Unpacking the Indo-Pacific Economic Framework Launch

At a public event in Tokyo on May 23, 2022, President Biden and 12 regional counterparts officially launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with a joint statement and hybrid meeting of participating leaders. Coming five years after the United States withdrew from the Trans-Pacific Partnership (TPP), the IPEF is intended to reassert U.S. economic engagement in a vital region and provide a U.S.-led alternative to China’s economic statecraft in the region. Though no new binding commitments were made in Tokyo under this framework, the long-awaited launch formally kicks off the centerpiece economic initiative of the Biden administration’s Indo-Pacific strategy.

Q1: What key features of the IPEF were announced at its release?

A1: The release provided few new details about the framework beyond what has already been signaled by the administration. Rather, it largely channels themes from the Biden administration’s broader trade agenda, which prioritizes—at least rhetorically—fair and inclusive trade, sustainability, and the need for digital democracy to flourish.

In a press briefing on the launch of the initiative, National Security Adviser Jake Sullivan said the IPEF was “foundational” to U.S. efforts in the region. He also underscored the administration’s new approach to economic engagement, saying, “The fact is that past models did not address these challenges—or did not address them fully and take them head on—leaving our workers, businesses, and consumers more vulnerable. So, we believe that we need a new model that we can move on quickly to, in fact, take these challenges head on, and that’s what IPEF will do.”

As previously announced, the IPEF will focus on four policy pillars, now with new names, each led by an individual agency:

  1. Connected Economy, which covers fair and resilient trade topics including the seven subtopics of labor, environment and climate, digital economy, agriculture, transparency and good regulatory practices, competition policy, and trade facilitation (led by the U.S. Trade Representative, or USTR);

  2. Resilient Economy, which covers supply chain resilience topics (led by the Department of Commerce, or DOC);

  3. Clean Economy, which covers infrastructure, clean energy, and decarbonization topics (led by the DOC); and

  4. Fair Economy, which covers tax and anti-corruption topics (led by the DOC).

Countries can choose to join any number of the four pillars but are expected to commit to all aspects of each pillar they join.

Overall, details are not clear on how the Biden administration, in concert with regional partners, plans to pursue or achieve these objectives or which specific incentives the administration will be able to provide as a bargaining method for incentivizing closer cooperation and follow-through among partners. Furthermore, although 12 countries signed on to the IPEF launch, it remains unclear which partners will join which specific policy pillars. It also remains unclear which countries have decided against joining initially but may eventually be persuaded to participate in negotiations.

Perhaps the most surprising element of the launch is that the administration ultimately chose weaker language in exchange for a higher number of participants. For example, any mention of negotiations is left out of the White House IPEF fact sheet, and the trade pillar indicates only that the United States “will engage comprehensively” with partners. What this portends for the launch of formal negotiations remains unclear.

Q2: What does the initial lineup of countries say about regional enthusiasm for the framework?

A2: Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam announced their interest in the IPEF and signed onto the launch, although it is not yet clear which pillars each country plans to participate in.

While it was widely expected that close advanced economy partners such as Japan, Australia, New Zealand, and Singapore would join the IPEF launch, the inclusion of seven other Indo-Pacific countries—including all seven of the Association of Southeast Asian Nations (ASEAN), members in the Asia Pacific Economic Cooperation (APEC), plus South Korea and India—is significant. In prior months, it seemed that U.S. unwillingness to provide market access incentives could make the IPEF a non-starter in regional capitals. Though securing the participation of these countries was an effort from the Biden administration that came down to the eleventh hour, it appears that the IPEF’s decentralized pillar approach with low barriers to participation has, at least initially, proved successful.

Several countries were still left out of the IPEF launch. Given political and human rights concerns, Myanmar is not participating. Laos and Cambodia, two of the least developed countries in the region, are also not participating given capacity challenges. Pacific Rim countries in the Americas that participated in TPP negotiations—Canada, Mexico, Peru, and Chile—were not invited. U.S. officials instead plan to use the upcoming Summit of the Americas as a venue to discuss many of the issues covered under the IPEF with these countries. While Taiwan had indicated interest in joining the IPEF—and 250 members of Congress called for its inclusion—the island was ultimately left out of the framework to secure the participation of other South and Southeast Asian countries reluctant to antagonize Beijing. Pacific Island nations were also notably absent from the IPEF launch.

