The Role of Japan in Biden’s Indo-Pacific Economic Framework

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Executive Summary

The Biden government has suggested an “Indo-Pacific Economic Framework” platform for U.S. economic participation in Asia. A credible and long-term economic plan in Asia is essential for furthering the United States’ commercial, diplomatic, and geopolitical goals. The Biden administration has potential in the area, but it must be created in a way that fits several criteria. These requirements include offering demonstrable advantages to both Americans and the partners of Indo-Pacific, promoting enforceable regulations and hard pledges as well as broad concepts, being managed in a logical and coordinated manner, and achieving the administration’s openness and inclusivity objectives.

Introduction

The White House stated on October 27, 2021, outlining the president’s engagement at the biennial East Asia Summit. President Biden also revealed that the U.S. would collaborate with partners to establish an Indo-Pacific Economic Framework. The plan will identify shared goals for economic cooperation, digital economic growth and technology guidelines, supply chain perseverance, emission reductions, and renewable technology areas of mutual interest. The Biden administration was pursuing a regular pattern of new U.S. presidents convening their first round of yearly meetings in Asia and revealing the parameters of a U.S. economic policy for that crucial area by delivering this remark.

Such a plan is both necessary and essential. The United States has long had a vested interest in the Indo-Pacific area, which contains about half of the world’s population, economic activity, and commerce. There is intense competition over who will establish financial rules and standards. Other nations aggressively negotiate trade treaties to establish regional regulations and privileged access, while the U.S. mostly observes. Such a plan is both necessary and essential. They want the U.S. to remain an active, dependable, and long-term participant in regional economic matters. This paper addresses the challenges that led to the framework’s creation, the IPEF’s four pillars, and the participation of the other nations in the region.

Framework Contents

The White House stated on October 27 that the IPEF would contain six substantive concerns. Many of these themes are essential for U.S. involvement with regional players and would serve U.S. business interests. In particular are American consumers, workers, and small and big enterprises. However, the government has provided little clarity on what it expects to achieve in each sector or the framework. The Biden administration must outline specific goals and comprehensive policy measures in all six facets.

The framework should strive to achieve binding norms and firm pledges that extend beyond broad ideas and aspirations. It is critical to promote U.S. economic and geopolitical interests and gain the legislative and public support required for the IPEF’s success. Simultaneously, the Biden administration will have to offer demonstrable benefits to regional players, particularly less-developed ones, to secure U.S. requests for tighter norms and guidelines. The partners will see little reason to join a project when the benefits are considered mainly for the United States. The neighbouring nations will also need to be persuaded that the United States’ obligations under the framework are long-term and unlikely to be reversed by other administrations in the future.

Japan’s Role

In the future, no area will be more essential to world security and stability than the Indo-Pacific. It has the most geopolitical hotspots, growing powers, overlapping economic and political alliances, and war risks of any region. Northeast Asia remains the region’s security risk hotspot. Although Southeast Asia is a global and regional development engine, boundary conflicts in the South China Sea endanger regional stability. The growth of China’s Belt and Road Initiative raises the geopolitical relevance of the Indian Ocean and the Malacca Strait as resource extraction sea lanes. From a security standpoint, the rivalry between the U.S. and China has exacerbated these geopolitical and geo-economics issues.

Japanese Prime Minister Shinzo Abe first referenced the “Free and Open Indo-Pacific” approach in August 2016 in a keynote talk at the Tokyo International Conference on African Development in Nairobi, Kenya. FOIP is a diplomatic project that aims to promote the area as a global public good, with a unified ASEAN crucial to preserving the rules-based international system that maintains the region’s prosperity and stability. The Japanese administration has underlined that FOIP is a comprehensive structure for Asian region cooperation.

