Strategic Trade and Investments Framework and Geopolitical Linkages across Asia-Pacific Economies

Abstract

The announced trade deal, the Indo-Pacific Economic Framework (IPEF), is a loosely-structured economic bloc advocated by the current US administration, which will include 13 countries. These countries, in addition to the United States, will be Australia, Brunei, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. The bloc represents an estimated 40% of the global economy. In addition to its membership, IPEF could create global standards for AsiaPacific economies and beyond. This, according to US pronouncements, could bring faster economic growth across Asia-Pacific economies. Currently, the US GDP growth rate for 2022 is expected to be 2.8%, while that of China will be 2%. The position of the United States is that of strength and represents a shift away from the unfounded notion that China would be there to overtake the United States. The United States will continue to be the leading economy, and China will continue to be the second-largest economy. Nevertheless, there are certain advantages to the IPEF. The framework will help lower the cost of supply chains and reduce costly disruptions and could ensure a higher level of economic competitiveness during the next century for the whole region. Cooperation and economic and political stability and prosperity will also be enhanced. The framework was intended to be a replacement to the prior Trans-Pacific Partnership (TPP), which was advocated by former President Obama and current President Biden, and which former President Trump dropped out of in 2017. The pillars of the framework will focus on harmonizing corporate supply chains, expanding digital trade and clean energy, and fighting corruption. Critics of the IPEF’s loosely coupled framework suggest that this enlarged alliance is intended to reduce the regional influence of China, and some of the member states indicate that it should go beyond challenging China’s influence and should produce a functional economic bloc that will enhance and improve the positions of all the participant economies. Seven countries from the earlier TPP will belong in the IPEF; however, countries such as Canada and Mexico did not join as they are already in a free trade area with the United States. Moreover, US labor and environmental groups, which lobbied against the earlier TPP, are equally concerned about the IPEF, when it comes to digital JOURNAL OF ASIA-PACIFIC BUSINESS 2022, VOL. 23, NO. 3, 183–186 https://doi.org/10.1080/10599231.2022.2095584