IFAFF Is What It All Amounts To

President Joe Biden’s Indo-Pacific Economic Framework (IPEF) plan for reviving ties with the Asia-Pacific region is a PR ploy to paper over large cracks in the region in the recent past.

Right from the pivot to Asia announced by President Obama’s administration in 2009, which led to the creation of the Trans-Pacific Trade Partnership (TPP) between 12 nations in the Indo-Pacific region – excluding China – to President Trump leading America out of it, America has always seen greater engagement in the region only as a way to contain China. It has always surprised me that the US cannot see the Asia Pacific region for its strengths, but only as a counterweight to China. And it is a good sign of growing confidence in the region that the remaining 11 countries still went ahead with TPP, with China recently applying to join it.

IPEF is a pathetic attempt at trying to cement ties, because it doesn’t recognize the fact that the basis for greater engagement within the region is not military, but economic. America must accept that most of South-East and East Asia power global economic growth. And they do this by engaging with China and trading with it, not by trying to contain it. It was known even by 2009 that greater economic growth was going to come from this region in the future, and that the centre of economic gravity had shifted to the East. It can be seen in the fact that ASEAN countries are now China’s largest trading partner, replacing the EU and the US.

Looking at the wider Asia-Pacific region, including Canada, Latin America, Australia and New Zealand, it is quite the same. These countries too depend hugely on trading with China and on Chinese investment. This growing importance of the APAC region has been three decades in the making, largely on the back of China’s growth and globalization. America’s acceptance of this comes at a difficult time for the country’s administration, when there is already a widespread backlash against globalization, fuelled endlessly by Trump and the Republicans.

Which is why IPEF studiously avoids any mention of trade or trade concessions. Notwithstanding the fact that the very premise of IPEF is misguided, it is also weak in content. It is supposed to be based on four pillars, but the only ones that are significant and hold any promise of greater engagement are greater cooperation on supply chain management and green energy. Supply chain discussions would probably revolve mostly around semiconductors, electronics components and products of the digital economy, since East Asia controls the world’s manufacture and supply of these products. Clean energy ought to focus on transfer of clean technology on better terms and its financing. At the moment, there are little to no specifics on IPEF.

Since trade and trade concessions or greater access to US markets are not part of IPEF at the moment, as it does not have the approval of the US Congress yet, it is a lame framework. And with US Midterm elections due later this year, the plan is not likely to make much headway with members of Congress who already believe that giving other countries easier access to its markets amounts to exporting more jobs overseas.

What’s the best that can be done? APAC countries need to continue growing their economies and engaging with China, the EU and the US. They ought not to give in easily to pressuring by the US, nor should they fall for the IPEF bait. Instead, on the issues where there is scope for greater and better engagement – supply chain and clean energy – they should continue discussions and negotiations. Most important, from the region’s point of view, countries ought to negotiate hard for better financing of clean technology transfer and better terms. This has been the main sticking point with advanced countries led by the US in climate change discussions for over a decade and they clearly need to do more.

The important thing is for APAC countries not to give up their relative positions of strength which come from economic growth through greater trade and investment in the region, including with China, in chasing some woolly and fuzzy economic framework that has little to offer at the moment. It is also worth bearing in mind that the end goal for the US in offering an economic framework is ultimately to seek greater political and military influence in the region. And its aim is clearly to counter China.

Let us also remember that the APAC region is not just one of the fastest-growing economic regions of the world, led by South-east and East Asia, it has been one of the most peaceful. The last time America intervened in the region, they left it economically devastated and with huge loss of life that kept mounting for decades thereafter, thanks to landmines. I am referring to Vietnam, of course, which has made a miraculous recovery since then. Like China, Vietnam too has adopted a form of capitalist, free-market economy, albeit with a communist government at the helm.

The ideological war that the US fought with the erstwhile Soviet Union and with China is back again it seems, in a new form. As it continues its search for new allies and friends in the 21st century, countries in Asia-Pacific and in Latin America need to put their economic interests first. IPEF is the weakest candidate to date, in that respect.

There has been talk of a Chinese attack on Taiwan to take control of it, from the time that talk also began of a Russian attack on Ukraine. Now that one huge mistake has been made by Russia, we can only hope that China doesn’t make a similar one. Although Taiwan is not in the same position as Ukraine; most countries in the international community have had to accept China’s policy of ‘one country, two systems’ with regard to Taiwan, making its position even more difficult and precarious.

Then, we have Hong Kong and the decades-long problem of its imminent return to China. These are economic powerhouses, not just in the region but of the world, and they ought to be treasured and encouraged to grow and flourish even more, instead of taking them down in a needless military conflagration. Yet, if the US flexes its muscles in the Indo-Pacific, it is bound to be seen as provocation by China since it is meant to contain the country. And its response could well be military.              

For the past many months, China has been down with new Covid outbreaks and massive lockdowns of entire metropolises such as Shanghai and Beijing. Its effect has been seen on the Chinese economy as well as on global trade. That, however, didn’t stop the Chinese foreign minister from making a tour of 12 Pacific islands, right after Biden announced his IPEF. From media reports it appears that the usual Chinese engagement tool was on offer: more trade, economic and infrastructure development, possibly in return for military cooperation. China will probably set up military bases in these Pacific islands, in addition to those it has already built in the South China Sea.

Hard to see how IPEF competes with that. Instead, it would be better if IPEF is reformulated as a policy that engages with the entire region – including China – on issues that all can agree upon. Global supply chains and clean energy would be a good start.

The animated owl gif that forms the featured image and title of the Owleye column is by animatedimages.org and I am thankful to them.  

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