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Last November I wrote a
column titled, “Where’s the Beef?,” which referenced the old Wendy’s
commercial and the famous 1984 Mondale commercial when he ran against
Ronald Reagan. I alluded to it again last January in a column that looked
for the beef in the Indo-Pacific Economic Framework (IPEF). Now that
the IPEF ministerial meeting in Los Angeles is over, the question
returns, but this time it is whether the beef is the equivalent of a Big
Mac or just a giant nothingburger.
For those of you interested in actual facts rather than mere opinions, CSIS has conveniently already published a short Critical Questions that explains what happened. If you don’t already know, you should take a look at it before reading any further.
Overall,
the outcome was anticlimactic, consisting largely of an outline of what
would be negotiated within each of the four pillars. Here is an
abbreviated list thanks to the piece:
Trade Pillar:
This pillar will focus on nine key issues: labor, environment, digital
economy, agriculture, transparency and good regulatory practices,
competition policy, trade facilitation, inclusivity, and technical
assistance and cooperation.
Supply Chains Pillar:
All countries agreed to negotiate ways to “anticipate, withstand, or
rapidly recover from shocks,” focusing on six key areas: establishing
criteria for critical sectors and goods, increasing resiliency and
investment in critical sectors and goods, establishing an
information-sharing and crisis response mechanism, strengthening supply
chain logistics, enhancing the role of workers, and improving supply
chain transparency.
Clean Economy Pillar:
This pillar is divided into five subcategories: energy security and
transition; greenhouse gas (GHG) emissions reductions in priority
sectors; sustainable land, water, and ocean solutions; innovative
technologies for GHG removal; and incentives to enable the clean economy
transition.
Fair Economy Pillar:
This pillar will focus on anticorruption, tax, capacity building and
innovation, and cooperation, inclusive collaboration, and transparency.
The
big question before the meeting was which countries would join which
pillars. Ultimately, they all joined all of them, except for India,
which declined to participate in the trade pillar. That probably
produced a sigh of relief at the Office of the U.S. Trade
Representative, which is well aware of India’s frequent efforts to slow
down negotiations and ensure they do not produce anything consequential.
Having India out makes it more likely the negotiations will come to a
meaningful conclusion.
So,
what does it all mean? Simply getting 13 other countries to join was a
significant accomplishment, as is getting almost all of them to agree to
participate in all the pillars. Although the ministerial declaration
provided no specific timetable for the talks, it appears they will begin
immediately, and there is some enthusiasm for trying to finish by
November 2023, when the United States will host the Asia-Pacific
Economic Cooperation (APEC) summit. The great unknown, of course, is
whether the talks will produce any meaningful
outcomes.
In
some pillars that appears likely, particularly the one on supply
chains, where Covid-19 and the war in Ukraine have taught all countries
the importance of supply chain resilience and the dangers of
vulnerability, particularly when it comes to the critical minerals that
are essential in economies based on digital technology.
Progress
in the clean economy pillar, in contrast, will really depend on the
extent to which the United States and other developed country parties
are willing to pay the developing country parties to make the energy and
decarbonization transitions that all would like to see.
The
trade pillar is similar in that it lays out a number of noble goals
which are hard to object to, but it leaves open the question of how they
will be achieved. And that in a nutshell is the promise and challenge
of IPEF. It represents the triumph of idealism over pragmatism. The
goals of all the pillars are commendable: better treatment of workers,
higher wages, decarbonization, sustainability, transparency, combating
corruption. It is hard to argue they are not desirable goals.
However,
the administration so far seems reluctant to acknowledge that they do
not come without a price, both economic and political. Some of them,
like decarbonization and sustainability, cost money. Others, like supply
chain cooperation, will require companies to provide their proprietary
data not only to their own government but to others. Improving labor
standards and promoting unionization can be politically disruptive in
some countries, and raising wages has the short-term effect of making
companies less globally competitive.
As
a result, it should not be a surprise when countries ask what they are
going to get for taking steps that are all meritorious but which will
cost them money, political support and competitiveness. The U.S.
response so far seems to be, “You should do those things because they
are good for you and good for the world.” (We have not yet admitted that
doing things like making their workers less competitive is also
particularly good for high-wage countries like the United States.)
I
learned at the National Foreign Trade Council dealing with companies
that it is hard to pressure them into submission, but they can be bribed
to do the right thing—and so too with nations. Idealism sets the goals,
but pragmatism gets them across the finish line. Whether the
administration is willing and able to play the pragmatic game and come
up with tangible benefits for the IPEF parties remains to be seen. So,
Big Mac or nothingburger? Take your pick, but either way, I want mine
with cheese.
William
Reinsch holds the Scholl Chair in International Business at the Center
for Strategic and International Studies in Washington, D.C.
Commentary is
produced by the Center for Strategic and International Studies (CSIS), a
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conclusions expressed in this publication should be understood to be
solely those of the author(s).
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