STRATEGIC ASSESSMENT-Jakarta. Indonesia supported the launch of a U.S.-led regional economic initiative this week but was also adamant about closely studying the proposal before making any concrete commitments, as Washington reveled in the limited fanfare of its “return” to Asia.
Foreign ministry’s deputy director for ASEAN free trade negotiations, Ranitya Kusumadewi, explained that Indonesia is not technically a member of the IPEF, but rather “a U.S. partner supporting” it. She said that while Indonesia was keen to discuss the program, it was still completing its due diligence.
“The concrete manifestation of this IPEF collaboration is still under examination. For instance, we are still discussing whether Indonesia would subscribe to all four pillars of the framework or if we’d select individual ones,” Ranitya said on Wednesday.
More exports to the lucrative U.S. market were all that Indonesia, along with six other members of ASEAN, expected when they attended the virtual launch of President Biden’s IPEF in Tokyo on May 23. Indonesia and the other ASEAN members will try their luck to take advantage of the U.S.’ decreasing global power and influence and the rising and more assertive China.
It is a gamble, which could end up costly. Biden hopes that with his economic framework offer it will be easier to lure ASEAN members to join the coalition to contain China, although the United States refrained from mentioning China.
In the meantime, his guests hope that the United States will offer wider opportunities for developing countries to enter the giant U.S. market, although they also know very well that the Biden administration stands little chance of meeting their wish due to strong resistance from the U.S. public and corporations.
But still, the U.S. market is too lucrative to ignore and it is worth the fight. Indonesia will continue to cherry-pick from the American offer. At the end of the meeting, the participants only agreed to “launch collective consultations toward future negotiations.” Participants have yet to decide which of the IPEF tracks they will join. It means the commitment is more like “a letter of intent.”
Indonesian Chamber of Commerce and Industry (Kadin) official Shinta Widjaja Kamdani on Thursday said she welcomed the IPEF initiative, regardless whether there are rules that bind member countries. Shinta said the chamber expected that the IPEF will help improve economic relations between Indonesia, ASEAN, and the United States, particularly in terms of supply chain expansion and cooperation in the adoption of U.S. industrial technologies.
The United States has been trumpeting that its IPEF will bring prosperity to the region. But its sole purpose is to advance the Indo-Pacific Strategy and key interests of the United States instead of driving post-pandemic recovery, development and prosperity of the region.
Asian countries need to brace themselves for the negative impact brought on by the framework which could be summed up as “four Ds”: division, deprivation, deviation, and disappointment. U.S. Trade Representative Katherine Tai has openly described the IPEF as an “arrangement independent of China”.
The leaders of the United States, Australia, India, and Japan attended the Quad Leaders’ Summit in Tokyo, Japan, Tuesday. While their joint statement did not mention China, some observers would argue that the Quad’s target is in fact China, as the statement reads: “We strongly oppose any coercive, provocative or unilateral actions that seek to change the status quo and increase tensions in the area, such as the militarization of disputed features, the dangerous use of coast guard vessels and maritime militia, and efforts to disrupt other countries’ offshore resource exploitation activities.”
This in large part refers to allegations of Beijing’s actions in the South China Sea. In its editorial, the China Global Times wrote that “the Quad is playing a dangerous trick.” Despite what the Quad offers, it is worth paying close attention to the Quad’s determination to maintain the status quo in the Indo-Pacific and the potential conflicts that could arise. War in the Taiwan Strait will be a very bad nightmare for the region that must be prevented.
U.S. President Joe Biden launched the Indo-Pacific Economic Framework (IPEF) with 12 initial partners including Australia, Indonesia, India, Japan, Singapore, South Korea, Thailand, Malaysia, Brunei, the Philippines, and Vietnam, in a statement released by the White House on Tuesday.
The framework will deliver a stronger, fairer, more resilient economy for families, workers, and businesses in the United States and the Indo-Pacific region. U.S. direct investment in the Indo-Pacific region totaled more than $969 billion in 2020, and has nearly doubled in the past decade. IPEF will allow the United States and partner countries to define the rules of the game that assure U.S. workers, small businesses and farmers can compete in the Indo Pacific.
The framework will focus on four key pillars to uphold high-standard commitments that will deepen economic participation in the Indo Pacific: a connected economy, a resilient economy, a clean economy, and an equitable economy.
President Biden launched the long-awaited economic component to the U.S. Indo-Pacific strategy in Tokyo on Monday. The great rhetorical absence at the heart of Biden’s announcement was, of course, China, whose rapid economic integration with and growing assertiveness toward its neighbors prompted the formulation of the Indo-Pacific strategy in the first instance. If the Indo-Pacific strategy is another iteration of the “pivot” or “rebalance” initiated by President Barack Obama, the IPEF is effectively the Biden administration’s replacement for the TPP.
