“Let’s finish the job.” It’s the rallying cry that echoed through the US House chamber a dozen times during President Biden’s State of the Union speech last week. Throughout his address, Biden touted his various domestic accomplishments on issues from infrastructure and manufacturing jobs to gun reform and electric vehicles. While he has accomplished much at home, the president acknowledged there is still more to do. But, amidst this list of unfinished domestic priorities, many allies watching on are likely wondering: is Biden ever going to start the job when it comes to trade?
President Trump slammed shut the door on free trade when he quit the Trans-Pacific Partnership (TPP) on his first day in the White House. And, more than six years on, the Biden administration continues to uphold Trump-era protectionism. Although Biden entered office promising his allies that the United States was returning to the Indo-Pacific, the diplomatic efforts have largely ignored trade agreements, arguably the top priority for regional stakeholders.
But, amidst this list of unfinished domestic priorities, many allies watching on are likely wondering: is Biden ever going to start the job when it comes to trade?
The president is unlikely to renege on Trump’s decision to exit the TPP and Beijing is already moving quickly to fill this vacuum with regional trade deals of its own. Against this backdrop, the Indo-Pacific Economic Framework (IPEF), formally launched in May 2022, represents a critical opportunity to demonstrate US leadership.
The US-led agreement aims to build cooperation among 14 regional partners—with openness to further expansion—across four policy pillars: fair and resilient trade (connected economy); supply chain resiliency (resilient economy); infrastructure, clean energy, and decarbonisation (clean economy) and tax and anti-corruption (fair economy).
Touted by the White House as the most significant US engagement in the region to date, IPEF evidently still fails to satisfy a growing chorus of Pacific voices demanding stronger US investment in the region. Off the back of AUSMIN in December 2022 – seven months after IPEF was announced – Australian Foreign Minister Penny Wong spoke of a region ready and waiting to welcome deeper US economic engagement with open arms, arguing for this to be elevated to “a core alliance priority” for the United States and Australia.
While the details remain murky, one thing has been made exceedingly clear: IPEF is not a trade agreement in the traditional sense. The deal falls short of offering market access, the usual “carrots” of successful trade negotiations. Promising to deliver the much vaguer benefits of “incentives and opportunities,” this missing ingredient separates the deal from Beijing’s Regional Comprehensive Partnership Agreement (RCEP) which gradually seeks to reduce tariffs between China, Australia, Japan and nine other Indo-Pacific economies.
There is room for the United States to do much more to deepen trade and investment with its regional partners but, governed by his goal of a “worker-centric trade policy” in the vision for a “foreign policy for the middle class,” the Biden administration is clearly reticent to remove tariffs.
This reluctance suggests that Washington is out of touch with the current attitudes of most Americans. The Biden administration is severely underestimating the public’s appetite for both deepening economic ties with Asia and copping some “sticks” in the pursuit of more ambitious leadership on climate action, the centrepiece of one of IPEF’s four key pillars.
Washington should reconsider the position against market access for the “green economy” and play a key role in negotiating a “green trade agreement,” which would facilitate the flow of environmental goods and services, green and transition finance, and clean energy between IPEF economies.
In polling conducted by the United States Studies Centre before the midterm elections in 2022, only 17 per cent of Americans ruled out increasing trade and investment with Asia as “not at all important.” Meanwhile, climate change emerged as a top priority, especially among younger voters, with more than two-thirds of Americans ranking it as an important issue for the new Congress to address.
Importantly, this desire for the United States to act on global issues generally eclipses concerns about any ensuing domestic costs. Even if they caused energy bills to increase by US$50, USSC polling found that around half of Americans would still favour government efforts to fight climate change. This willingness largely persists even when the hypothetical extra energy bill costs rise to US$100 or US$250, with 39 per cent of US respondents still favouring government action in both cases.
With such resounding enthusiasm for US leadership on climate action and trade among the American public and Indo-Pacific partners alike, there is no reason why the Biden administration should not advance these goals – of deepened trade and more ambitious climate leadership – hand-in-hand. So, can IPEF finish the job?
If Biden is serious about delivering on his promises not only at home, but also overseas, the administration should put forward a proactive trade agenda that offers tangible benefits to IPEF economies. Washington should reconsider the position against market access for the “green economy” and play a key role in negotiating a “green trade agreement,” which would facilitate the flow of environmental goods and services, green and transition finance, and clean energy between IPEF economies. The Singapore-Australia Green Economy Agreement signed on 18 October 2022, presents an ideal model for this kind of agreement.
Not only this, but pursuing deeper collaboration through a green trade deal would provide a more compelling, values-driven counterbalance to China’s ascending economic ambitions in the region, and deliver binding, concrete commitments and market access to allies while advancing shared climate objectives.
There is immense potential and willingness here for the United States to seize. While his ability to do “the job” and deliver on his promises at home is clearly a priority for the president, the next two years will be a test of whether Biden can deliver overseas. Without deepened trade with the Indo-Pacific, Biden’s work to reassure allies will remain unfinished.