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  • Writer's pictureThe San Juan Daily Star

Biden to begin new Asian-Pacific economic bloc with a dozen allies

President Joe Biden is greeted by Rahm Emanuel, the American ambassador to Japan, at the Yokota Air Base in Tokyo on Sunday, May 22, 2022.

By Peter Baker and Zolan Kanno-Youngs

U.S. President Joe Biden has enlisted a dozen Asian-Pacific nations to join a new loosely defined economic bloc meant to counter China’s dominance and reassert American influence in the region five years after his predecessor withdrew the United States from a sweeping trade accord that it had negotiated itself.

The alliance will bring the United States together with such regional powerhouses as Japan, South Korea and India to establish new rules of commerce in the fastest growing part of the world and offer an alternative to Beijing’s leadership. But wary of liberal opposition at home, Biden’s new partnership will avoid the market access provisions of traditional trade deals, raising questions about how meaningful it will be.

Biden on Monday was to formally inaugurate what he has dubbed the Indo-Pacific Economic Framework for Prosperity in Tokyo, where he will be joined by several leaders of the new network in person or virtually. It represents the centerpiece not only for his first trip as president to Asia but also for his broader strategy in the region at a time when China has increasingly filled the void left when President Donald Trump pulled the United States out of the Trans-Pacific Partnership in 2017.

“It is by any account the most significant international economic engagement that the United States has ever had in this region,” Commerce Secretary Gina Raimondo, who will lead some of the negotiations that will emerge from the agreement, told reporters Sunday. “And the launch of it tomorrow here in Tokyo marks an important turning point in restoring U.S. economic leadership in the region and presenting Indo-Pacific countries an alternative to China’s approach to these critical issues.”

In addition to the United States, India, Japan and South Korea, the 13 members of the framework will include Australia, Brunei, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Together, the participating nations represent about 40% of the world economy and any specific agreements that emerge from the grouping could go a long way toward setting the parameters for interactions even beyond its membership.

Amid uncertainty and skepticism in the region about what the new framework would actually mean, American officials scrambled in recent weeks to line up enough major countries to commit in hopes of making a big impression with a splashy kickoff. Privately, they expressed satisfaction that they had assembled an expansive opening roster, but some analysts wondered whether assurances or trade-offs proffered to entice participation would diminish the scope of the new bloc.

The new Biden initiative comes less than five months after the China-led Regional Comprehensive Economic Partnership officially went into force, linking 15 Asian-Pacific economies in the world’s largest trade bloc. Most of the countries Biden signed up for his framework already belong to the bloc with China.

For the United States, the new framework effectively replaces the more expansive Trans-Pacific Partnership as the main vehicle to shape the flow of goods and services in the region. President Barack Obama, with Biden as his vice president, negotiated the TPP, only to have Trump abandon it on his first full weekday in office, leaving the bloc to proceed without its largest member.

But rather than simply rejoin the partnership, as Japan, Singapore and other countries wanted him to do, Biden essentially abandoned it, too, in deference to opposition within his own party. To assuage his liberal base, the new framework will not reduce tariffs or open markets in the same way that TPP envisioned.

Business executives say the China-led bloc has now done more to define trade in the region, even though it asks little of its members and focuses mainly on limiting red tape. The American vision for the region, in contrast, is ambitious, aiming to raise labor and environmental standards. But without offering more access to its market, analysts say, the United States does not have a lot of carrots to encourage those changes.

“It is going to be difficult to convince Asian governments to change rules in ways that may be disruptive to their political economies without the promise of increased access to the American market,” said Aaron Connelly, a research fellow at the International Institute for Strategic Studies in Singapore.

The framework will focus on four main goals: harmonizing efforts to secure supply chains, expanding clean energy, fighting corruption and paving the way for greater digital trade. With Monday’s kickoff, negotiations in each of these areas among the 13 members will now ensue, led by Raimondo or Katherine Tai, the U.S. trade representative.

Tai said labor and environmental groups would “have premier seats at the table” but demurred on whether agreements emerging from the new framework would be submitted to Congress for approval. “Let’s see where these negotiations take us,” she said.

But another senior administration official, speaking on condition of anonymity to discuss internal deliberations, said separately that the White House expected most deals to be fashioned as executive agreements that would not go to Congress.

The membership in the new framework overlaps the TPP membership but not precisely. Seven countries will belong to both, but several members of TPP did not sign onto the framework. For two of them, Canada and Mexico, it could be superfluous since they have their own North American Free Trade Agreement with the United States, updated by Trump.

Raimondo said the new framework goes above and beyond a “same-old, same-old” free-trade agreement, but partners in Asia still want a same-old trade agreement. Countries such as Singapore have tried to persuade the United States to use the framework as a steppingstone to rejoin the TPP, a nonstarter for the Biden team.

Even the more limited Biden framework will require deft management of Democratic constituencies. Labor groups in the United States are already skeptical of any broad new commitments, including digital provisions that could lead to more outsourcing in fields such as medicine and other service industries.

Joining Biden in Tokyo for the announcement Monday will be Japanese Prime Minister Fumio Kishida, Indian Prime Minister Narendra Modi and Anthony Albanese, just elected Saturday as prime minister of Australia. Several other leaders will join by video and a few will have ministers represent them.

The kickoff will come during a busy two days for Biden, who will meet separately with each of those three leaders in addition to a summit gathering of all four of them representing the Quad, a security-oriented bloc formed years ago out of growing anxiety about China’s military footprint in Asia and parts of the Indian Ocean.

Economic issues, however, have clearly been front and center on Biden’s mind throughout his trip to South Korea and Japan. With prices rising, stock markets falling and fears of recession spreading at home, Biden is eager to demonstrate he is focused on stabilizing the economy, especially with midterm elections five months away.

Before flying to Tokyo on Sunday, Biden joined Euisun Chung, executive chair of Hyundai Motor Group, to celebrate the company’s plan to build a new $5.5 billion electric vehicle and battery manufacturing plant in Savannah, Georgia. Biden said the factory would result in 8,000 jobs, continuing the administration’s strategy of pointing to job growth as Republican lawmakers escalate attacks over high inflation.

“These investments are part of a trend by my administration,” Biden said, adding that it would help the White House make good on its clean-energy commitments. “Manufacturing jobs are coming back to America.”

Such announcements often have a political component. Biden framed the investment as a result of work by his administration and the Democratic senators from Georgia: Raphael Warnock and Jon Ossoff.

But he was not the only one eager to claim credit. Just two days earlier, Chung had been in Georgia celebrating the investment while standing next to Gov. Brian Kemp, a Republican facing a primary contest from a pro-Trump challenger.

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