IPEF Advances at Negotiations in Brisbane

Trade negotiators representing 14 Indo-Pacific countries met for the first in-person negotiating round for the Indo-Pacific Economic Framework for Prosperity (IPEF) from December 10 to 15, 2022 in Brisbane, Australia. Following a May launch event in Tokyo, a July senior officials meeting in Singapore, and a September ministerial in Los Angeles, the six-day Brisbane round saw the first sets of draft text for certain pillars and subtopics circulated among IPEF parties for negotiation.

At the end of the negotiating round, the Office of the U.S. Trade Representative (USTR) and the Department of Commerce released a joint statement detailing the progress made in negotiations. While no new deliverables were announced, the statement indicated how text-based and detailed conceptual negotiations among parties advanced—signaling that the supply chains, a fair economy, and aspects of the trade pillar were developing faster than the clean economy pillar and other trade pillar topics.

Q1: What was the state of play for IPEF development going into the Brisbane negotiations?

A1: Negotiators exceeded expectations at the first IPEF ministerial meeting in Los Angeles in September, generating almost universal buy-in from participating countries in all four pillars of work. Working-level discussions between parties have continued since then, though gaps remain between the expectations of U.S. negotiators, foreign counterparts, and domestic stakeholders.

The U.S. government outlined its expectations for the USTR-led trade pillar two weeks after the Los Angeles ministerial. USTR defined its three broad negotiating goals for the trade pillar as resilience, inclusion, and sustainability. Notably, these goals broke the mold of detailed, chapter-specific negotiating objectives used in prior trade negotiations, such as for the Trans-Pacific Partnership (TPP). While some domestic advocates have praised this evolution in USTR’s approach as more inclusive and less beholden to corporate interests, other domestic stakeholders, including some in Congress, have criticized USTR’s approach for lacking details, an enforcement mechanism, and a willingness to increase market access for U.S. firms and regional partners—a key incentive for boosting resilience, inclusion, and sustainability. Several regional partners continued to lament that market access is not on the table in negotiations. U.S. trade representative Katherine Tai maintains that omission of market access commitments is a “feature, not a bug” of IPEF and that tariff reduction will not be incorporated.

Q2: What progress was made by negotiators on each of the pillars?

A2: The parties produced no early harvest agreements or new initiatives, although they did make progress on several IPEF pillars and subtopics. This was also the first time that the parties tabled text for negotiation. Tabled text covered the following topics:

• The trade facilitation, agriculture, services domestic regulation, and transparency and good regulatory practices subtopics of the trade pillar led by USTR
• The supply chains pillar led by the Commerce Department
• The fair economy (tax and anti-corruption) pillar led by the Commerce Department

Though text was not introduced for the other pillar and subtopics, negotiators engaged in “detailed conceptual” discussions on

• the environment, labor, digital economy, competition policy, and inclusivity subtopics of the trade pillar led by USTR; and
• the clean economy (climate, decarbonization, and infrastructure) pillar led by the Commerce Department, which featured a concept paper for what the pillar could include.

The difference in text-based and conceptual negotiations signals that the trade, supply chain, and fair economy pillars are developing faster than the clean economy pillar. It remains to be seen whether the text-based negotiations in Brisbane will produce “early harvests”—smaller agreements concluded earlier than the conclusion of a final package of agreements. U.S. negotiators have not ruled out the possibility, with Commerce Secretary Gina Raimondo suggesting the supply chain pillar could potentially see early harvest agreements. On infrastructure, the complexities of standing up a joint financing mechanism, a feature that Japan, Australia, and the United States have struggled with in the past, suggests it remains unlikely that major infrastructure projects—and complex supply chain deals—will materialize ahead of the already ambitious (and likely to shift) November 2023 deadline.

Of the four pillars, the one that has garnered the most enthusiasm among participants is the supply chain pillar. This reflects a broad and long-term effort by the United States to encourage allies to rethink their supply chains in two fundamental ways. The first relates to security and the U.S. desire for trade partners to move away from China. The second element is decarbonization and the need for a steady mineral supply that will facilitate the green transition. Participating IPEF members are keen to play a greater role in these supply chains, and there are high hopes that the IPEF will bring about an information-sharing mechanism that will promote more secure and resilient supply chains.

IPEF participants also discussed whether to expand the membership of IPEF to include Canada. A key player in TPP and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) negotiations, Canada remains a significant Indo-Pacific trading partner that seeks deeper regional integration. In October, Canada expressed its desire to join IPEF, a position that has now garnered the support of Secretary of State Anthony Blinken and all other IPEF parties in principle. Despite this support, however, it remains unclear how and when Canada can formally join IPEF negotiations.

On the margins of negotiations, congressional staff from the Senate Finance Committee and House Committee on Ways and Means met with U.S. negotiators and regional partners. This congressional involvement comes on the heels of a December 1 congressional letter to President Biden. Signed by a bipartisan group of 19 Senate Committee on Finance members, the letter challenged the Biden administration’s assertion that IPEF does not require congressional approval, saying “there appears to be a misunderstanding as to whether an agreement like IPEF, which aims to regulate foreign commerce and reshape international trade flows, requires similar approval. It does.” According to a senior Biden administration official, the issues covered by IPEF “do not trigger any need for congressional legislation.” Questions of legal authority remain unresolved and could cast a shadow on the Biden administration’s efforts as negotiations continue in the months ahead.

Q3: What are the likely next steps for IPEF negotiations?

A3: USTR and Commerce remain committed to concluding IPEF negotiations within an 18-month timeframe to coincide with the United States hosting the Asia Pacific Economic Cooperation (APEC) Leaders’ Meeting in November 2023. Japan, a leading IPEF partner, has also signaled its commitment to an “ambitious” IPEF negotiating schedule. However, the slow progress of negotiations thus far may makes this targeted timeline increasingly unlikely.

Some partners, including South Korea and Malaysia, have expressed interest in reaching an early harvest digital economy agreement under the trade pillar. However, USTR appears unlikely to pursue such an agreement before it clarifies its own goals regarding digital trade. On the domestic front, digital economy issues remain contentious, with diverging views on core digital trade issues among business, labor, and legislative constituencies. USTR’s position on digital economy issues within this domestic debate remains unclear, though the agency has committed to negotiating a digital economy chapter in line with its broader worker-centric trade policy agenda. CSIS is currently examining this policy challenge and will release a report synthesizing domestic perspectives on digital trade in IPEF in early 2023.

Aidan Arasasingham is a research associate with the Economics Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Emily Benson is a senior fellow with the Scholl Chair in International Business at CSIS. Matthew P. Goodman is senior vice president for economics at CSIS. William A. Reinsch holds the Scholl Chair in International Business at CSIS.

Stephen Garrett, CSIS Economics Program research intern, provided valuable research support.

Critical Questions 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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