But to call the IPEF itself a “bloc,” is to oversell its substance. “Framework” is very much the operative word in the title of the IPEF, which seeks to recreate the sweeping, rule-defining scope of a normal trade deal within the constraints of a U.S. domestic political mood that is deeply hostile toward multilateral trade agreements.
The framework therefore requires a lot of filling in and elaboration before it can hope to achieve the lofty goals set out by Biden. Last week, I cited an article by James Crabtree of Singapore’s International Institute for Strategic Studies, who argued that as a result of these limitations, the IPEF amounts to an “all-pain, no gain economic deal” for Southeast Asian countries.
This also likely explains the generally skeptical tone of some Southeast Asian governments toward the IPEF when they met Biden for the U.S.-ASEAN Special Summit in Washington earlier this month. Despite its broad scope, the U.S. government therefore has a lot of work to do to convince Southeast Asian signatory governments that the agreement is motivated by a positive vision for the region, rather than a negative response to China’s growing power.
President Joe Biden launched a new Asia-Pacific trade initiative on Monday in Tokyo, with 13 countries including India and Japan signing up, although questions about the pact’s effectiveness remain. Biden formally unveiled the Indo-Pacific Economic Framework for Prosperity (IPEF) on his second day in Japan, where he is also holding talks with Prime Minister Fumio Kishida before joining a Quadrilateral Security Dialogue summit on Tuesday.
Unlike traditional trade blocs, there is no plan for IPEF members to negotiate tariffs and ease market access, a tool that has become increasingly unpalatable to U.S. voters fearful of seeing homegrown manufacturing undermined. Instead, the program foresees integrating partners through agreed standards in four main areas: the digital economy, supply chains, clean energy infrastructure, and anti-corruption measures.
Biden inaugurated IPEF with 12 countries in the region, including Indonesia, with the aim to strengthen the economies of regional countries. When combined with the United States, the economies of these countries make up 40 percent of the world’s gross domestic product (GDP). “We are writing a new history,” Biden said. In a joint statement, the countries said the agreement would help them jointly “prepare the economy for the future” after being pushed back by the pandemic and war in Ukraine.
The White House said the IPEF would help the United States and countries in Asia work more closely to address a range of issues, including supply chains, digital commerce, clean energy, workers protection, and anti-corruption efforts. The White House further said member states still needed to negotiate the details. Therefore, it is still difficult for the U.S. government to say how this framework can fulfill the promise of interests of U.S. workers and businesses as well as the global community.
Chinese Foreign Minister Wang Yi in Guangzhou on Monday expressed China’s objections to the establishment of the IPEF, saying it destabilizes the Asia-Pacific region. Wang said the U.S. foreign policy approach in the Asia-Pacific is to form small groups consisting of pro-U.S. countries, which will lead to mutual suspicion and run the risks of countries in the region being pitted against each other.
Japan’s Prime Minister Fumio Kishida welcomed President Biden to Tokyo on Monday, as a demonstration of the United States’ commitment to strengthening its engagement in the Indo-Pacific region. The two leaders also discussed the situation in Ukraine. President Biden assured Kishida that the United States remains fully committed to Japan’s security defense and announced the launch of the new IPEF.
Trade Minister Muhammad Lutfi on Saturday met with U.S. Trade Representative (USTR) Ambassador Katherine Tai on the sidelines of the APEC Trade Ministers Meeting in Bangkok, Thailand. Minister Lutfi emphasized the importance of collaboration between the Indo-Pacific Economic Framework (IPEF) and the ASEAN Outlook on the Indo-Pacific (AOIP) in order to get maximum impact on regional economic development.
He said Indonesia was looking into the United States’ desire to strengthen economic participation in the Indo-Pacific region through the IPEF. Minister Lutfi said Indonesia would like to see concrete results from the cooperation, particularly in the areas of trade and supply chains, as well as its benefits on the welfare of people in the Indo-Pacific region, particularly ASEAN.
Minister Lutfi expressed hope that the meeting would send a strong signal to ASEAN and U.S. firms to establish collaboration that will promote economic recovery efforts. Ambassador Tai said Indonesia and ASEAN’s participation in IPEF was important, and invited Indonesia to participate in the Joint Initiative on Services Domestic Regulation. Ambassador Tai said she would follow up on Indonesia’s request to continue to enjoy the Generalized System of Preferences (GSP). (Red/many sources)