The Known Benefits

The U.S. and its IPEF allies will pursue high-standard measures that benefit workers. It will enable free and fair trade, promote sustainable economic growth, and contribute substantially to environmental preservation. The benefits include:

Trade Facilitation

Improving and streamlining border export and import processes is crucial for fostering job creation and growth, especially for small and medium-sized businesses. SMEs represent 60-70 per cent of total employment in the Indo-Pacific market but fewer than thirty-five per cent of direct exports, indicating that there is plenty of possibility for expansion. Furthermore, ever since TFA’s conclusion, like smart contracts and blockchain, advancements in digital technology will cut border tensions even further. Helping nations achieve current TFA obligations and take on new ones should be a significant component of the Biden administration’s regional supply chain strategy.

Appropriate SME assistance pledges might include encouraging more SME engagement in Indo-Pacific markets. They might do so by giving institutional capacity and technical help to meet TFA obligations. There is also a need to expand broadband access. Players must encourage the exchange of knowledge and best practices on SME digitalization and access to financing, as well as trade finance, delegations, and training programs.

Digital Economy and Technology Standards

The Biden administration is correct to mark the digital economy as a point of focus of the planned IPEF because governments, organizations, and consumers rely on the internet and digital technologies. Most Americans say the internet was crucial to them throughout the outbreak. American manufacturers of industrial machinery, autos, aeroplanes, and other industries depend on digital technology to remain internationally competitive. The number of connected devices in the Indo-Pacific area is predicted to reach 3.1 billion in a year. However, there are few globally agreed-upon global norms for securing and expanding digital economy prospects while controlling hazards ranging from cyber-attacks to unlawful use of private information.

Even after these most recent accords were reached, the digital economy has grown further. New laws are required to address concerns like increased access of patients to high-quality healthcare, more excellent online consumer privacy laws, and strengthened digital economy benchmarks. There is now a compelling case for combining the ideas and regulations of the multiple Indo-Pacific digital agreements into a more significant regional agreement and introducing new rules to address growing concerns.

Resilience in Supply Chain

Partners in the IPEF should pledge to mapping, openness, and information sharing on critical supply chains, beginning with a detailed description of what is vital. They should start by taking a similar strategy to the one agreed upon at the first US-EU Trade and Technology Plenary session, culminating in the bilateral establishment of information collection and sharing portals.

They should create uniform criteria for sustainable and transparent supply chains. It would entail defining consensus rules on supply chain regulations and preventing the importation of items made using forced labor. Countries should strive to give technical help in raising labor standards and safeguarding employees while also working in tandem with current International Labour Organization projects in the region.

Clean Energy and De-carbonization

The Biden administration has prioritized climate policy measures and the development of de-carbonization. It is logical for the administration also to prioritize this in the IPEF. It includes efforts to strengthen the collaboration among framework partners to create innovative technologies, investment plans, and roadmaps that promote environmental sustainability.

These measures should aim for net-zero emissions and include the environment as a fundamental problem in other framework categories. In this sense, the United States should take various beneficial initiatives. Participants in the Framework must commit to encouraging increasing investments in technologies with environmental cleanup capacities and mitigating climate change advantages. They should also collaborate to increase ecologically beneficial investments while reducing negative ones.

Impact of the on other regions

The IPEF’s final influence on the Asia-Pacific industry and cooperation will be determined by China’s practical policy decisions instead of the United States’ growth strategy, which is laden with political considerations. The IPEF has built four pillars of commerce, supply chain, renewable energy infrastructure, taxation, and anti-corruption. However, its essence is essentially a hollow market activity.

The U.S. market openness vow is exactly what ASEAN countries are concerned about. Unless the U.S. administration tackles domestic anti-globalization feelings and integrates IPEF into current free trade agreements, it will struggle to establish long-term engagement with ASEAN members. As long as the existing industrial linkages between ASEAN and China are not disrupted, the vibrant Asia-Pacific distribution network and value chain cannot collapse, and the method of an economic partnership in the Asian-Pacific countries will not stall.

Issues leading to IPEF

IPEF is a US-led project that intends to deepen economic partnerships among participating nations to improve the Indo-Pacific region’s sustainability, inclusivity, economic growth, and performance. The agreement is designed to offset China’s growing influence in Southeast Asian nations. The IPEF targets topics important to prospective partners, such as infrastructure, de-carbonization, and the digital economy. The United States has little influence in persuading allies to join the final framework and make substantive and enforceable commitments. Given the present political constraints in U.S. trade rules, IPEF adopts an innovative strategy in seeking to engage major Asian allies on economic matters.

