Thirteen leaders of Asia-Pacific Economic Cooperation (APEC) nations, including President Joe Biden, came together to sign a “regional trade framework” on Thursday.
Despite lacking key elements of the Indo-Pacific Economic Framework (IPEF), the Biden administration considers the agreement a significant achievement after years of negotiations.
The signatory countries include Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.
Although acknowledging that more work needs to be done, Biden emphasized the substantial progress made thus far. The joint statement from APEC outlined specific commitments to enhance workers’ rights, address supply chain disruptions, transition to cleaner economies, fight corruption, and improve tax administration.
The supply chain portion of the agreement was commended as the first of its kind and would be further bolstered by a “critical minerals dialogue” aimed at strengthening regional economic competitiveness.
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Biden emphasized the importance of the supply chain agreement, stating that it would help identify and address bottlenecks before they lead to disruptions similar to those observed during the Covid-19 pandemic.
Notably, the missing “fourth pillar” of the IPEF pertained to fair trade provisions, an aspect criticized by some. Indonesian CEO Anindya Bakrie stressed the need for market access, while Joshua Kurlantzick, a senior fellow for Southeast Asia at the Council on Foreign Relations, described most Southeast Asian states as being lukewarm about the deal. He pointed out that the United States did not offer any market access in the IPEF, and Southeast Asian nations could compare this with the comprehensive trade deals involving China, South Korea, Japan, and other major economies that have been established in recent years.
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Kurlantzick suggested that APEC nations agreed to the flawed agreement to avoid tension with the Biden administration, as they desired a greater U.S. security presence. The lack of an IPEF trade agreement was viewed as a setback for the Biden administration, which had aimed to demonstrate its economic re-engagement in Asia and provide a counterweight to China’s trade influence in the region. Russian state media attributed the failure to geopolitics, with Russian Deputy Foreign Minister Alexander Pankin hinting that some APEC nations resisted the U.S.’s call for a stronger stance against Russia’s actions in Ukraine due to their valuable trade relationships with Russia.
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Despite the challenges, there is optimism that Thursday’s agreement could serve as a symbolic foundation for future progress. Reuters suggests that the U.S. may be making headway in positioning itself as a trading alternative to China, whose economy has been wavering. Both APEC leaders and private business leaders express hope for stability between the U.S. and China to benefit the global economy.
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