ASPI Note: How to Understand the Quad - Key Points for Business

February 10th, 2022 by Richard Maude | 22/07

What’s happening: Australian Foreign Minister Marise Payne hosts her counterparts from the United States, India, and Japan this week for the fourth “Quad” foreign ministers’ meeting, the latest in a series of high-profile gatherings highlighting the increasingly consequential role of the group in the foreign policy of its members.

The background: The Quad is not a military alliance, but its members seek to balance China’s growing power in the Indo-Pacific, resist coercion and support the autonomy of regional countries. In its own words, the Quad is united by a shared vision of a “free and open Indo-Pacific.”

• The Quad should be understood first and foremost as part of the contest with China to shape the region’s future.  
• This is not a rerun of the Cold War, but the battle lines are clear. The contest is both about prosperity, security, and technological advantage and the values, norms, rules, and standards that should govern the conduct of states and prevail in parts of the world where they are up for grabs.
• In short, the Quad is about ideas as much as it is about power balances. The group wants to strengthen Indo-Pacific democratic resilience based on universal values. 

The Quad and business: As the Quad evolves, its work program increasingly touches on business interests. 

• The Quad sees technology as a key battleground. Its work focuses on technical standards (for artificial intelligence, for example), 5G diversification and deployment, and resilient technology supply chains, especially for semiconductors. The Quad, therefore, adds to existing national efforts that will drive at least some further technological decoupling from China.
• The Quad’s values agenda extends into the technology realm. Design “principles” released in September last year emphasize approaches to technological design, governance, and usage that “promote our shared values, including the autonomy, agency, and dignity of individuals.”
• Quad countries also want to use the group to help tackle “some of the world’s most pressing challenges,” an agenda that requires partnerships and collaboration with business. For example, the Quad has announced its intention to form a green-shipping network to encourage the greening and decarbonizing of the shipping value chain and has also established a clean hydrogen partnership. Quad members are donating more than 1.2 billion doses of COVID vaccines globally and want to encourage investment in quality infrastructure, including to compete with China’s Belt and Road Initiative. 
• Finally, while the Quad is not a trade agreement, its members share concerns about Chinese economic coercion. The United States, India, and Japan have joined (as “interested parties”) Australia’s action at the World Trade Organization in protest of China’s anti-dumping measures and countervailing measures on Australian wine and barley.
• The knitting together of India, the United States, Australia, and Japan in the Quad is also reinforcing the strength of bilateral relationships within the group, with potential indirect effects on economic cooperation. Over time, for example, the strength of the Quad could help ease areas of strain in U.S.-India trade ties.

Key takeaways: The Quad is more than a forum of like-minded countries for diplomatic exchanges and practical cooperation — it embodies a long-term contest to shape global order.

• There is potential economic opportunity and significant scope for engagement with business in the Quad’s growing work program.
• But the Quad also entails elements of tough contestation, partial decoupling, national economic sovereignty, “trusted” supply lines, and divided technology realms.
• The net result is a complex new duality mixing separation and interdependence, with higher degrees of risk — material and reputational — for businesses to navigate.