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US to aggressively push for digital trade rules in Asia in 2023

Nikkei Asia | 24 January 2023

US to aggressively push for digital trade rules in Asia in 2023


WASHINGTON — The Biden administration "is hoping to make a lot of progress this year" on the U.S.-led Indo-Pacific Economic Framework (IPEF), Deputy U.S. Trade Representative Sarah Bianchi said in an interview with Nikkei.

The goal is to quickly create shared rules for the region, particularly in the digital sector, and to regain the initiative in the U.S.-China contest for economic leadership in Asia.

The IPEF, which consists of 14 member countries, was launched by U.S. President Joe Biden in May, and working-level negotiations began at the end of last year.

"We’re currently working with our IPEF partners to negotiate the 2023 schedule," Bianchi said. "We haven’t set any hard deadlines yet but ... we’re definitely trying to move as quickly as we can."

The U.S. in the fall will chair the Asia-Pacific Economic Cooperation (APEC) summit.

The IPEF will not address the elimination or reduction of tariffs, a central theme in previous trade negotiations, but will focus on the creation of rules for the rapidly expanding digital economy and cooperation on supply chains for products like semiconductors.

In the interview, Bianchi stressed the importance of rules-based digital trade. "A lot of trade in the 21st century is through digital formats," she said. "So we want to make sure there’s an open and free system that is good for consumers and good for a small business that’s trying to export their products."

According to the USTR, negotiators from participating countries have begun discussing consumer protections and personal data safeguards in online transactions, the promotion of reliable artificial intelligence (AI) capabilities and cybersecurity rules.

China is making its presence felt in digital rules making in the Asia-Pacific. Last summer, it began negotiations to join the Digital Economy Partnership Agreement, which is among Singapore, Chile and New Zealand. In September 2021, it applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which has provisions for digital rules.

U.S. economic involvement weakened in Asia after the Trump administration withdrew from the TPP, which other signatories later ratified as the CPTPP. Many experts say that lagging China in rules-making for the digital sector — the foundation of economic activity — will act as a significant drag on the U.S. in its competition with China.

The Biden administration hasn’t shown any intention to return to the CPTPP, which is politically unpopular in the U.S. Bianchi would only say that there might be "some overlap" between the CPTPP and IPEF in the future.

"We’re designing [the] IPEF to address the challenges of [the] 21st-century economy," she said, "and those issues that have grown since the pandemic and the global shocks."

She noted that the IPEF’s objectives are different from those of the CPTPP.

In the Obama administration, Bianchi served as deputy assistant to the president for economic policy and also oversaw then Vice President Biden’s economic and domestic policy team.

 source: Nikkei Asia