Indo-Pacific Economic Deal Incomplete

The fourteen countries of Indo-Pacific Economic Framework (IPEF) agreed on the deal over anti-corruption and clean energy at the leaders meeting in San Francisco on Thursday. Adding to already agreed measures on supply chains, the member countries were successful in sharing the norms in three “pillars” of IPEF out of four. However, the most crucial point on the framework, trade, was left behind without any hope for reaching a deal. Japan has not exercised a leadership to wrap up the negotiation.

IPEF is a United States-led international economic conference established last year, which aimed to build economic order countering China’s advance in the region. They set four subjects to discuss: fair and resilient trade, supply chains, fair economy, and clean economy. The member countries have agreed on supply chains in May, which aimed to increase the resilience, sustainability, transparency or diversification of their supply chains.

 

On the issue of clean anergy, the parties agreed on working together “on developing and deploying clean technologies that the governments can use to lower greenhouse gas emissions and transitions to clean energy.” On fair economy, they agreed on “preventing and combating corruption and related financial crimes, improving tax administration, and increasing cooperation, information sharing, and capacity building on these issues.”

 

IPEF hopes to include the countries of “global south” into the framework. Japan, with United States and Australia, will establish a fund amounting $30 million for decarbonization in the emerging countries. “It is necessary to have various courses to go in consideration of the conditions in each country,” said Minister of Economy, Trade and Industry Yasutoshi Nishimura in the meeting.

 

The fundamental motivation for U.S. to create IPEF was to build an economic cooperative framework alternative to Trans-Pacific Partnership, from which U.S. withdrew with a decision of former President Donald Trump. It is thus fair to say that the agreement on trade has crucial significance in IPEF.

 

However, IPEF members failed to reach an agreement in San Francisco and would resume the negotiation next year. According to a report of Nikkei Shimbun, some Southeast Asian countries opposed to being posed strict standards on employments or environments, while U.S. required high standards. It is a political issue in U.S., as seen in an argument of Democratic Senator Sherrod Brown urging President Joe Biden to abandon the trade deal rather than lower its standards.

 

Prime Minister Fumio Kishida raises economy on the top of his policies., calling “It’s economy, economy and economy.” In the meeting with Chinese President Xi Jinping in San Francisco, Kishida agreed on having high-level economic dialogue between the two countries. Xi referred to the close bilateral relationship, saying “The economic interest and supply chains of both countries are deeply connected and enclosure of specific technology or the decoupling will never be anyone’s interest.” Japan is looking to the both sides of the Pacific Ocean.