How To Handle the US Push for the Indo-Pacific Economic Framework

There has been a lot of discussion about the Indo-Pacific Economic Framework for Prosperity that President Joe Biden announced in Tokyo this May. Some say that without China’s participation, the IPEF cannot succeed; others say that we should try to “beat the market” by investing in the IPEF at just the right time. Before engaging in such discussions, we should first get to the bottom of what exactly is this IPEF for which the U.S. advocates so vehemently.

First, the IPEF is merely an executive agreement, unlike traditional trade deals which are congressional-executive agreements, such as the United States-Mexico-Canada Agreement. Because the IPEF is an executive agreement, it does not require congressional approval. The IPEF is a half-baked arrangement that will leave U.S. allies up a creek without a paddle. As everyone knows, anything involving U.S. domestic labor laws, environmental protection, market access, tariffs and tax adjustments, etc., must be approved by Congress to become law. That is to say, the U.S. will not make an investment or commitment in these major areas; hence, the IPEF does not require congressional deliberation and approval. This being the case, it is clear Washington has never given sincere thought to bringing tangible benefits to other IPEF members, but rather is preparing to pull off a con job.

Second, the U.S. is not telling it like it is. The artificial construct, IPEF, is a conflation. Does this “Indo-Pacific” advocated by the U.S. include Pacific Rim countries or countries bordering the Indian Ocean? Evidently not. Regarding the Americas, the U.S. is the only IPEF member. Canada is not included, nor are the Pacific-bordering countries of Central and South America. As for the countries along the Indian Ocean, only India is included. The rest of South Asia, the Middle East and East Africa are excluded.

Such an “Indo-Pacific” is entirely wishful thinking by the U.S., rather than the actual Indo-Pacific region. The U.S. often muddies the waters linguistically. First, it continues to refer to the rest of the Americas as its own “backyard”; thus, it does not allow the outside world to get involved in the region. Second, in the Pacific region, the U.S. wants to choose who is designated as its “friend” in forming an economic and trade alliance against China. India has been nominated to be this friend.

There are two things the Indo-Pacific Economic Framework certainly is not. It is not “Indo” and it is not “Pacific.” The IPEF, therefore, is just a few fragments the U.S has rigged together.

Third, there is the mobilization plan. The U.S. is ready to use administrative, diplomatic, security, military, intelligence and other resources to scale up efforts to coerce and entice companies from the U.S., Taiwan and developed countries to pull out of mainland China. These companies will either be moved back to the U.S. or moved to other IPEF countries, especially the Association of Southeast Asian Nations countries and India.

Fourth, this is a rush job. The U.S. is impulsively promoting the IPEF out of a seemingly overeager desire for quick results. The main reason is this year’s U.S. midterm elections. Should the Democratic Party lose, the Biden administration may be reduced to being a lame duck government. Therefore, Washington is seeking a shortcut and has found one in bypassing Congress. Washington is unwilling to subject the U.S. to “who moved my cheese” anxiety but is happy to move China’s cheese, implementing a mobilization plan aimed at destroying China’s central role in the global supply chain. This would further expand U.S. influence in the Indo-Pacific region.

Based on the above understanding, we might take the following countermeasures. First, introduce new policies to attract foreign investment and enterprises. We must emphasize the importance of the Chinese market. It is mutually beneficial for foreign companies to set up and operate factories in China. Second, emphasize the importance of the Asia-Pacific region. Do not permit the “Indo-Pacific” to call the tune. Third, vigorously promote cooperation within the framework of the Asia-Pacific Economic Cooperation forum, the Regional Comprehensive Economic Partnership agreement and the ASEAN–China Free Trade Area. Fourth, adhere to the idea that one should “know thyself and know thy enemy.” Develop a more nuanced understanding of Central and South America, the Pacific Rim and the Indian Ocean countries in order to further develop relations. Fifth, vigorously develop cooperative relations with Pacific Island countries, focusing on jointly addressing climate change. Sixth, lead the way in negotiations with our neighboring countries, and discuss cooperation in business and industrial relocation and human resources, and a joint response to climate change. Seventh, continue to wield the banner of peaceful development and actively defend peace in the Asia-Pacific region. Eighth, consider working with the countries along the Indian Ocean on the premise of building on the current Asia-Pacific framework. By covering both the Pacific and Indian Ocean countries, we could form a real Asia-Indo-Pacific framework that is mutually beneficial for economic development and trade.

The author is vice president of the Center for China and Globalization think tank and Chair Professor of Soochow University.