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Kyodo | 14 November 2023
No trade deal struck at US-led Indo-Pacific economic meeting
By Takuya Karube
The United States and other Indo-Pacific countries participating in its economic initiative on Monday were unable to strike a substantial trade deal during ministerial talks, despite their common goal of promoting a rules-based commercial order in the region where China is growing in influence.
Following the first day of the meeting for the U.S.-led Indo-Pacific Economic Framework in San Francisco, Japanese trade minister Yasutoshi Nishimura said progress was made on some aspects but "no substantial agreement was reached" for the whole trade area.
"Unfortunately, there were big differences in position," Nishimura told reporters while stressing that he still thinks they achieved meaningful progress in areas such as advancing paperless trade procedures just a year after entering negotiations.
The stalemate was unavoidable because the United States has put off talks on rule-making for digital trade, including free data flows, due to concern at home over the possibility of benefiting IT giants, according to officials with knowledge of the negotiations.
The areas that prevented the reaching of a consensus on trade in time for the summit of the Asia-Pacific Economic Cooperation forum later this week also included workers’ rights.
Other economic issues will be discussed Tuesday by the trade, industry and foreign ministers of the 14-member framework, which include Australia, Indonesia, Japan, South Korea and Thailand. They are in the U.S. West Coast city for discussions of the 21-member APEC grouping that follow.
Since the initiative, known as IPEF, was launched by U.S. President Joe Biden in Japan in May 2022, officials have been trying to create common rules and standards across four pillars — trade, supply chains, clean energy and infrastructure, and tax and anti-corruption — to help all the members achieve faster and more equitable growth.
The ministers are expected to largely agree on language for the third and fourth pillars, after doing so for supply chains in May.
Regarding clean energy, they plan to announce the establishment of a fund to propel decarbonization measures, with Japan and the United States each expected to chip in $10 million for the scheme, according to the officials.
The leaders of the IPEF countries plan to gather Thursday in San Francisco on the sidelines of the APEC summit and release a joint statement detailing the progress the partnership has made so far, according to the officials.
IPEF, which does not include China, constitutes an important component of the Biden administration’s strategy for the region that is considered to be the likely engine of world growth for many years to come. Collectively, the group, which also includes India, Malaysia and Vietnam, accounts for about 40 percent of the global economy.
The two-day IPEF ministerial meeting comes just ahead of Biden’s scheduled bilateral summit with Chinese President Xi Jinping on Wednesday at an undisclosed location in the San Francisco Bay Area.
The first sit-down in a year between the two leaders is aimed at stabilizing the bilateral relationship and will involve reviewing many contentious issues between Washington and Beijing, including tensions stemming from fierce economic competition, according to senior Biden administration officials.
While many countries have shared concerns about overdependence on China for trade, critical minerals and manufacturing, Biden is focused on restoring his country’s economic presence in Asia after his predecessor Donald Trump pulled out of the more ambitious Trans-Pacific Partnership free trade deal in 2017.
Unlike in traditional trade agreements and the TPP, which was subsequently renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, IPEF is not discussing plans to lower tariffs or expand market access.
Given that the United States remains reluctant to provide new access to its market under the framework, some IPEF countries appear to see little incentive to make major commitments, raising questions as to the extent to which the initiative will lead to further integration of their economies.
Many of the IPEF members, such as Australia, Japan and Singapore, are already part of the comprehensive trade agreement, also known as CPTPP, with ambitious market-access commitments.