IPEF plan is bad news for U.S. economic influence in Asia
Trade discussions of limited value unless Washington can offer enticements
Paul Nadeau is adjunct professor of political science at the Japan campus of Temple University.
The regional response to the Biden administration's Indo-Pacific Economic Framework has so far been tepid at best.
The cool reception appears to reflect the failure of the IPEF to offer the economies of the region what they are looking for: a rules-based economic framework that includes new access to U.S. markets and has the relative permanence and legal force of a trade agreement.
This is because such commitments would have to be approved by the U.S. Congress and the Biden administration is torn between two imperatives: developing an economic framework for engagement in the Indo-Pacific and avoiding a combative Congress, both in terms of Republicans and among important stakeholders within the president's own Democratic Party.
Congress and domestic stakeholders cannot take all the blame, either, because the compromises that were necessary to expand the membership of the IPEF to 14 nations, an achievement in itself, meant accommodating diverse economic interests. But the "nothing-burger" agreement that we have been left with is the result of the Biden administration trying to thread a tough needle and coming up short.
In lieu of bipartisan action it seems the Biden administration will try to use executive orders to implement the IPEF. These have the force of law as long as they are issued pursuant to the president's powers. But are impermanent as they can be modified or revoked, a key risk for others taking part in a trade arrangement.
In earlier times, something like a stronger IPEF or even the Comprehensive and Progressive Agreement for Trans-Pacific Partnership might have been seen as an easy opportunity for a bipartisan win that could bring together pro-trade Democrats and Republicans in Congress.
It is fair to ask whether political space for congressional approval of trade agreements still exists. Optimists can point to bipartisan support for the U.S.-Mexico-Canada Agreement, the modified North American Free Trade Agreement secured by the Trump administration. A revised free trade agreement with South Korea was also passed then.
But as president, Barack Obama held back from putting the Trans-Pacific Partnership to Congress for a vote in 2016. Both parties' presidential nominees that year then attacked the agreement, leaving the U.S. on the outside as the pact later evolved into the CPTPP. The Biden administration then failed to seek renewal of its expiring special powers to negotiate trade agreements last year.
The administration's hesitance about seeking congressional support on trade seems to stem from a worry about alienating key stakeholders in Democratic coalition in a midterm election year when all hands need to be on deck, and a fear that not enough Republican votes can be found to make up the difference.
It is partisanship that gives the pessimists the edge in the debate. Many surveys show that comfortable public majorities in the U.S. support free trade, and each party's voters are more pro-trade than the parties themselves.
The problem is that majorities are not what matter, stakeholders and partisans are. Indeed, for all the talk of how the U.S. is polarized, there is more evidence of polarization among partisans than there is of polarization among the public. For partisans, what matters is not policy details so much as signaling about partisan division to voters.
Leveraging its economic appeal to help buttress global governance is what the U.S. did successfully following the end of World War II, giving partners and allies a stake in the success of a Washington-led system via investments, market access and nondiscrimination.
That is the kind of leadership that is missing now, and there will not be much interest in the Indo-Pacific region in offering up much for any agreement with the U.S. without it.
Countries can sign up for rules, even high-standard rules, if they know what they are going to get out of it. This is how the U.S. can build leverage on sensitive issues like labor standards and corruption. These things can make the difference in a situation where different sets of rules are in competition and where economies want options besides China. But without offering market access, the U.S. can do very little to entice partners to sign up.
The Biden administration deserves the benefit of the doubt, up to a point. It is worth remembering that there is still value in getting everyone together and talking, even if it does not lead to anything concrete. It can still create a basis for more concrete work in the future, should that become possible.
But at the end of the day, the problem is the same: Whether Congress is a dead-end or the Biden administration is just gun-shy, the U.S. is effectively out of the picture on economic policy in the Indo-Pacific.
If polarization is the reason the Biden administration is so hesitant about economic engagement, that is a structural, chronic problem rather than something that can be solved after an election cycle or two. The good news is that the administration is at least trying to find a way forward, given the constraints upon it. The bad news is that those constraints are not going away.