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Merits of U.S.-led IPEF unclear

By Sakakibara Ken (in Washington), Wakai Takumi, and Imaizumi Susumu

 

It looks like the U.S.-led Indo-Pacific Economic Framework (IPEF) will get underway. As China gains in influence, Japan welcomes the involvement of the United States in rule making in the region, given that its ally has withdrawn from the Trans-Pacific Partnership (TPP). Some, however, question the IPEF’s compatibility with the TPP and the effectiveness of having two systems.

 

“There is more than one way for the United States to have influence in the Indo-Pacific,” said U.S. Ambassador to Japan Rahm Emanuel at an online event held by a U.S. think tank on May 9, thus emphasizing the importance of the IPEF as an alternative framework to the TPP.

 

Former U.S. President Donald Trump, who gained [domestic] support with his “America First” principle, withdrew his nation from the TPP in 2017. President Joe Biden, who served as vice president in the Obama administration which promoted the TPP, has essentially abandoned the idea of returning the U.S. to the TPP out of consideration for American public opinion, which opposes free trade.

 

Taking advantage of the “absence of the United States,” China applied for TPP membership in September 2021. The IPEF was crafted by the Biden administration to counter China, which is increasing its military and economic influence over its neighbors.

 

The U.S. aims to involve Japan, South Korea, and the Association of Southeast Asian Nations (ASEAN) [in the IPEF], but there are many issues. Since the IPEF does not go as far as opening markets through tariff reduction, the IPEF offers few benefits to countries that hope to expand their business in the American market. The United States says it will enhance cooperation by creating rules in the digital field and building supply chains for semiconductors, but the specifics have not been announced.

 

“I welcome the involvement of the United States in the Indo-Pacific region,” said Minister of Economy, Trade and Industry Hagiuda Koichi at a press conference held after a cabinet meeting on May 10. At the same time, however, he said the merits of membership are “unclear” and added that “the United States should make efforts to deepen the understanding (of [prospective IPEF] member countries) regarding how the IPEF differs from the TPP.”

 

Japan is cooperating with the U.S. initiative because of the rising presence of China. “Something has to be done to prevent China from taking everything,” said a government official. “ASEAN wants to get along with both China and the United States, and they need to be brought around to the U.S. side, but the specifics still have not been released.”

 

Japan plans to continue to seek the return of the United States to the TPP. “We hope the new framework will lead to the U.S.’s return to the TPP in the future,” commented a senior METI official.

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