Biden Administration Announces Indo-Pacific Deal, Clashing With Industry Groups

The Biden administration announced Saturday that it had reached an agreement with 13 other countries in the Indo-Pacific region to coordinate supply chains, in an effort to lessen the countries’ dependence on China for critical products and allow them to better weather crises like wars, pandemics and climate change.

The supply chain agreement is the first result of the administration’s trade initiative in the region, called the Indo-Pacific Economic Framework. Negotiations are continuing for the other three pillars of the agreement, which focus on facilitating trade and improving conditions for workers, expanding the use of clean energy, and reforming tax structures and fighting corruption.

Gina Raimondo, the secretary of commerce, said the supply chain agreement would deepen America’s economic cooperation with partners in the Indo-Pacific region, helping American companies do business there and making the United States more competitive globally.

“Bottom line is, this is about increasing the U.S. economic presence in the region,” she said in a call with reporters Thursday.

But prominent business groups expressed reservations about the Indo-Pacific deal, and on Friday, more than 30 of them sent a public letter to the administration saying the negotiations were leaving out traditional U.S. trade priorities that could help American exporters. That included lowering tariffs charged on their goods but also limiting other regulatory barriers to trade and establishing stronger intellectual property protections.

The Biden administration says that past trade deals with those provisions have encouraged outsourcing and hurt American workers. Business leaders are arguing that without them, the Indo-Pacific deal will ultimately have little impact on the way these countries do business.

Regulatory barriers to trade undermine efforts to strengthen supply chains, potentially sapping the effectiveness of the administration’s new agreement, the business groups’ letter said. It also expressed concern that the administration was not pushing for digital trade rules.

“We are growing increasingly concerned that the content and direction of the administration’s proposals for the talks risk not only failing to deliver meaningful strategic and commercial outcomes but also endangering U.S. trade and economic interests in the Indo-Pacific region and beyond,” said the letter, which was signed by the U.S. Chamber of Commerce, the National Association of Manufacturers, Business Roundtable and other groups.

In remarks Saturday in Detroit, where she was meeting with trade ministers from the participating countries, Ms. Raimondo said the group’s characterization of the deal was “flatly wrong and just reflects a misunderstanding of what the I.P.E.F. is and what it isn’t.”

The United States began negotiations for a more traditional trade deal in the Pacific during the Obama administration, called the Trans-Pacific Partnership. The deal was designed to strengthen America’s commercial ties in the Pacific, as a bulwark to China’s growing influence over the region. It cut tariffs on auto parts and agricultural products and established stronger intellectual property protections for pharmaceuticals, among many other changes.

But the Trans-Pacific Partnership created deep divisions among both Republicans and Democrats, with some politicians in both parties arguing it would hollow out American industry. Former President Donald J. Trump withdrew the United States from that deal, and Japan, Australia and other members put the agreement into effect without the United States.

The Indo-Pacific Framework includes some of the same countries as the Pacific deal, as well as India, Indonesia, Korea, the Philippines and Thailand. But the Biden administration argues that the agreement is designed to better protect American workers and the environment.

“The I.P.E.F. is not a traditional trade deal,” Katherine Tai, the U.S. trade representative, said Saturday in Detroit. “It is our vision, our new vision for how our economies can collaborate to deliver real opportunities for our people.”

“We’re not just trying to maximize the efficiencies of globalization,” Ms. Tai added. “We’re trying to promote sustainability, resilience and inclusiveness.”

Ed Gresser, the director for trade and global markets at the Progressive Policy Institute, said allies like Japan were participating in the new deal but still trying to convince the United States to rejoin the Trans-Pacific Partnership.

There is good will internationally toward the Biden administration, Mr. Gresser added, but also confusion about what a trade agreement would mean without market access.

Countries have a long history of creating trade and investment frameworks that fall short of traditional trade deals, he said, but “they’re generally not seen as very ambitious things.”

Source: New York Times

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