President Biden’s plan

The government of Joe Biden developed the Indo-Pacific Economic Framework, which is characterized as an endeavor to strengthen U.S. economic supremacy in the Indo-Pacific area. It is an attempt to engage an area that China increasingly influences. The proposal is not a standard trade deal because it covers commerce, supply chain, renewable energy promotion, and anti-corruption measures.

IPEF and the idea of the 4 “pillars.”

The IPEF talks are divided into four pillars. Gina Raimondo, the Commerce Secretary, will coordinate discussions on three of them: climate, supply chains, and corruption and tax. At the same time, United States Trade Representative Katherine Tai will oversee the trade pillar. Although the Biden government has not yet provided all the specifics, the absence of attention on tariff cuts and other trade facilitation problems so far implies that the IPEF may be a wasted trade opportunity.

The U.S. is an Indo-Pacific economic force, and increasing American economic dominance in the area benefits the American workforce, businesses, and the continent’s communities. IPEF will allow the United States and its allies to agree on basic principles allowing the American workforce, small companies, and ranchers to participate in the Indo-Pacific. Combating inflation is a critical economic objective. This approach will assist cut costs that make the supply chain more robust over time and protect against expensive interruptions contributing to increased consumer prices. The four pillars are:

Connected Economy

The pillar on trade will address three broad issues: labor, digital commerce, and the environment. The United States plans will more likely follow the United States-Mexico-Canada Agreement that Tai has described as a current concept for trade accords. Numerous U.S. policy objectives are included in the USMCA’s digital commerce chapter, such as a ban on customs charges on digital products, limitations on data localization, and prohibiting policies that hinder cross-border data transfer.

Resilient Economy

The pillar will partly handle supply-chain concerns by developing standards allowing businesses to respond to disturbances more swiftly. Whereas an early alert system for supply-chain shortages might be beneficial, decisions to broaden supply chains should be left to the enterprises engaged in product sourcing and production.

Clean Economy

Many climate-related concerns are addressed under this pillar, including carbon removal, renewable energy, energy efficiency, de-carbonization, standards, carbon removal, and reduction of methane emissions. There is the possibility of overlap between these debates and the commerce pillar’s environmental considerations.

Fair Economy

The pillar will concentrate on tax and anti-corruption measures. It is anticipated that it will incorporate current international agreements on these problems, to which not all IPEF countries subscribe. Combating domestic and international corruption is a critical national security priority, and the pillar will aid those efforts. It is uncertain if the IPEF pillars will be discussed individually or as a group. Countries generally make sacrifices in one area in return for benefits in another throughout a trade discussion, allowing for comprehensive compromises. The concern of whether the IPEF’s content will be enforceable by law and subject to resolving disputes remains unanswered.

Other countries

The United States will collaborate with twelve initial countries, including partners of the Quad: Japan, Australia, India, and Japan. The Philippines, Singapore, Thailand, Vietnam, Malaysia, Brunei, and Indonesiaare other countries. It also captures New Zealand and South Korea. The nations will participate in consultations throughout the Indo-Pacific region to commence negotiations on four key pillars.

The Minister expressed optimism that the group of 14 nations will set the norms for future trade amongst countries committed to fair play, openness, and rules-based commerce. The U.S. and its IPEF allies will pursue high-standard measures that benefit workers, enable free and fair trade, promote sustainable and equitable economic growth, and contribute substantially to environmental preservation.

Conclusion

The IPEF represents a new beginning for meaningful economic engagement with significant U.S. collaborators in a critical region. It can lessen its partners’ security flaws to Chinese economic coercion and contribute to long-term and equitable development in developing markets in Asia. However, the Biden administration must be honest regarding what the IPEF represents. It will neither change the economic geography of Asia nor become the favored platform for continental rule-making.

Bibliography

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Medcalf, Rory. “Indo-Pacific Empire: China, America and the contest for the world’s pivotal region.” Manchester University Press, Manchester, 2021.

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