A Look at the Indo-Pacific Economic Framework

• Participating in Indo-Pacific trade agreements is a U.S. strategy to counter China’s increasing influence.
• President Biden announced the Indo-Pacific Economic Framework to promote fair and resilient trade.
• Reduced barriers and science-based standards could increase American ag export opportunity.

On his third day in office, former President Trump withdrew the United States from the proposed 12-nation Trans-Pacific Partnership (TPP). Proponents of the TPP argued the partnership would expand U.S. exports, and Farm Bureau estimated that a successful agreement would increase net U.S. agricultural exports by $5.3B.

Since the withdrawal, neither former president Trump nor President Biden re-engaged in free trade agreements in that region. By contrast, China and 14 other Asian countries participate in the Regional Comprehensive Economic Partnership trade agreement. China and other countries also formally requested to accede to the TPP’s successor arrangement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The EU also continues advancing new trade agreements in the region.

Many worry that the United States lacks an economic and trade strategy sufficient to counter China’s increasing economic influence in the Indo-Pacific. Our absence from those regional agreements limits our ability to shape trade rules in the region.

Recent action from the Biden Administration may change that.

A New Angle

In late May, the Biden Administration announced intentions to proceed with a U.S.-led Indo-Pacific Economic Framework (IPEF). The initiative will include modules covering fair and resilient trade, supply chain resilience, infrastructure and decarbonization, and tax and anticorruption.

IPEF is not a free trade agreement, and it varies greatly from any other traditional trade agreement. For starters, Congress won’t need to approve it. Instead, the administration will move forward with congressional input. Not requiring congressional approval inherently limits the scope of potential IPEF commitments, given Congress’ constitutional authority to regulate U.S. foreign commerce. Additionally, the administration indicated it will not negotiate changes to market access and tariff reductions.

However, United States Secretary of Agriculture Tom Vilsack and Trade Representative Katherine Tai indicated they will target non-tariff trade barriers as part of the effort to strengthen ties in the region, creating optimism that U.S. ag trade could reap significant benefits. The Indo-Pacific region, with rapidly growing markets and 60% of the world’s population, presents a patchwork of regulatory restrictions and non-tariff trade barriers. We do not know which and how many countries will participate in the negotiations, but it could include India, the Philippines, Japan, Indonesia, Malaysia, Mongolia, New Zealand, Singapore, Taiwan, Thailand and Vietnam.

Vietnam’s trade barriers are particularly difficult as they continue banning common ag pesticides without conducting appropriate risk assessments. Other countries in the region impede U.S. exports under Sanitary and Phytosanitary (SPS) barriers. Numerous obstacles impede biotech crop exports to the region, including: asynchronous approvals that create backlogs of unapproved traits; evaluation procedures not based on international scientific standards; unnecessary testing, labeling and traceability requirements; and even outright bans on genetically modified products.

Ag Imperatives

It is imperative that the administration make agriculture a priority in the IPEF, and U.S. farm groups hope non-tariff trade barriers will be addressed in negotiations:

• Reduce barriers to U.S. ag exports throughout the region and improve trade, starting with participating countries.
• Include high-standard SPS measures to reduce barriers and increase trade, including certification and inspection rules.
• Create mutually agreed-upon regulatory reforms allowing the U.S. reliable and easy export to key markets throughout the Indo-Pacific region. For example, recognizing the strength of the U.S. food safety and plant and animal health oversight systems and removing or streamlining certification or registration requirements for timely results.
• Address tariffs on U.S. agricultural exports to improve our competitiveness in the region. While IPEF will not initially be a comprehensive trade agreement with tariff negotiations, this should not preclude efforts to increase agricultural market access by reducing our trading partners’ tariffs.

Several U.S. business associations recently urged the Administration to conclude IPEF modules this year¹, and include binding commitments — such as on market access — and provisions for future expansion of commitments and participants.

Editor’s Note: Information included in this article is reflective of the status as of June 2022.