In a sweeping economic initiative designed to counter China’s influence in the Indo-Pacific region, US President Joe Biden Monday unveiled an economic pact named Indo-Pacific Economic Framework (IPEF) which constitutes roughly 40% of global gross domestic product.
The nations included in IPEF represent $34.7 trillion in global output, or about 41% of global production, compared with $31.7 trillion for TPP members, Bloomberg reported.
The biggest economies in IPEF include Japan and India, which are also members of the Quad group of nations in addition to Australia. Besides the three, South Korea and New Zealand were included, along with seven Southeast Asian countries in the economic pact.
While launching the 13 nations’ economic pact, US President Joe Biden said the US is deeply invested in the Indo-Pacific and is committed for the long haul.
“I want to be clear that the framework will be open to others who wish to join in the future — if they sign up and meet the goals and work to achieve those goals,” the US president said.
The Indo-Pacific Economic Framework is intended to advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness for our economies, the countries said in a joint statement.
Through this initiative, we aim to contribute to cooperation, stability, prosperity, development, and peace within the region, the countries added in the statement.
The US selected the initial group out of a desire to reach beyond countries that have deep economic ties with America, while also ensuring they can agree to at least one of the pillars, a US official said.
The US hopes to know which countries will participate in each of the four pillars by mid-June, and aims to have substantive commitments in about 12 to 18 months, the official said.
The US offer to keep the framework open to China had been demanded in particular by countries in Southeast Asia. Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam ended up participating in the framework.
The IPEF is the most significant US effort to engage Asia on economic matters since former President Donald Trump in 2017 withdrew from the Trans-Pacific Partnership agreement negotiated under the Obama administration.
But unlike that trade deal, the new framework doesn’t include any tariff reductions and it’s unclear which parts are binding, making it hard to quantify the economic benefits.