|
||
|
TWN
Info Service on Free Trade Agreements
Trade: Indo-Pacific economic framework & emergence of
security-driven blocs Washington DC, 31 Aug (D. Ravi Kanth) -- As the global trading system continues to face headwinds amidst increasing inflationary pressures and rising recessionary fears, the emergence of security-driven trade blocs like the Asia-Pacific Economic Framework for Prosperity (IPEF) adds a new dimension to the likely trading patterns in which developing and the poorest countries may continue to remain at the receiving end. The IPEF was officially launched by President Joe Biden in Singapore more than a month ago and is aimed ostensibly to develop "a high-standard and inclusive economic framework that will fuel economic activity and investment, promote sustainable and inclusive economic growth, and benefit workers and consumers across the region." Trade ministers of the 14-member IPEF are now scheduled to meet in Los Angeles on 8-9 September for their first trade ministerial meeting. The new group, established in the wake of the worsening US-China geopolitical tensions, particularly in the South China Sea, includes Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Viet Nam and the United States. Although many members of the IPEF are also signatories to the Regional Comprehensive Economic Partnership (RCEP), which came into force on 1 January 2022, some members like India, which withdrew from the RCEP, and Fiji, are part of what some analysts refer to the IPEF as "Uncle Sam's trade framework". Indeed, India is a member of the Quadrilateral (Quad) group - the US, Australia, India, and Japan. It is seen as the new security equivalent of NATO (the North Atlantic Treaty Organization). Significantly, India appears to be buoyed over its participation in the IPEF, according to media reports from India. In their first ministerial summit in Los Angeles, the trade ministers are apparently going to enter into "scoping" discussions that would broadly indicate the underlying intentions/goals, the likely areas to be covered, and the way forward, said a trade official from one of the member countries. The second phase, which will last for more than a year, will focus on legal issues, including the legal architecture, to achieve the goals mapped out in the scoping exercise, the official said, preferring not to be identified. In a press release issued by the Office of the US Trade Representative (USTR) on 23 August, the co-hosts - USTR Ambassador Ms Katherine Tai and the US Commerce Secretary Ms Gina Raimondo - will focus on each of the four pillars - trade; supply chains; clean energy, de-carbonization and infrastructure; and tax and anti-corruption. Much of the focus on trade will be to build high-standard, inclusive, free and fair trade commitments and develop new and creative approaches in trade and technology policy. However, it is not clear as to what would constitute free and fair trade commitments and whether they would include new market access as was the case with the RCEP. At a time when the US is apparently averse to engaging in market access commitments, it is not clear whether the IPEF will have a significant market access component, said people familiar with the IPEF preliminary talks. On supply chains, though the US and the other 13 members say that they are committed to improving transparency, diversity, security, and sustainability for making them more resilient and integrated, there is considerable confusion as to how they will be managed. As regards clean energy, de-carbonization, and infrastructure, the IPEF participants "plan to accelerate the development and deployment of clean energy technologies to decarbonize our economies and build resilience to climate impacts." However, the IPEF remains silent on whether transfer of technology and IPRs (intellectual property rights) will be waived. The United Nations Conference on Trade and Development (UNCTAD) has proposed, in its Trade and Development Report last year, a "peace clause" for sharing the latest technologies without any IPR barriers for combating climate change. Lastly, the inclusion of the issue of tax and anti-corruption for promoting "fair competition by enacting and enforcing effective and robust tax, anti-money laundering, and anti-bribery regimes in line with the existing multilateral obligations" to curb tax evasion and corruption in the Indo-Pacific region has raised questions about its real intentions, said a person, who asked not to be quoted. CHINA TARGETED That the IPEF appears to be targeted against China is an open secret. The US wants the IPEF to be a commercial and trade scaffolding against China, which has emerged as the fulcrum of the global supply chains. In an interview with the Financial Times on 30 August, the former Malaysian Prime Minister Mahathir Mohamad criticized the US for the increased tensions over Taiwan, urging South-East Asian countries to move closer to China. According to the FT interview, he said that China was "a big market" for Malaysia and the region and maintaining that economic relationship was crucial. He praised China as a "good trading partner" despite the tensions in the South China Sea with the Philippines, Indonesia, Malaysia and Thailand. According to Chartbook published by renowned economic historian Adam Tooze on 28 August, "global supply chains work only in peace time, but not when the world is at war", as said by the economist Zoltan Pozsar of Credit Suisse, a leading international bank. Pozsar argued that global supply chains cannot work when there is a "hot" war or economic war. Pozsar says that the low inflation world fueled by globalization "had three pillars: cheap immigrant labor keeping nominal wage growth "stagnant" in the US, cheap Chinese goods raising real wages amid stagnant nominal wages, and cheap Russian natural gas fueling German industry and Europe more broadly." Pozsar maintains that implicit in this "trinity" were two giant geo-strategic and geo-economic blocs involving China, the US, and Russia. With the erosion of trust among the three, the likelihood of global supply chains coming back to normalcy seems pretty bleak. Against this backdrop, the prospects for new security-driven trading blocs to replace the old supply chains appear like "a mirage in the global trading desert" at this juncture. +
|
||
