Commentary: Biden wants Asia to trade with the US as an ‘alternative to China’ but details are scant
There’s a risk that IPEF could force ASEAN member countries to choose sides in future negotiations, balkanising the region. China has already been courting ASEAN countries through its Belt and Road Initiative and Global Development Initiative, while RCEP, albeit not China-led, has China as the largest economy in the trade bloc and could strengthen East Asian interdependence.
STILL EARLY DAYS
It remains unclear how IPEF will evolve as it is still early days. The fact that only 12 other countries (besides the US) from such a vast region have indicated interest is not a promising start – there is only one Pacific Island nation and one from South Asia.
The diverse nature of the current participating countries means that consensus will not be easy. Expanding the number of participating countries to promote inclusion will likely prolong the negotiation process.
Making binding commitments will also require protracted negotiations. Although negotiations are slated to last between 12 to 18 months, it will not be surprising if they last a lot longer.
Although there is potential for IPEF to play an important role in moving the region towards a more rules-based trading system, there is a good chance that it may not actually amount to anything significant.
This would be a pity, especially with the waning role of the World Trade Organization since the Doha Round collapsed and left its dispute settlement mechanism in paralysis. But it is a difficult time to try and sell an ambitious programme for the long-term future of the region when there is so much short-term uncertainty.
On the US side, the long-term prospects of IPEF may be impaired if it remains a presidential executive order rather than a US Senate-backed treaty. Support in the Senate for its ratification may shift following the mid-term elections in November, but only time will tell.
Dr Jayant Menon is a Senior Fellow, Dr Tham Siew Yean is a Visiting Senior Fellow and Dr Maria Monica Wihardja is a Visiting Fellow at ISEAS – Yusof Ishak Institute.
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