The administration of US President Joe Biden faces significant distractions from the war in Ukraine, record inflation, high gas prices, Covid-19, a shortage of baby formula, and uncontrolled gun violence. Through it all, the White House has pledged to maintain its Asia focus with the newly-launched, much anticipated Indo-Pacific Economic Framework for Prosperity (IPEF), which offers an open-ended or non-binding commitment whereby participating countries can choose to come together to bolster economic security.
The IPEF is neither a free trade agreement nor anything approaching a security bloc, unlike the Quadrilateral Security Dialogue, known as the Quad, which brings together Australia, Japan, India and the United States. At the launch on May 23 at a gathering of the Quad in Tokyo, 13 countries joined the IPEF: Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Along with the US, that made a multilateral baker’s dozen – a powerful international mix accounting for 40 percent of global GDP. Pacific nation Fiji joined the IPEF three days later.
With no trade provisions or potential for reduced tariffs for commercial activities, however, it is difficult to begin to assess the impact of the vague framework. Yet, Washington’s messaging on the IPEF economic plan to tackle 21st-century challenges is clear: It is about setting rules of the road for the digital economy, ensuring resilient supply chains, paving the way for clean energy infrastructure investment, and raising standards for transparency, fair taxation and anti-corruption measures.
Although Southeast Asian countries share US concerns about Beijing, they remain cautious about siding more closely with Washington, given the region’s predominant economic ties with China and, for now, limited economic incentives from the US.
During the global health storm, the economies of the member states of the Association of Southeast Asian Nations (ASEAN) were especially hard hit, forcing them to make fundamental strategic changes to advance trade, attract investment, and stimulate economic growth. Naturally these critical measures have included strengthening their health systems and pressing for far more regional economic integration.