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Commentary: Biden’s Indo-Pacific power play stymied by lack of trade authority

YASU OTA, Nikkei columnist

 

TOKYO — The U.S. is seeking to reassert itself in the Indo-Pacific by forming a new economic framework as a bulwark against a rising China. But President Joe Biden currently lacks a powerful trade negotiating tool that can make this vision a reality.

 

His conundrum is evident in an Indo-Pacific strategy laid out by the White House in February. Despite spanning just 19 pages, it touts five lofty policy goals for the U.S. in the region: advancing a free and open Indo-Pacific, building connections, driving prosperity, bolstering security and building resilience to transnational threats such as climate change.

 

Though the strategy generally sticks to boilerplate statements, it includes some language likely to rankle China, including plans for “supporting Taiwan’s self-defense capabilities” and deepening “long-standing cooperation with” the Association of Southeast Asian Nations — a signal that Biden is committed to working with Asian partners to counter Beijing’s growing economic and political influence in the region.

 

But despite the grand strategy, the document was striking in its lack of substance — how Biden plans to engage with Asian countries and bring them into his economic framework. 

 

To prevent China from becoming the dominant force in the Indo-Pacific, the U.S. needs to form an economic alliance in the region by promising greater trade and investment. The goal is to convince Beijing that it will lose out a lot by not joining transparent trade regimes. 

 

The White House promises high labor and environmental standards, open cross-border data flows and secure supply chains as part of a new Indo-Pacific economic framework (IPEF) proposed by Biden at the East Asia Summit in October.

 

The U.S. envisions a regional pact that “could be even more robust in some ways than the traditional free trade agreement,” Commerce Secretary Gina Raimondo said during a November trip to Japan.

 

But what exactly the IPEF will entail remains unclear, and that’s because he does not have the Trade Promotion Authority that lets him negotiate trade pacts with other countries. 

 

The U.S. Constitution gives Congress sole authority to set tariffs and regulate international commerce. But Congress can temporarily grant the president power to do so by granting him the fast-track negotiating ability, known as the Trade Promotion Authority.

 

But this expired on July 1 last year. Without TPA, Biden can offer only a loose partnership among like-minded nations, rather than an expansive and legally binding trade agreement in the mold of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or the Regional Comprehensive Economic Partnership.

 

Indo-Pacific countries have little incentive to make an agreement that imposes strict standards on labor and decarbonization unless it also awards them greater access to the U.S. market.

Creating international rules is an admirable goal. But what’s more important is ensuring that countries actually follow those rules. The new trade framework needs to reduce tariffs as an incentive for members to abide by the rest of its terms.

 

Only a superpower can mold the global order. Part of what makes the U.S. so powerful is that many countries want to boost exports to its outsize market, but Biden now cannot promise this market access to advance trade negotiations.

 

President Xi Jinping can grant access to the Chinese economy with the flick of a pen. More countries likely will lean on Beijing over Washington if China opens to more exports.

 

Emerging economies are pragmatic, unswayed by ideals and strategy alone. China’s recent bid to join the CPTPP trade bloc has triggered concern in Japan and the U.S. But ASEAN members — located in the heart of the Indo-Pacific — swiftly embraced the idea.

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