The Indo-Pacific Economic Framework and Digital Trade in Southeast Asia

• Published in: Policy File 2022
• Main Authors: Natalegawa, Andreyka, Poling, Gregory B
• Format: Report
• Language: English
• Subjects: Center for Strategic and International Studies

In October 2021, the Biden administration announced the development of an Indo-Pacific Economic Framework (IPEF) with partner nations to "define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest." Details on the framework are still being worked out, but it now seems that those six areas of focus have been distilled into four negotiating "pillars." Deputy U.S. Trade Representative Sarah Bianchi said in early February that these would include "fair and resilient trade, supply chain resilience, infrastructure and decarbonization, and tax and anticorruption." The Office of the U.S. Trade Representative (USTR) will likely lead negotiations on the first, while it appears that the Commerce Department will take the lead on the other three. The details of each pillar will be worked out in the months ahead, but the Biden administration is certain to face challenges and trade-offs across each, given the diversity of economies and political constraints across the region. USTR has said the trade pillar will be "high-ambition" and include binding commitments. But this will be complicated by the fact that the administration plans to roll out the IPEF through executive action rather than as a traditional trade deal requiring congressional approval. This pathway will help the framework sidestep political obstacles that agreements like the Trans-Pacific Partnership faced before Congress, but it also means that the administration cannot offer increased market access or any other concessions that would require changes to U.S. law. Moreover, moving forward with the IPEF through executive action has led to concerns among partners that the framework could be vulnerable to U.S. domestic politics or that a future administration may well roll back or abandon the framework. Given these self-imposed constraints, the administration will face headwinds trying to convince countries to sign on to high-standard provisions on digital trade, labor, and environmental standards that might run counter to their perceived short-term political or economic interests.