Big Mac or Nothingburger? Take Your Pick

Last November I wrote a column titled, “Where’s the Beef?,” which referenced the old Wendy’s commercial and the famous 1984 Mondale commercial when he ran against Ronald Reagan. I alluded to it again last January in a column that looked for the beef in the Indo-Pacific Economic Framework (IPEF). Now that the IPEF ministerial meeting in Los Angeles is over, the question returns, but this time it is whether the beef is the equivalent of a Big Mac or just a giant nothingburger.

For those of you interested in actual facts rather than mere opinions, CSIS has conveniently already published a short Critical Questions that explains what happened. If you don’t already know, you should take a look at it before reading any further.

Overall, the outcome was anticlimactic, consisting largely of an outline of what would be negotiated within each of the four pillars. Here is an abbreviated list thanks to the piece:

Trade Pillar: This pillar will focus on nine key issues: labor, environment, digital economy, agriculture, transparency and good regulatory practices, competition policy, trade facilitation, inclusivity, and technical assistance and cooperation.

Supply Chains Pillar: All countries agreed to negotiate ways to “anticipate, withstand, or rapidly recover from shocks,” focusing on six key areas: establishing criteria for critical sectors and goods, increasing resiliency and investment in critical sectors and goods, establishing an information-sharing and crisis response mechanism, strengthening supply chain logistics, enhancing the role of workers, and improving supply chain transparency.

Clean Economy Pillar: This pillar is divided into five subcategories: energy security and transition; greenhouse gas (GHG) emissions reductions in priority sectors; sustainable land, water, and ocean solutions; innovative technologies for GHG removal; and incentives to enable the clean economy transition.

Fair Economy Pillar: This pillar will focus on anticorruption, tax, capacity building and innovation, and cooperation, inclusive collaboration, and transparency.

The big question before the meeting was which countries would join which pillars. Ultimately, they all joined all of them, except for India, which declined to participate in the trade pillar. That probably produced a sigh of relief at the Office of the U.S. Trade Representative, which is well aware of India’s frequent efforts to slow down negotiations and ensure they do not produce anything consequential. Having India out makes it more likely the negotiations will come to a meaningful conclusion.

So, what does it all mean? Simply getting 13 other countries to join was a significant accomplishment, as is getting almost all of them to agree to participate in all the pillars. Although the ministerial declaration provided no specific timetable for the talks, it appears they will begin immediately, and there is some enthusiasm for trying to finish by November 2023, when the United States will host the Asia-Pacific Economic Cooperation (APEC) summit. The great unknown, of course, is whether the talks will produce any meaningful outcomes.

In some pillars that appears likely, particularly the one on supply chains, where Covid-19 and the war in Ukraine have taught all countries the importance of supply chain resilience and the dangers of vulnerability, particularly when it comes to the critical minerals that are essential in economies based on digital technology.

Progress in the clean economy pillar, in contrast, will really depend on the extent to which the United States and other developed country parties are willing to pay the developing country parties to make the energy and decarbonization transitions that all would like to see.

The trade pillar is similar in that it lays out a number of noble goals which are hard to object to, but it leaves open the question of how they will be achieved. And that in a nutshell is the promise and challenge of IPEF. It represents the triumph of idealism over pragmatism. The goals of all the pillars are commendable: better treatment of workers, higher wages, decarbonization, sustainability, transparency, combating corruption. It is hard to argue they are not desirable goals.

However, the administration so far seems reluctant to acknowledge that they do not come without a price, both economic and political. Some of them, like decarbonization and sustainability, cost money. Others, like supply chain cooperation, will require companies to provide their proprietary data not only to their own government but to others. Improving labor standards and promoting unionization can be politically disruptive in some countries, and raising wages has the short-term effect of making companies less globally competitive.

As a result, it should not be a surprise when countries ask what they are going to get for taking steps that are all meritorious but which will cost them money, political support and competitiveness. The U.S. response so far seems to be, “You should do those things because they are good for you and good for the world.” (We have not yet admitted that doing things like making their workers less competitive is also particularly good for high-wage countries like the United States.) 

I learned at the National Foreign Trade Council dealing with companies that it is hard to pressure them into submission, but they can be bribed to do the right thing—and so too with nations. Idealism sets the goals, but pragmatism gets them across the finish line. Whether the administration is willing and able to play the pragmatic game and come up with tangible benefits for the IPEF parties remains to be seen. So, Big Mac or nothingburger? Take your pick, but either way, I want mine with cheese.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.

Subscribe to William Reinsch's Weekly Column

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2022 by the Center for Strategic and International Studies. All rights reserved.