In an April 2022 brief, the CSIS Economics Program found that regional partners viewed “the success of the IPEF as hinging on the extent to which the United States can attract developing countries from Southeast Asia, South Asia, and the Pacific.” In attracting these 12 other initial countries for the IPEF launch, the United States has succeeded by this metric, offering a clear demand signal for U.S. economic engagement and leadership in the region. However, these countries only committed to attending an initial scoping round of discussions, and whether this broad initial enthusiasm for the framework continues once negotiations commence remains an open question.

Q3: What does the IPEF say about the Biden administration’s approach to economic engagement in the Indo-Pacific?

A3: International trade and economic policy remains a controversial issue for the Biden administration. Critics across both sides of the aisle continue to oppose the administration's prolongation of Trump-era tariffs, its reluctance to negotiate new trade agreements, and its evolving—yet still unclear—strategy for reforming the multilateral trade system.

Since the IPEF is not a traditional trade agreement, the administration will not need to seek congressional approval, thereby avoiding a politicized battle for domestic ratification. While its decentralized approach to participation in each pillar lowers the barrier for Indo-Pacific partners to join the framework, pursuing an agreement that does not require the input of Congress signals to other countries that the United States does not intend to make significant concessions.

However, there are still drawbacks to the IPEF not being a traditional trade agreement. Without the promise of greater U.S. market access, a significant incentive for regional partners to agree to high U.S. standards goes away. A lack of enforcement mechanisms also limits the ability of the United States to secure its interests in the framework.

In the Indo-Pacific region and beyond, the Biden administration has committed itself to a multilateral approach to trade and economics that leverages relationships with allies and partners. Within the U.S.-EU Trade and Technology Council (TTC), another U.S.-led economic security engagement forum, the transatlantic allies participating already share common objectives, a strong institutional history of negotiating complex objectives, and a growing record of joint agreements on topic areas covered under the IPEF. If the United States is able to replicate this level of cooperation and momentum in the Indo-Pacific—not certain given the diversity of the region and lack of clear incentives—the IPEF could potentially be a similarly ambitious framework among a broader set of partners.

Q4: Should the United States pursue a separate digital trade pillar?

A4: There is disagreement as to whether the United States should pursue a separate digital trade pillar. CSIS experts are split on this proposition. The CSIS Economics and Southeast Asia programs have argued in two papers that breaking out a separate digital pillar could provide an “early harvest” digital trade agreement that harmonizes digital norms and standards among key advanced economy partners without overwhelming the existing trade pillar with high standards requests for developing economies. However, the CSIS Scholl Chair in International Business argues that breaking out a separate digital pillar would remove a key offer attracting advanced economy partners to the trade pillar. For now, the administration has made clear that it does not intend to break out a separate digital trade agreement since it views it as an incentive for regional participation in the broader trade pillar. In other words, short of market access, the digital component remains one of the most appealing parts of the IPEF, and administration officials are reluctant to unbundle that incentive from other trade objectives.

Q5: What are the next steps for the IPEF?

A5: The IPEF is not a multilateral trade agreement, and forthcoming negotiations under each of the framework’s pillars will likely proceed at their own pace. Unlike a traditional trade agreement, the IPEF will be an executive agreement (or agreements) not requiring congressional approval—an approach that the CSIS Economics Program and Scholl Chair in International Business critiqued in a previous white paper.

It is expected that in the next few months, countries who indicated interest in joining the IPEF will select the pillars on which they will enter negotiations. By mid-summer, the administration aims to convene a ministerial summit with all countries that participated in the launch event to scope the overall negotiations, break into groups by pillar, and begin negotiations. Within 12–18 months, the administration hopes to conclude negotiations under each pillar. The Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting, to be hosted by the United States in November 2023, is seen by many as the informal deadline for finalizing IPEF agreements. That said, there is hope for “early harvest” wins, particularly regarding trade and supply chain issues.

As CSIS has previously argued, the IPEF is the linchpin of the administration’s economic policy in a critical region, and failure would be a significant blow to its objectives. Following a promising launch event, attention now turns to how effectively the administration can move to formal negotiations and offer incentives for key countries in the region to remain involved and make meaningful commitments.

Aidan Arasasingham is a program coordinator and research assistant with the Economics Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Emily Benson is an associate 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.

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).

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

Aidan Arasasingham

Aidan Arasasingham

Former Research Associate, Economics Program
Emily Benson
Director, Project on Trade and Technology and Senior Fellow, Scholl Chair in International Business
Matthew P. Goodman

Matthew P. Goodman

Former Senior Vice President for Economics