Renewing Trade and Economic Engagement through IPEF
July 28, 2023
By Uma Menon, Office of Public Affairs, International Trade Administration
Since President Biden launched the Indo-Pacific Economic Framework for Prosperity (IPEF) in May 2022, it has sparked discussions on innovative ways to enhance longer-term economic cooperation in the Indo-Pacific, the world’s most populous and fastest-growing region. The framework harnesses the economic power of the United States and 13 partners — Australia, Brunei, Fiji, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam — to support the development of a fair, resilient and secure regional economy that can meet the demands of the future.
Indo-Pacific countries are crucial economic partners for the United States. Combined, the markets of the 14 IPEF countries represent nearly 40% of the world’s gross domestic product, presenting significant opportunity for collaboration and economic growth. Trade with the Indo-Pacific supports more than 3 million American jobs and is the source of nearly $900 billion in foreign direct investment in the United States. As the leading exporter of services to the region, the United States is also helping to drive regional growth and development.
This framework for economic cooperation strengthens ties between the United States and the Indo-Pacific region to promote and facilitate trade, improve supply chain resiliency, enable the clean economy transition, and combat corruption and improve tax administration. In addition, by establishing high-standard labor, environmental and accountability commitments as well as facilitating coordination across borders, IPEF puts workers and consumers at the center of foreign economic engagement.
IPEF focuses on forging innovative partnerships across distinct pillars through the negotiation of four separate agreements:
On behalf of the U.S. Government, the U.S. Department of Commerce leads on Pillars II, III and co-leads on certain provisions in Pillar IV, while the Office of the U.S. Trade Representative (USTR) leads on Pillar I. Sharon H. Yuan represents the U.S. Department of Commerce alongside Assistant U.S. Trade Representative for Southeast Asia and the Pacific, Sarah Ellerman, and together they serve as the Chief Negotiators for the United States with IPEF partner countries.
To advance the Biden-Harris Administration’s objectives, Chief Negotiator Yuan balances complex issues, including commercial diplomacy, policymaking and negotiation both with the IPEF partners and within the U.S. Government. Within the first four months after IPEF’s launch in Tokyo, the 14 partner countries moved quickly to establish shared goals in working to address challenges related to supply chains, climate action, taxation and corruption.
In just over one year, the IPEF partners have engaged in four in-person negotiating rounds in Brisbane, Australia; Bali, Indonesia; Singapore and Busan, South Korea; one Special Negotiating Round in New Delhi, India and two ministerial meetings. During the ministerial meeting held in Detroit, Michigan in May 2023, the 14 partner countries announced a significant achievement, the substantial conclusion of negotiations for one of the IPEF pillars that is crucial to economic resilience for the partners—supply chains.
The proposed IPEF Supply Chain Agreement gives partner countries new tools to collaborate and respond to supply chain disruptions and economic challenges before a crisis occurs, as well as during, through the establishment of an IPEF Supply Chain Council, a Supply Chain Crisis Response Network, and a Labor Rights Advisory Board consisting of government, private sector, and worker representatives that will support cooperation on labor rights.
The Agreement will bolster jobs by helping American businesses plan for an ever-changing international economic landscape. As the pandemic made clear, disruptions in key sectors or goods can lead to shutdowns that leave workers and consumers worse off. The activities envisioned under the Agreement will work to reduce and prevent these kinds of chokepoints and ensure U.S. firms have access to the inputs they need to compete globally.
As part of this, the U.S. plans to work with IPEF partners on programs to strengthen and diversify supply chains across the region. This will include leading trade missions and high-level delegations to target markets, implementing technical assistance and capacity building initiatives on topics like cybersecurity and risk assessment in regional ports, and developing a workforce with skills critical for our supply chains through studies and exchange programs.
With negotiations on the remaining Pillars still underway, the U.S. Department of Commerce remains strongly committed to the transparent development and implementation of the Biden-Harris Administration’s economic agenda and enhancing engagement with our partners in the region. In the coming weeks and months ahead, work will intensify on the Pillars to support this new model for greater economic cooperation and deliver concrete benefits to American businesses and workers and our IPEF Partners.
Stay updated on IPEF developments by visiting the U.S. Department of Commerce’s website: https://www.commerce.gov/ipef