America’s new Asian economic pact: just don’t call it a trade deal

JUST three days after being sworn in as president in January 2017, Donald Trump signed an executive order withdrawing America from the Trans-Pacific Partnership (TPP), a 12-country free-trade deal he had railed against on the campaign trail. On May 23, 488 days after his own swearing-in, President Joe Biden tried to reverse some of the damage by unveiling a new pact, the 13-country Indo-Pacific Economic Framework (IPEF). That Biden took so much longer to launch his Asian trade policy illustrates one basic truth: it is far easier to tear up agreements than it is to craft them anew.

Inevitably, one way to look at the IPEF is by way of comparison to the TPP (which lives on in reduced form, absent America). Some bits sound rather familiar. One selling point for the TPP was that it was a “21st-century trade agreement” complete with high standards for workers’ rights and e-commerce rules. The IPEF is also “a 21st-century economic arrangement”, according to Jake Sullivan, America’s national security adviser. The original TPP members accounted for nearly 40 per cent of global GDP, roughly the same share as the current IPEF partners (the biggest change is that the new deal swaps out Mexico and Canada for India and South Korea). Most crucially, China is still excluded. The IPEF, like the TPP, is an attempt to build a trading structure in Asia that enshrines both America’s economic principles and its economic power—welcomed by many in the region as a counterbalance to China’s heft.

That, however, is where the similarities end. Trump’s success in winning support with his calls to stop countries “ripping off” America has made many in Washington leery of ambitious free-trade deals. So rather than starting work on a pact that would require approval from Congress, Biden’s team has designed a framework that is more malleable and may avoid that political death-trap. In announcing the launch, Katherine Tai, the United States Trade Representative (USTR), pledged to “keep Congress close” in shaping the IPEF — a far cry from putting it to a vote.