Economic policy

In search of a US-Indo-Pacific economic policy

Author: Claude Barfield, American Enterprise Institute

Entering its second year, the Biden administration has failed to produce a coherent economic policy for the Indo-Pacific. Meanwhile, two major regional trade deals are moving forward. American businesses and workers will increasingly suffer legal economic discrimination from these new regional trade rules road — the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

The parallels and contrasts with the Obama administration are striking. Like US President Joe Biden, Obama entered office proclaiming the need to fix the US economy first, with no plans to push forward with new business initiatives. But within a year, in the face of mounting security and diplomatic challenges in Asia – China’s growing assertiveness and North Korea’s missiles over surrounding seas – the Obama administration reversed Classes and join the negotiations for the Trans-Pacific Partnership. Obama too’rebalancedmilitary means in Asia.

In 2022, the merging of economic imperatives and security dangers is even more pressing. While the Biden administration has made some progress on the security front by upgrading the ‘Quadruple‘ and securing the AUKUS nuclear submarine deal, the United States has failed to craft a credible economic response.

Beyond the internal difficulties of the Biden administration, the reality is that the political terrain of the United States’ international economic advances is hostile. The progressive wing of the Democratic Party, in strong alliance with industrial unions, continues to be hostile to open trade and investment policies. This led President Biden to promise domestic reforms before tackling international economic advances.

On the Republican side, former President Trump’sAmerica first‘ economic doctrines have produced a similar anti-trade mentality. With Congress evenly divided between the two parties and with deep intra-party divisions, the Biden administration is crippled. the said Trade Promotion AuthorityCongress’ grant of authority to the President to negotiate new trade agreements, has expired and there is no prospect of renewal in the foreseeable future.

The Biden administration has compounded its challenges by not speaking with one voice and touting flimsy alternatives to tough trade and investment rules. Several voices are vying for internal leadership on international economic policy, including the State Department, the National Security Council, the Commerce Department and the Office of the US Trade Representative, headed by Katherine Tai. While Tai came to office with a stellar reputation, she is not close to Biden and has often found herself overwhelmed by White House and Commerce Department officials.

National Security Council Asia expert Kurt Campbell has been widely quoted to say that the United States “step up his game‘ in Asia. Commerce Secretary Gina Raimondo has also taken it upon herself to tout plans for an Indo-Pacific framework that will be ‘more robust‘ and comprehensive than traditional trade agreements. In fairness, Biden administration officials have assiduously consulted with Asian partners through several senior government trips.

The administration has promised a fully developed framework for the Indo-Pacific in the coming weeks. While details are yet to come, it seems clear that the rugged elements touted by top Biden officials will be to go beyond traditional trade liberalization. They will likely focus on social issues and policies for small and medium enterprises.

A separate potential digital commerce initiative would likely include provisions for worker training and development, regional and global standards, bridging the digital divide and addressing bias in platform algorithms. The digital space produced deep internal conflicts in the administration, as some senior officials have sided with progressive lobby groups that argue a digital trade deal is a sellout to big tech companies.

For decades, the United States has insisted on negotiating only ‘enforceable‘ trade pacts. In keeping with the Biden administration’s emphasis on issues of social justice and equity, Tai expressed skepticism about the adequacy of traditional trade liberalization agreements. Her too compared the frame to the new US-EU Business and Technology Advisory Council. If such an executive agreement is contemplated, it would be restricted – changeable by the next president and bound by no change in United States law.

Absent the concessions and market-opening promises made by the United States in the CPTPP, Washington will have a hard time persuading Indo-Pacific nations that the framework even equates to the limited concessions that China promised in the RCEP.

Claude Barfield is a Senior Fellow at the American Enterprise Institute and a former consultant to the Office of the United States Trade Representative.