Genesis of IPEF
The US policy towards the Indopacific region became strong during US President Barack Obama’s visit to Honolulu, Australia and Indonesia in November 2011. Obama, who came into office as admittedly “the first Pacific president,” convinced the US policy advisors that George W Bush’s administration had paid too little attention to Asian regional issues and that the United States should restore and then enhance its traditional level of engagement there. Efforts accelerated as China’s Asia policy became more hardedged during 2010 and, during 2011, the United States’ military involvement in Iraq and Afghanistan significantly declined.
According to Kenneth G Lieberthal, Senior Fellow, Foreign Policy, China has invested substantial efforts in the Association of Southeast Asian Nations (ASEAN), the ASEAN+3 (ASEAN, plus China, Japan, and South Korea), and the ASEAN Regional Forum (ARF). Beijing negotiated a free trade agreement with ASEAN that provided for generous “early harvest” measures in the mid-2000s; the full agreement came into effect in 2010. This agreement, of course, excluded the United States. Against this background, US policymakers have taken a significant step forward in four areas:
Multilateral Organisation: Obama, in November 2011, brought to fruition his decision to support two different multilateral organisations. On the economic and trade side, the president declared that America hopes to see the Transpacific Partnership (TPP) become a high-quality trade and investment platform by December 2012, which would include the major economies of the Asia-pacific. The TPP was structured around principles America champions in terms of transparency, protection of intellectual property, labour rights, environmental protection, and so forth. Second, On the security side, America formally joined the East Asia Summit (EAS), and Obama used his inaugural participation to steer this new body toward focusing on difficult, concrete security issues in the region, especially maritime security.
Economics and trade: In early November 2011, it achieved ratification of the free trade agreement with South Korea, and it then turned its focus to developing the TPP as a new trade and investment platform in the Asia-pacific. This pair of initiatives has thrust East Asia back into the centre of US economic and trade initiatives, in line with Obama’s oft-repeated assertion that there is no region as vital as Asia to America’s future economic prosperity.
Security: Obama declared unequivocally on that trip that he would protect America’s Asian security investments from any future cutbacks in overall US military spending.
Democracy: President Obama also made clear that America would lead in Asia in promoting democracy and human rights, declaring in Australia that, “Other models have been tried and they have failed — fascism and communism, rule by one man and rule by committee. And they failed for the same simple reason: They ignore the ultimate source of power and legitimacy — the will of the people.”
The Obama administration did not seek to confront China across the board. Rather, it had adopted a two-pronged approach — to reaffirm and strengthen cooperative ties with China, and to establish a strong and credible American presence across Asia to both encourage constructive Chinese behaviour and to provide confidence to other countries in the region that they need not
vvvvyield to potential Chinese regional hegemony.
By the middle of the last decade, China, India and the USA got new leaders in Xi Jinping (2013), Narendra Modi (2014) and Donald Trump (2017).
China, under the leadership of its new President Xi Jinping, became more ambitious and emerged as a major global power of the new century. With the induction of two more countries — Australia and New Zealand — to the existing ASEAN+3 group, the alliance has been turned into a Regional Comprehensive Economic Partnership (RCEP) Agreement. The world’s largest trade agreement, RCEP, which includes China and 14 other Asia-pacific nations and covers a third of the global GDP, came into effect on January 1, but without one Asian economic giant — India. Though India was very much involved with this Chinese initiative since its inception, after the Indian Prime Minister’s visit to the USA in October 2019, the Indian government had walked out of the pact in November same year.
