IPEF Trade Pillar Not Ready; Commerce Pillars Done

The Commerce-led pillars of the Indo-Pacific Economic Framework -- tax and anti-corruption, climate and supply chain -- are all completed or all-but-completed, but the U.S. chose not to talk about which parts of the trade pillar have reached agreement during a round of IPEF negotiations in San Francisco. The administration also is making no projections about when the trade pillar, led by the U.S. trade representative, might be completed.

Nikkei, a Japanese newspaper, said that negotiations made little headway this week, and said the U.S. is conflicted about how to use trade with other Asian countries as a counterbalance to China. The Trans-Pacific Partnership was designed to do that, but the U.S. withdrew from TPP in January 2016, after opposition from the left and right made its path in Congress thorny. Japan led the other member countries to ratify the TPP.

Nikkei's story said that all the IPEF countries agree on trade facilitation proposals, to move customs certifications online. But, its reporters wrote, "The U.S. pushed for rules that would set high labor and environmental standards for product development. Southeast Asian countries objected to a framework that would impose tough requirements without sweeteners such as tariff cuts."

Nikkei reporters also wrote that Asian countries didn't want to agree to restrict the import of goods made with forced labor.

The Japanese newspaper also noted that there was internal pushback in the U.S. against IPEF.

Sen. Sherrod Brown, a Democrat up for re-election in Ohio, a state that is trending Republican, issued a press release that said he successfully pushed the Biden administration to remove the trade pillar from IPEF.

"Until Brown spoke out, the Biden administration was moving forward with rolling out the Indo-Pacific Economic Framework -- which included a “trade pillar” with no enforceable labor standards -- this week at the Asia Pacific Economic Forum in San Francisco," the news release said.

"I’ve made it very clear that the trade portion of the Indo-Pacific Economic Framework is unacceptable, and I’m glad it’s not moving forward. Instead of negotiating trade deals behind closed doors, we should be working to strengthen enforcement so that American workers can compete on a level playing field. That means passing my Leveling the Playing Field 2.0 Act and my Fighting Trade Cheats Act,” Brown said in the release.

However, the trade pillar is not gone from IPEF, the administration said Nov. 16. Mike Pyle, deputy national security adviser for international economics, responded to reporters who asked if other countries were troubled by the pull-back from announcing "early harvests" after the administration was pressured by Brown and others.

He cited the conclusion of the other three pillars in 18 months. "With respect to the trade pillar, we’re going to, you know, keep at that. There’s been progress that’s been made. In the weeks and months ahead, we expect to continue putting shoulders against that effort, both here in the United States as well as with other IPEF partners," Pyle said. "We’re going to do that in a way that continues to consult intensively with leaders on Capitol Hill, with a full set of stakeholders back here in the United States -- including, importantly, our friends in the labor community."

Arthur Stamoulis, executive director of Citizens Trade Campaign, issued a statement hailing Biden's hesitancy to announce partial gains in the trade pillar.

"We continue to urge that no part of IPEF’s trade pillar be enacted unless and until parties agree to strong labor, climate and other environmental provisions backed by swift-and-certain enforcement mechanisms with meaningful, facility-specific penalties for violations," he wrote. He also said the administration is taking the right tack on digital trade.

The Commerce Department announced that the 14 countries signed the supply chain agreement this week. Countries in IPEF are Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the U.S. and Vietnam.

It noted that the climate pillar includes efforts to strengthen supply chains in the region with "a better understanding of the challenges and vulnerabilities of the region’s supply chains and securing more diversified and sustainable sources of critical inputs, including critical minerals or materials, for clean energy technologies."

The countries will work to establish green shipping corridors and increase the production of sustainable aviation fuels.

They will "increase efforts towards the sustainable management, conservation, and restoration of forests and other natural ecosystems, addressing drivers of deforestation and degradation, including by working with companies that source products from the Indo-Pacific region, and creating the enabling conditions necessary to facilitate these activities."

They said they will work to reduce non-tariff barriers to the trade of zero-emissions goods.

The IPEF partners are talking about working groups in the area, including on embedded emissions accounting -- crucial for carbon border adjustment takes -- and e-waste solutions.

The tax and anti-corruption pillar aims to enhance transparency and the rule of law, which can spur more foreign investment, Commerce said.

The countries said they will try "to effectively prevent, detect, investigate, prosecute, and sanction corruption offenses consistent with their respective obligations under the United Nations Convention against Corruption (UNCAC) and, as applicable, the Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention ... ."

They also will ask for private sector participation to combat bribery, "and encourage the private sector to implement internal controls, ethics, and compliance programs that contribute to preventing and detecting corruption including bribery."

There will be an IPEF Council and Joint Commission to monitor work under the pillars and also to consider new countries joining.