IPEF Meeting: Make the Most of New U.S.-Led Economic Bloc

Editorial

15:48 JST, November 16, 2023

As China attempts to expand its influence in the Asia-Pacific region, it is crucial for Japan and the United States to strengthen the framework of a recently launched economic bloc in order to achieve stable development in the region.

A ministerial meeting of the Indo-Pacific Economic Framework for Prosperity (IPEF) has been held in the United States. The IPEF is a new economic initiative involving 14 nations, including Japan, the United States, South Korea, Australia, India and seven countries from the Association of Southeast Asian Nations.

The IPEF ministers are likely to reach a substantive agreement on two areas: “clean economy,” including decarbonization; and “fair economy,” including efforts to strengthen the rule of law through anti-corruption measures. Final confirmation of the agreement is expected to be made at the summit on Nov. 16.

In May, participants reached an agreement in the area of “supply chains,” in which member countries will supply each other in the event of shortages of semiconductors, minerals and other critical materials.

Of the four areas that have been negotiated, all but “trade” have been settled. It is welcome news that certain results have been achieved.

In the Asia-Pacific region, China has joined the 15-member Regional Comprehensive Economic Partnership (RCEP) agreement, and has also applied for membership in the Trans-Pacific Partnership (TPP) free trade agreement in an attempt to take the lead in trade-realm rulemaking.

On the other hand, the United States withdrew from the TPP. Instead, the IPEF was launched as a Washington-led framework to keep Beijing in check.

However, unlike the TPP, the IPEF does not include the elimination of tariffs — which emerging countries desire — among its topics for negotiation. The question now is whether emerging countries will be able to feel the benefits of the initiative.

It is regrettable that no agreement has been reached in the trade sphere this time.

The IPEF ministers failed to reach a consensus on the creation of rules for the free exchange of data across borders, an area that is expected to be utilized for online business and automated driving technology, among others.

This is reportedly because there were concerns that such rules could lead to an increase in profits for tech giants, whose oligopoly is seen as a problem in the United States.

While the issue of data distribution needs to be carefully examined, both the United States and emerging countries need to make efforts to expand cooperation in other areas where they can see eye to eye.

Japan’s role is significant in this regard. Decarbonization, which is of great interest to emerging countries, is an area where this country can take advantage of its strengths, such as hydrogen utilization technology. Regarding mutual support for supply chains, emerging countries will be able to develop their economies if Japanese firms increase their investment in such nations.

Many emerging countries in Southeast Asia have close economic ties with China, but there is a growing sense of caution about Beijing’s “economic coercion,” which puts pressure on partner countries through trade restrictions. It is hoped that Japan will strengthen cooperation with these nations and help them move away from excessive dependence on China.

(From The Yomiuri Shimbun, Nov. 16, 2023)