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Argus Media - 23 May 2022
US-led Asia trade pact eyes clean energy, supply chains
By Kevin Foster
US President Joe Biden has announced a new economic framework deal for Asia-Pacific designed to boost investment in clean energy infrastructure, drive decarbonisation efforts and strengthen regional supply chains.
The US-led Indo-Pacific Economic Framework for Prosperity (IPEF) is backed by 12 other countries that account for 40pc of global GDP, Biden said in Tokyo on 23 May. But it excludes China, the region’s biggest economy and Washington’s main strategic rival.
The IPEF focuses on trade, supply chains, clean energy, and tax and anti-corruption measures. The 12 participants said they will work together on technology and financing for clean energy and decarbonisation measures, in line with the Paris agreement that aims to limit global temperature increases to 1.5°C above pre-industrial levels by 2050.
This includes "concrete, high-ambition targets that will accelerate efforts to tackle the climate crisis", including renewables, carbon removal, energy efficiency standards and measures to cut methane emissions, the White House said.
IPEF signatories also pledged to strengthen and integrate supply chains, including by ensuring access to semiconductors, critical minerals and clean energy technology.
The IPEF is backed by Australia, Brunei, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam, as well as the US.
The deal is in its early stages, with today’s announcement signifying only the launch of collective discussions towards future negotiations. The pact falls short of a full trade agreement such as the Trans-Pacific Partnership (TPP), the previous US-backed economic plan for the region that included provisions for tariff reductions and market access — measures that are absent from the IPEF.
Former US president Donald Trump withdrew from the TPP in his first days in office. The deal was replaced by the Comprehensive and Progressive Agreement for the Transpacific Partnership (CPTPP), an 11-nation pact that excludes the US but which China subsequently applied to join.
The CPTPP, and the separate China-backed Regional Economic Comprehensive Partnership trade deal, include many of the same Asia-Pacific countries that have signed up to the IPEF.
Biden announced the IPEF during a five-day visit to Japan and South Korea. The trip includes a 24 May meeting between Biden, Indian prime minister Narendra Modi, Japanese prime minister Fumio Kishida and Australia’s new prime minister Anthony Albanese. The four countries make up the Quadrilateral Security Dialogue or Quad group, which Washington sees as a democratic counterweight to China’s growing regional power.
China has already dismissed the latest US efforts as an attempt to upend the region’s peaceful development. The US’ Indo-Pacific strategy is designed to contain China and is bound to fail, Chinese foreign minister Wang Yi said on 22 May.