On December 31, US President Trump passed the Asia Reassurance Initiative Act (ARIA), which authorised USD 1.5 billion in spending for a range of US programmes in East Asia and Southeast Asia to “develop a long-term strategic vision and a comprehensive, multifaceted, and principled US policy for the Indo-pacific region.” Prior to that in May 2018, Secretary of Defence James Mattis announced the renaming of the “US Pacific Command” to “US Indo-pacific Command.” Subsequently, USD 113.5 million in seed funding was announced at the July 2018 Indopacific Business Forum, to promote US private sector investment in the region. One of the main policy decisions of Trump’s Indo-pacific policies was his formal withdrawal from a long-planned trade deal with Pacific Rim nations (Trans-pacific Partnership). According to Eric Altbach, a former deputy assistant to US Trade Representative for China Affairs, “the withdrawal created a political and economic vacuum in Asia that China was eager to fill, offering a boost for beleaguered US manufacturing regions while damaging American prestige in Asia.”
To counter China’s growing political and economic might in the Indo-pacific region, the USA and its allies have been trying all possible options, including revival of the almost defunct security alliance among India, USA, Australia and Japan — Quadrilateral Security Dialogue (Quad). Now the same Quad platform will be used to launch the new US initiative — Indo-pacific Economic Framework (IPEF).
Japan, another Asian power house, which is a close ally of both the USA and China (Japan is an active member of RCEP), initiated another alliance — the Comprehensive and Progressive Agreement for Trans-pacific Partnership (CPTPP). This was initiated when President Trump decided to trash the Trans-pacific Partnership (TPP) initiative of his predecessor. The Comprehensive and Progressive Agreement for Trans-pacific Partnership (CPTPP) is a free trade agreement (FTA) between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. The CPTPP was signed by 11 countries on March 8, 2018, in Santiago, Chile. The CPTPP entered into force on December 30, 2018. On February 1, 2021, the United Kingdom (UK) formally requested accession to the Comprehensive and Progressive Agreement for Trans-pacific Partnership (CPTPP), and on June 2, 2021, the
CPTPP Commission agreed to formally commence accession negotiations with the United Kingdom.
In this context, it should be mentioned that around 25 years ago (1997), India took a lead to form a regional forum, the Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation (BIMSTEC). It is a multilateral regional organisation established with the aim of accelerating shared growth and cooperation between littoral and adjacent countries in the Bay of Bengal region. BIMSTEC has a total of seven member countries — five from South Asia, including Bangladesh, Bhutan, India, Nepal, and Sri Lanka, and two from Southeast Asia, including Myanmar and Thailand.
Though the BIMSTEC platform could be used by its member nations as a free trade zone, its progress was very sluggish. Since its inception, BIMSTEC’S policy making meetings have not been held as per plan. Just five summits, including the recent one in Sri Lanka, have been held in 25 years. Until March 2022, BIMSTEC did not have a formal document or organisational architecture. According to a report by The Hindu, this was adopted during the last Summit in the form of the BIMSTEC Charter. BIMSTEC members have not adopted a Free Trade Agreement yet.
It seems the US administration has done in-depth research on the challenges faced by the countries of the Indo-pacific region and identified few ‘unique selling propositions’ to market IPEF among the countries of the region.
By mixing economics, security, development, climate and public health challenges, the Biden strategy places the United States at the heart of efforts to meet the challenges that face the region. Its ‘strategic ends’ — a free and open Indo-pacific — and its ‘strategic ways’ — strengthening the US role and building collective capacity — reflect an optimism that effective mechanisms can be built to coordinate across the region while successfully managing differences.
The Biden framework recognises the region’s security and prosperity as vital to American security and prosperity. It acknowledges that its economies will drive the lion’s share of global growth and that cooperation within the region is essential in the fight against climate disruption and COVID-19. It suggests new initiatives in military cooperation and shared technology development and governance. It recognises infrastructure needs within the region and ties them to the Build Back Better World initiative of the G7. This strategy encompasses the US’ intention of having closer security and economic ties with India, part of the Quad security dialogue that also includes Australia and Japan. It also invites closer cooperation with the EU, which seeks to increase its own presence in Asia. Pulling in so many partners, the strategy may be seen as a building block for America’s ‘friend-shoring’, or the creation of supply chains based only in countries with whom it has a security alliance.
