New Report | Jump-Starting U.S. Trade and Economic Engagement in the Indo-Pacific
WASHINGTON, DC; Sept 11, 2023 – The U.S. must “urgently” and significantly increase its economic and trade ties with the Indo-Pacific region to remain competitive in light of China’s more ambitious trade agenda, a new report from the Asia Society Policy Institute (ASPI) warns.
The issue paper, “Jump-Starting U.S. Trade and Economic Engagement in the Indo-Pacific,” argues that America’s current Indo-Pacific Economic Framework (IPEF) negotiations, while a step forward, are likely to fall short of creating a true alternative to more comprehensive trade agreements offered by China.
“To put it bluntly, if the United States does not take a bolder approach, we risk becoming spectators as our partners work among themselves and with China to strengthen supply chain connectivity and regional economic integration. This will substantially undermine the United States’ long-term economic, national security, and geopolitical influence,” write authors Wendy Cutler, ASPI Vice President, and Clete Willems, partner at Akin Gump Strauss Hauer & Feld.
Their paper outlines four different paths forward for the U.S. to step up its regional economic engagement while keeping apace with China’s vigorous pursuit of regional trade agreements, describing the advantages and challenges for each:
- Rejoin a Reimagined Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The authors’ preferred approach is for the U.S. to work with other CPTPP partners to update and renegotiate core areas of the CPTPP agreement, but they recognize that this approach may not be politically viable at this time This option is described in greater depth in “Reimagining the CPTPP,” their prior report that identifies 12 specific areas where the U.S. could modernize and address key CPTPP shortcomings.
- Embark on “Phase 2” IPEF Negotiations. The U.S. could propose a second phase of the IPEF negotiations, to build on the results expected this year. Areas where more substantive commitments could be pursued fall under the supply chain and trade pillars, including introducing market access commitments. Specific supply chain suggestions are are discussed in ASPI’s recent issue paper “Strengthening Regional Supply Chain Resiliency through IPEF.”
- Encourage More Economies to Join the USMCA. The U.S. could expand membership in its most popular trade agreement in recent years, which enjoys broad bipartisan support, to include new partners.
- Start from Scratch. The U.S. can go back to the drawing board and develop a new template for trade agreements, drawing on a wide range of existing agreemnts and new ideas. To be credible, input from a wide range of stakeholders should be welcomed.
“As the U.S. host year for APEC and IPEF negotiations draw to a close in November, now is the time for the United States to give serious thought to our next step in deepening our regional economic engagement. It would be regrettable to look back at this time in history as the moment when we ceded regional trade leadership to China,” said Cutler.
Willems said: “China’s ambitious trade agenda should be ringing alarm bells for any policymaker who is concerned about supply chain issues or geopolitical influence. We need to put politics aside and figure out the best way to provide a meaningful alternative, whether it’s a renegotiated TPP, a turbocharged IPEF, or something else altogether. USMCA showed us the way to do meaningful trade agrements on a bipartisan basis.”
Read the full issue paper here. Read the May 2023 companion issue paper “Strengthening Regional Supply Chain Resiliency Through IPEF” here, and the related December 2022 report “Reimagining the TPP: Revisions that Could Facilitate U.S. Reentry” here.
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