Finding the Beef

Last November, I wrote a column titled “Where’s the Beef,” which resurrected a line from a famous commercial of the ’80s and applied it to the administration’s proposed Indo-Pacific Economic Framework (IPEF). Subsequently, CSIS colleagues Matt Goodman, Emily Benson, and I launched a search for the beef, and I am pleased to report we may have found some—or at least our idea of what the beef ought to be. During the hunt we consulted with a lot of people in both the administration and the private sector. Our conclusions will be discussed in detail in a paper to be issued this week, but today’s column provides a preview.

Our discussions concentrated on two areas: process—how the negotiations would be conducted—and substance—what might actually be agreed to. Today I will focus on the latter and provide some excerpts from our paper. With respect to substance, we followed the list of topics laid out by President Biden when he announced the IPEF: “trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.”

In our discussions it was clear the highest U.S. priority is on digital trade, and we had plenty of suggestions for the administration:

• Prohibit restrictions on cross-border data flows and data localization requirements, including for financial services;
• Ensure nondiscriminatory treatment of digital products;
• Prohibit customs duties on digital products distributed electronically;
• Prohibit forced disclosure of proprietary computer source code and algorithms;
• Promote the protection of personal information in digital trade, ensuring that information is transferred across borders consistent with strong privacy principles;
• Permit the use of electronic authentication and e-signatures, while protecting consumers’ and businesses’ confidential information;
• Promote access to government-generated public data in formats usable by small and medium-sized enterprises (SMEs); and
• Promote the interoperability of privacy rules and related enforcement regimes, such as the Asia-Pacific Economic Cooperation Cross-Border Privacy Rules, while respecting U.S. federal and state privacy laws and regulations.

These are not new, and the United States has sought them in other venues, including the plurilateral e-commerce negotiations at the World Trade Organization (WTO) and the original Trans-Pacific Partnership negotiations, which were repeated in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and built upon in the United States-Mexico-Canada Agreement (USMCA) and the U.S.-Japan Digital Trade Agreement. There are also precedents in Asia, including the Digital Economy Partnership Agreement, the Singapore-Australia Digital Economy Agreement, and the just-concluded Korea-Singapore Digital Partnership Agreement The challenge for the IPEF will be moving beyond the usual suspects —Japan, Korea, Australia, New Zealand, and Singapore—and persuading other countries in the region to make meaningful commitments.

Another important area for the United States is climate, a problem of the global commons, where cooperation will be key to achieving broader outcomes than any single nation could accomplish on its own. For the IPEF, those outcomes should include:

• Agreement to promote increased investments in environmental remediation technologies such as industrial-scale carbon-capture technologies;
• Cooperation on scaling up environmentally beneficial investments while eliminating harmful investments;
• Commitments to expand regional carbon offset markets, such as the Australia-led Indo-Pacific Carbon Offsets Scheme;
• Commitments to increase demand for renewable power throughout the region as well as phase out fossil fuel subsidies; and
• Commitment to participate in renewed negotiations on the WTO’s proposed Environmental Goods Agreement (EGA). (See the separate CSIS paper on this.)

Supply chain resiliency also involves organizing cooperation among the participating countries. That should include:

• Coordinating mapping, transparency, and information sharing on critical supply chains in order to create early warning systems for shortages and bottlenecks;
• Considering the feasibility of creating joint stockpiles or strategic reserves of essential goods;
• Coordinating financing projects to secure access to key raw materials and critical minerals; and
• Developing common standards for transparent, trusted, and sustainable supply chains.

Infrastructure is largely a question of coming up with money for projects in the region, but the related goal is to provide a transparent alternative to China’s Belt & Road Initiative (BRI). IPEF participants should:

• Commit to the Group of Twenty’s (G20) quality infrastructure principles agreed to at Osaka in 2019;
• Commit to transparency in their procurement processes, such as making government contracts public and sharing contract information; and
• Commit to strive for sustainability in infrastructure projects, including a prohibition on new coal-fired power plants.

The WTO Trade Facilitation Agreement created new opportunities and obligations for members that are particularly important for SMEs, and there are a number of these that IPEF parties could undertake:

• Providing capacity-building and technical assistance to fulfill Trade Facilitation Agreement commitments and by increasing access to broadband connectivity;
• Promoting the exchange of information and best practices on SME digitization and access to capital, trade finance, trade missions, and training programs;
• Reviewing and minimizing the adverse impact of new regulations on SMEs;
• Enhancing customs transparency and expanding electronic processing of information and documents;
• Promoting use of “single windows” for import, export, and transit; and
• Establishing “trusted trader programs” to facilitate customs clearance for traders that meet specified security criteria.

Finally, the Biden administration will want to deal with forced labor and human trafficking, which are persistent problems in the Indo-Pacific region. This should include:

• Integrating labor as a core issue throughout the framework, including the adoption of USMCA-like dispute-settlement provisions;
• Committing to enforce labor provisions of existing trade agreements, while providing capacity building and other program support to ensure that workers are treated fairly; and
• Committing not to block the work of companies and nongovernmental organizations in analyzing and certifying the status of their supply chain participants’ labor practices.

These are ambitious undertakings—real beef, as it were—but if the administration wants to produce an agreement that actually changes anything, it needs to pursue these commitments. The danger of their menu approach is that it could end up with deep commitments by only a few countries—the usual suspects—or shallow commitments by many countries. The challenge will be to maximize inclusion. How to do that will be the subject of a later column.

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

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).

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