoked by the United States.

Tu Xinquan pointed out that the biggest difference between IPEF and free trade agreements is the lack of relevant content such as trade liberalization and market access negotiations. For countries other than the United States, it is currently unclear what value IPEF has and what practical economic benefits it can bring. Therefore, the vitality and appeal of IPEF are greatly reduced.

Priority for the United States——

It is difficult for other members to truly benefit from reflecting the interests and values of the United States

According to the vision of the United States, IPEF includes four pillars: firstly, to establish so-called fair, high standard, and binding rules in areas such as digital trade, labor, and environment; The second is to improve the resilience and security of important industrial supply chains such as chips, high-capacity batteries, medical products, and key minerals; Thirdly, promote the construction of high standard infrastructure, decarbonization, and the development of green technologies; The fourth is taxation and anti-corruption.

"On the surface, IPEF appears to have a wide range of content and various topics, but its actual achievements are few." Zhang Zhongyuan pointed out that on the one hand, the United States' commitment is "lip service but not practical". At the beginning of the launch of IPEF, other member countries, especially Asia Pacific countries, were more concerned about whether the United States could provide market access, reduce tariffs, and trade barriers. But the framework clearly cannot meet the needs of these countries. On issues such as climate change and infrastructure, there is intense partisan struggle and significant disagreement within the United States, and it is unlikely that specific measures will be taken. On the other hand, due to the significant gap in economic development levels among member countries, the so-called "fairness" and "high standards" advocated by the United States are difficult to implement. For example, in the areas of digital economy, labor, clean energy, etc., IPEF has imposed many constraints on other countries, forcing developing countries to "hard align" with US economic policies, which clearly exceeds the domestic policy standards and actual capacity of some countries.

The Nihon Keizai Shimbun said that although IPEF has made some progress on strengthening the supply chain, in other areas, the positions of the United States and Southeast Asian countries are very different. Compared to the trade liberalization issues that other members are concerned about, the United States places more emphasis on its so-called "labor rights and environmental" standards, which contradicts the demands of Southeast Asian countries to pursue practical interests.

In September 2022, during the first ministerial meeting of the IPEF, India announced its temporary withdrawal from the IPEF trade negotiations on the grounds of "currently not seeing benefits" and "potential discrimination against developing countries".

"The IPEF is completely led by the United States, reflecting US interests and is a product of 'US priority', while the interests and demands of other countries are ignored. While the United States puts forward strict requirements, it does not promise to reduce tariffs or expand market access as a return, resulting in insufficient participation motivation for some countries." Zhang Zhongyuan said that for ASEAN, the IPEF also brings a challenge: due to Myanmar, Laos, and Cambodia not participating in the framework, the consistency principle that ASEAN has long followed may be undermined.

CNBC in the United States pointed out that the IPEF appears to provide a highly flexible "soft legal" framework, but only allows member states to reach consensus on a few rules and individual areas. The true purpose of this framework is to enhance the influence of the United States in the region, in order to provide a legitimate excuse for its intervention measures.

"The four pillars of IPEF are filled with words that the United States' likes'." Tu Xinquan pointed out that, for example, "fair trade" is a concept that the United States frequently hypes up, and the United States has always narrow-minded that the US China economic and trade relationship is "unequal"; The essence of "supply chain elasticity" is to establish a supply chain that breaks away from China's industrial chain, but for China's largest trading partner ASEAN, decoupling from China is impossible. The United States attempts to dominate the Asia Pacific region's economy and trade based on its own standards, but cannot bring practical benefits to other countries.

Subsequent weakness——

Due to political constraints within the United States, there is significant uncertainty in the future

In recent years, the United States has been a disruptor of Asia Pacific economic cooperation. From withdrawing from the TPP, to not participating in the CPTPP and the Regional Comprehensive Economic Partnership Agreement, and then proposing an IPEF with geopolitical implications, the United States adheres to the principle of "use when applicable, discard when not applicable", completely considering its own interests. Can the United States fulfill its commitments related to IPEF? The outside world is not optimistic.

It is reported that the current US Congress has not granted Biden the power to negotiate and sign new trade agreements with other trading partners, which means that the IPEF can only provide a loose partnership and cannot reach legally binding trade agreements. At the same time, the Biden administration has made it clear that it will not submit the negotiation results to Congress for approval in order to avoid the framework being rejected during congressional debates, which means that the terms of the agreement reached by the IPEF have no legal effect.

Agence France Presse pointed out that unlike traditional trade agreements, the IPEF does not have plans to negotiate tariffs and relax market access - as these are increasingly unpopular among American voters and difficult to pass in the US Congress.

Tu Xinquan pointed out that in the context of intense partisan struggles and a lack of interest from protectionist forces in trade liberalization in the United States, the Biden administration will face certain obstacles if it seeks approval from Congress for the IPEF. In addition, the content of IPEF mainly reflects the ideas and concepts of the Democratic Party, such as clean energy, infrastructure construction, and other issues. If the Republican government takes office, the prospects of IPEF will face great uncertainty. In terms of budget, the Republican controlled House of Representatives often opposes the spending plans of the Democratic government, and investment or aid plans involving IPEF are likely to be blocked in Congress.

In May 2022, in order to promote IPEF, the US government announced that it would invest 150 million US dollars in ASEAN to strengthen clean energy construction, maritime security and fight against the COVID-19 in Southeast Asia. Once the amount was announced, it was ridiculed by public opinion. After all, almost at the same time, the United States provided up to $40 billion in aid to Ukraine. According to a Reuters report, compared to the deep relationship between China and Southeast Asia, the investment commitments of the United States appear pale and powerless.

Zhang Zhongyuan also believes that the implementation prospects of IPEF have great randomness and uncertainty——

Firstly, the framework was promoted by the Biden administration through the signing of executive orders, without approval from Congress, lacking legal safeguards and constraints.

Secondly, although the IPEF does not go through legislative procedures in the United States, related negotiations will still be constrained by domestic political games. In addition, there are differences between the Democratic and Republican parties on some issues, and business people also question the actual effectiveness of the framework. It is still questionable whether the IPEF can come up with practical measures to promote investment.

Thirdly, the framework is completely led by the United States, and the US government may modify relevant issues and content at any time according to its own interests. With the change of government in the United States, whether the IPEF can be implemented is also a question mark. The Trump administration's withdrawal from TPP negotiations is a precedent. In the future, IPEF is likely to become a so-called "multilateral cooperation" mechanism with only symbolic significance.

Fourthly, the fiscal expenditure of the United States is limited by various factors. After the comprehensive escalation of the Ukrainian crisis, with the increase of geopolitical risks, American companies lack the motivation to participate in infrastructure investment. The above factors will all affect the effectiveness of IPEF at the practical level.