US rolls out Indo-Pacific trade pact
Biden warns of long inflation ‘haul,’ balks at talk of recession
TOKYO — President Joe Biden launched a new trade deal with 12 Indo-Pacific nations Monday aimed at strengthening their economies as he warned Americans worried about high inflation that it is “going to be a haul” before they feel relief.
Biden, speaking at a news conference after holding talks with Japan’s Prime Minister Fumio Kishida, acknowledged the U.S. economy has “problems” but said they were “less consequential than the rest of the world has.”
He added: “This is going to be a haul. This is going to take some time.”
In answer to a question, he rejected the idea that a U.S. recession is inevitable.
His comments came just before Biden’s launch of the Indo-Pacific Economic Framework, also known as IPEF. His administration says the trade deal is designed to signal U.S. dedication to the contested economic sphere and to address the need for stability in commerce after disruptions caused by the pandemic and Russia’s invasion of Ukraine.
Nations joining the U.S. in the pact are: Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Along with the United States, they represent 40% of world GDP.
The countries said in a joint statement that the pact will help them collectively “prepare our economies for the future” after the fallout from the pandemic and the war in Ukraine.
Biden and Kishida were joined for the launch event by Indian Prime Minister Narendra Modi, while representatives from the other countries appeared by video. Modi was in Tokyo for Tuesday’s meeting of the Quad, a four-country security group that also includes the U.S., Japan and Australia.
The White House said the framework will help the United States and Asian economies work more closely on issues, including supply chains, digital trade, clean energy, worker protections and anticorruption efforts. The details still need to be negotiated among the member countries, making it difficult for the administration to say how this agreement would fulfill the promise of helping U.S. workers and businesses while also meeting
global needs.
Critics say the framework has gaping shortcomings. It doesn’t offer incentives to prospective partners by lowering tariffs or provide signatories with greater access to U.S. markets. Those limitations may not make the U.S. framework an attractive alternative to the Trans-Pacific Partnership, which moved forward without the U.S. after former President Donald Trump pulled out. China, the largest trading partner for many in the region, is also seeking to join TPP.
“I think a lot of partners are going to look at that list and say: ‘That’s a good list of issues. I’m happy to be involved,”’ said Matthew Goodman, a former director for international economics on the National Security Council during President Barack Obama’s administration.
But he said they also may ask, “Are we going to get any tangible benefits out of participating in this framework?”
Kishida hosted a formal state welcome for Biden at Akasaka Palace, including a white-clad military honor guard and band in the front plaza. Reviewing the assembled troops, Biden placed his hand over his heart as he passed the American flag and bowed slightly as he passed the Japanese standard.
The Japanese premier took office last fall and is looking to strengthen ties with the U.S. and build a personal relationship with Biden. The two leaders ended their day with dinner at Kochuan, an iconic Tokyo restaurant on the grounds of a Japanese garden.
Kishida said at their meeting that he was “absolutely
delighted” to welcome Biden to Tokyo on the first Asia trip of his presidency. Along with Biden, he drove a tough line against Russia over its invasion of Ukraine, saying the aggression “undermines the foundation of global order.”
Biden, who is on a fiveday visit to South Korea and Japan, called the U.S.-Japanese alliance a “cornerstone of peace and prosperity in the Indo-Pacific” and thanked Japan for its “strong leadership” in standing up to Russia.
Kishida welcomed the new Biden trade pact but said he still hoped the president would reconsider the U.S. position and return to the Trans-Pacific pact that Trump withdrew from.
“We think it’s desirable for the United States to return to the TPP,” he said.
The new pact comes at a moment when the administration believes it has the edge in its competition with Beijing.
Bloomberg Economics published a report last week projecting U.S. GDP growth at 2.8% in 2022 compared to 2% for China, which has been trying to contain the coronavirus through strict lockdowns while also dealing with a property bust. The slowdown has undermined assumptions that China would automatically supplant the U.S. as the world’s leading economy.
“The fact that the United States will grow faster than China this year, for the first time since 1976, is a quite striking example of how countries in this region should be looking at the question of trends and trajectories,” said White House national security adviser Jake Sullivan.