It is interesting to note that South Korea, which is a member of China-led RCEP, is moving toward joining the Us-led Indo-pacific Economic Framework (IPEF). This comes at a time when it is also making preparations to submit an application to join the Comprehensive and Progressive Agreement for Trans-pacific Partnership (CPTPP)!
It is apprehended that the simultaneous existence of IPEF and RCEP will trigger another cold war in the Indo-pacific region. The battleground will shift from the Atlantic to the Indo-pacific — creating division among the ASEAN and other countries of South and East Asia. Though the US claims to support the centrality of ASEAN, yet IPEF apparently takes little heed of ASEAN’S preferred way of inclusive regional cooperation. A framework like this would only weaken and damage ASEAN’S centrality in the regional architecture. The US aims to potentially use IPEF to supplement its “Indo-pacific Strategy” and establish a unilaterally dominant economic cooperation arrangement, rather than a true free trade agreement with mutual open market access and tariff exemption as desired by the regional countries.
Russia is not a member of either RCEP or the proposed IPEF. Chinarussia relation is much better than Russia US relation. Though Russia may not be prepared to play second fiddle to China, with her huge oil and gas reserve along with military might, Russia will continue to play an important role in the European and Asian economy in coming years also. The helpless condition of the European NATO members and USA during the Russia-ukraine war reveals the shakiness of NATO. It seems the USA is now more interested in the Indo-pacific than the
Atlantic region. Russia may use this opportunity to emerge as a leader of energy-starved Europe. She may also position herself as a leader of Eurasia.
Though the US claims to support the centrality of ASEAN, IPEF is barely in sync with ASEAN’S preferred way of inclusive cooperation
USP of IPEF
Apprehensions
Options before Russia
Conclusion
Five Indian states — Himachal Pradesh, Uttarakhand, Arunachal Pradesh, Jammu and Kashmir and Sikkim — share their border with China which runs into 3,488 kilometres, reported News9live. Interestingly, amidst the pandemic and global tensions, trade between China and India has been booming. India’s export to China rose by 26 per cent to USD 21.18 billion in 2020-21 from USD 16.75 billion in 2018-19. However, the imports from China have exhibited a declining trend from USD 70.31 billion in 2018-19 to USD 65.21 billion in 2020-21. India’s Minister of State for Commerce and Industries said in the Parliament that India has made sustained efforts to achieve a more balanced trade with China, including bilateral engagements to address the non-tariff barriers on Indian exports to China and measures against unfair trade practices. He further added that the trade deficit with China stood at USD 44.02 billion in 2020-21 as against USD 53.57 billion in 2018-19. India has also started to remove restrictions on Chinese FDI in a phased manner. Restrictions were imposed in April 2020 after skirmishes along the border, reported Millennium Post.
China is a powerful neighbour to India which shares, among other things, nearly 3,500-kilometre-long border, thousands of years of cultural history, mighty rivers, and an ecosystem. Most importantly, China is a major trade and investment partner. India cannot afford to ignore China and Russia.
Japan is a member of RCEP and Quad. So is Australia. Even the USA, which is making all these strategic plans to isolate China, is avoiding any confrontation with them. Business Standard reported that US President Joe Biden may talk with his Chinese counterpart Xi Jinping in the coming weeks.
To avoid the emerging cold war, India may follow Obama’s policy which did not seek to confront China across the board. Rather, his administration had adopted a twopronged approach — to reaffirm and strengthen cooperative ties with China; and to establish a strong and credible American presence across Asia to both encourage constructive Chinese behaviour and to provide confidence to other countries in the region that they need not yield to potential Chinese regional hegemony. Japan is actually following the same policy with China. It has become a member of RCEP and has taken the initiative to form CPTPP. Hope, India will take an appropriate decision to keep its sovereign identity and strive to retain peaceful coexistence with its immediate neighbours.
Views expressed are personal