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Japan shores up U.S. vision for IPEF economic bloc in Asia

  • May 24, 2022
  • , The Asahi Shimbun , 7:02 p.m.
  • English Press

Japan played a vital role in the launch of an economic bloc that was proposed by the United States and joined by Asia-Pacific countries as an alternative to a new China-led trade pact in the region.

 

But it is unclear whether the Indo-Pacific Economic Framework (IPEF) will evolve into a significant initiative, given that its objectives do not include reduction of tariffs, unlike traditional free-trade pacts.

 

“We cannot tell how much longer it will take to turn the new trade deal into a reality,” a Japanese government official said.

 

When U.S. President Joe Biden hailed the significance of the IPEF as a pact that will help member nations’ economies “grow faster and fairer” at the launch in Tokyo on May 23, Prime Minister Fumio Kishida reaffirmed his support.

 

“We genuinely welcome the rollout of the IPEF in Japan and strongly support it,” Kishida said.

 

Their meeting, joined by Indian Prime Minister Narendra Modi, was the culmination of Japan’s efforts over more than half a year during which Tokyo worked with Washington to help realize the U.S. initiative.

 

The IPEF consists of 13 members–Japan, the United States, India, South Korea, Australia, New Zealand, Singapore, Brunei, Malaysia, Vietnam, the Philippines, Thailand and Indonesia.

 

Its four goals are coordinating efforts to secure supply chains, promoting renewable energies, grappling with corruption and expanding digital trade.

 

Biden unveiled his vision for IPEF at the East Asia Summit in October 2021 following concerns raised about the absence of the United States in efforts to set trade rules in the Asia-Pacific region countering China’s dominance there.

 

Japan was notified about the U.S. plan last summer.

 

After Biden’s announcement, the United States began talks behind the scenes over laying the groundwork for the framework with Japan, Australia, New Zealand and Singapore.

 

A challenge for Japan was how to ensure consistency with its basic policy to call for the U.S. return to the Trans-Pacific Partnership (TPP) trade agreement. Although Washington negotiated the TPP under President Barack Obama, his successor, Donald Trump, withdrew the United States from it in 2017.

 

20220524-IPEF-G-L
The Asahi Shimbun

The 11-member TPP, including Japan, went into force in 2018 without the participation of the United States.

 

It was considered unlikely for Biden to return the United States to the TPP. The Biden administration cannot afford to ignore strong opposition at home to a traditional free-trade agreement with the midterm congressional elections fast approaching.

 

Japan decided to go along with the new U.S. initiative to counter China, which was pushing trade rules in its favor.

 

When U.S. Commerce Secretary Gina Raimondo visited Japan in November, Foreign Minister Yoshimasa Hayashi urged her to make the trade pact an inclusive one, warning that some ASEAN countries would be turned off if Washington were picky about its membership.

 

A senior official with the Ministry of Economy, Trade and Industry said the U.S. administration has relied on Japan to help advance the deal, given the large role Tokyo played in the rollout of the TPP.

 

“Japan has worked to turn demanding U.S. proposals into acceptable ones to other Asian countries,” the official said.

 

Negotiations for the start of the IPEF continued until the last minute before the summit between Kishida and Biden on May 23 in Tokyo.

 

On May 21 and May 22, trade minister Koichi Hagiuda was busy talking with his counterparts from Singapore, Thailand, Indonesia and Brunei and other officials separately over the IPEF in Bangkok where a trade ministers’ meeting of the Asia-Pacific Economic Cooperation (APEC) forum was held.

 

Despite the IPEF’s launch, it remains to be seen whether it will develop into a meaningful economic bloc due to a lack of provisions ensuring reducing tariffs to allow increased market access.

 

Apart from the TPP, the Regional Comprehensive Economic Partnership agreement (RCEP), a 15-member free trade pact, including Japan, China and South Korea, went into force on Jan. 1 in the Asia-Pacfic region. The elimination of tariffs was agreed on for more than 80 percent of commodities under the RCEP.

 

ASEAN countries that are members of the RCEP think highly of their relationship with China.

 

For such countries, joining the IPEF does not appear beneficial if they cannot gain expanded access to the U.S. market.

 

In addition, they are concerned that they may end up being subject to stricter standards under the deal.

 

(This article was written by Ryo Aibara, Takumi Wakai and Ken Sakakibara.)

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