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In Search of a US Trade Roadmap Beyond IPEF
Office of the U.S. Trade Representative
US in Asia

In Search of a US Trade Roadmap Beyond IPEF

To achieve U.S. economic security goals, Washington must be a rule-setter in areas of increasing importance.

By Shihoko Goto

The first in-person ministerial meeting since the Indo-Pacific Economic Framework was launched, a Los Angeles gathering in early September, was a success from Washington’s perspective. As Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai welcomed trade ministers from the 13 IPEF member countries, the meeting went beyond simply being a good photo op to visualize the framework’s union. It led to further progress on shaping IPEF by making clear which of the four key issues the member nations were prepared to negotiate on, and fleshed out details on how they could move forward on the four pillars that make up IPEF.

But as Washington looks to take the lead in developing an Asia-focused economic framework, the need for the United States to be clear about both its strategic economic as well as foreign policy vision for the Indo-Pacific is gaining greater urgency.

From a foreign policy perspective, IPEF’s progress to date has been a mixed bag. To be sure, the framework has succeeded in bringing together an unexpectedly large group of countries from Southeast Asia, including Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The fact that they are prepared to move forward together with Washington on all four pillars of IPEF – including trade, which includes digital trade as well as supply chain resilience – is a significant unto itself. After all, with market access to the United States now clearly off the table, one of the biggest expectations for IPEF is to offer a roadmap for a Washington-led economic coalition in the Indo-Pacific that would push back against Chinese coercion and allow for greater economic collaboration to withstand Chinese pressure.

One of the biggest challenges from within IPEF, though, is India. As the region’s biggest democracy with perhaps the greatest potential to supplant China as the next economic hub, expectations for New Delhi to be an integral part of U.S. efforts for multilateral cooperation have been particularly high in recent years. But for all the efforts to accommodate the Modi government, it has become increasingly clear that convincing India to align with the United States and its allies will be no easy feat despite the high expectations. While there had been hopes that IPEF would buck the trend, the fact that India did not sign on to the digital trade pillar of the framework has made clear that building an economic alliance with New Delhi will be no easy feat. By not signing onto the most forward-looking pillar of IPEF, India has elected not to be part of collaborative efforts to establish higher standard trade rules that will shape not only the future growth of the region, but the nature of economic competition with China.

To be sure, the Modi government’s position on IPEF should not have come as a surprise, given that India also chose not to join the Regional Comprehensive Economic Partnership, instead pulling out of the deal at the 11th hour. Coupled with the fact that India abstained from voting against Russia’s invasion of Ukraine at the United Nations, Washington may need to reassess the extent to which India can actually be a reliable partner in promoting economic stability and defending the rule of law. It is a particularly challenging question as India remains one of the four countries that make up the Quad, which continues to be the bedrock of multilateral cooperation in the Indo-Pacific.

When it comes to developing a vision for economic security moving forward, however, Washington will need to do more than simply advance IPEF. The two principal economic goals for the United States must be to build up resilience to external shocks and to ensure that it retains its competitive advantages. While the four main pillars of IPEF align to further those main interests, it is not enough simply to coordinate with a large number of countries at varying degrees of economic development to implement digital trade, supply chain resilience, energy sustainability, and anti-corruption measures.

In addition, it is imperative for Washington to establish an economic coalition that would bolster resilience to both external shocks and Chinese coercion by developing rules as well as structures to protect advanced technology, encourage innovation without fear of intellectual property theft, and establish an ecosystem that would be based on trust among countries that are willing to abide by established rules. The new trade rules must ensure interoperability of technology systems, which in turn will require harmonization of standards as well.

Global disruptions caused by COVID-19 and growing wariness of Chinese coercion are leading to an increased sense of urgency to develop new rules of economic engagement that would bring like-minded countries closer together. At the same time, there is greater risk of countries focusing more on taking unilateral action against such threats. India’s reluctance to join multilateral deals is certainly one such example, but the United States and other countries too are also adopting unilateral policies that could herald a race for more protectionist industrial policies to emerge.

As political considerations loom even larger ahead of the presidential elections, the U.S. trade agenda must focus not only on protecting its competitive edge, but also on being a leader in establishing rules that will further U.S.-based standards.

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The Authors

Shihoko Goto is the director for Geoeconomics and Indo-Pacific Enterprise and deputy director for the Asia Program at the Wilson Center.

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