Biden puts trade back on radar with Indo-Pacific talks

President Biden is putting Asian economies at the center of a new economic deal, at a time when globalization has become anathema and geopolitical tensions are reshaping the world order.

Why is this important: Regional heavyweights like India, Australia, Japan and South Korea are mainstays of the Indo-Pacific Economic Framework (IPEF), which (at least for now) has clearly excluded China.

  • The administration is seeking new regional alliances and strengthening old ones, but those ambitions are facing a surge.

By the numbers: Bilateral trade between the United States and the region totaled $1.75 trillion in 2020, according to White House estimates, with U.S. foreign direct investment just $1 trillion.

  • The other side: According to the Center for International Strategic Studies (CSIS), some voters are concerned about the “optics” of not including Beijing.
  • Worse still, “partners in the region remain puzzled as to what IPEF is and what it seeks to do,” CSIS wrote in a recent analysis.

The big picture: Bilateral relations between the United States and China are strained for a number of reasons, with grievances over trade and technology topping the list.

  • The new framework is designed in part to cultivate new allies and counterbalance China, but it is already under fire from both parties for not being clear or ambitious enough.

What they say: Trade is no longer just about the flow of goods and services. In a global economy increasingly reliant on advanced technology, Biden has an opportunity to craft rules “based on safety, security and transparency,” says IBM Vice Chairman Gary Cohn.

  • In an op-ed piece shared with Axios, the former Goldman Sachs banker turned White House economist called the framework a “good start” that needs more muscle — and a laser focus on security. data and intellectual property.
  • “Without the certainty of clear legal obligations, countries will be free to ignore its elements on a whim when different governing constituencies come to power,” he added.

Yes, but: Some Asian economies fear the effort will involve only “the usual suspects” while excluding other key countries.

  • “These partners believe that the success of IPEF depends on the extent to which the United States can attract developing countries from Southeast Asia, South Asia, and the Pacific,” CSIS said.

The bottom line: Asia is strategically critical, America needs all the friends it can get in the region, and many countries are engaged in principle. But a flawed deployment can ruin IPEF’s chances before it even begins.

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