Tom Swarbrick 7pm - 10pm
Biden launches Indo-Pacific trade deal and warns over inflation
23 May 2022, 09:24
Mr Biden said the new Indo-Pacific Economic Framework would increase US co-operation with other nations in the region.
President Joe Biden has launched a new trade deal with 12 Indo-Pacific nations aimed at strengthening their economies as he warned Americans worried about high inflation that it was “going to be a haul” before they feel relief.
The president said he does not believe an economic recession is inevitable in the US.
Mr Biden, speaking at a news conference after holding talks with Japan’s Prime Minister Fumio Kishida, acknowledged the US economy has “problems” but said they were “less consequential than the rest of the world has”.
He added: “This is going to be a haul. This is going to take some time,” even as he rejected the idea a recession in the US was inevitable.
The comments came just before Mr Biden’s launch of the Indo-Pacific Economic Framework (IPEF), a new trade deal his administration designed to signal US dedication to the contested economic sphere and to address the need for stability in commerce after disruptions caused by the pandemic and Russia’s invasion of Ukraine.
Nations joining the US in the IPEF are Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
Along with the United States, they represent 40% of world GDP.
The countries said in a joint statement that the pact will help them collectively “prepare our economies for the future” following disruptions caused by the coronavirus pandemic and the Russian invasion of Ukraine.
Meeting with Mr Kishida, Mr Biden said the new framework would also increase US co-operation with other nations in the region.
The White House said the framework will help the United States and Asian economies work more closely on issues including supply chains, digital trade, clean energy, worker protections and anti-corruption efforts.
The details still need to be negotiated among the member countries, making it difficult for the administration to say how this agreement would fulfil the promise of helping US workers and businesses while also meeting global needs.
Critics say the framework has gaping shortcomings.
It does not offer incentives to prospective partners by lowering tariffs or provide signatories with greater access to US markets.
Those limitations may not make the US framework an attractive alternative to the Trans-Pacific Partnership (TPP), which still moved forward after the US bailed out.
China, the largest trading partner for many in the region, is also seeking to join TPP.
“I think a lot of partners are going to look at that list and say: ‘That’s a good list of issues. I’m happy to be involved,’” said Matthew Goodman, a former director for international economics on the National Security Council during President Barack Obama’s administration.
But he said they also may ask: “Are we going to get any tangible benefits out of participating in this framework?”
Countries signing on to the framework were to be announced on Monday during Mr Biden’s visit to Tokyo.
It is the latest step by the Biden administration to try to preserve and broaden US influence in a region that until recently looked to be under the growing sway of China.
Mr Kishida hosted a formal state welcome for Mr Biden at Akasaka Palace, including a white-clad military honour guard and band in the front plaza.
Reviewing the assembled troops, Mr Biden placed his hand over his heart as he passed the American flag and bowed slightly as he passed the Japanese standard.
Mr Kishida said at their meeting that he was “absolutely delighted” to welcome Mr Biden to Tokyo on the first Asia trip of his presidency.
Along with Mr Biden, he drove a tough line against Russia over its invasion of Ukraine, saying it “undermines the foundation of global order”.
Mr Biden, who is in the midst of a five-day visit to South Korea and Japan, called the US-Japanese alliance a “cornerstone of peace and prosperity in the Indo-Pacific” and thanked Japan for its “strong leadership” in standing up to Russia.
The White House announced plans to build the economic framework in October as a replacement for the Trans-Pacific Partnership, which the US dropped out of in 2017 under then-president Donald Trump.
Mr Kishida, while welcoming the new Biden trade pact, said he hoped Mr Biden would reconsider the United States’ position on the TPP.
“Our position remains unchanged,” Mr Kishida said.
“We think it’s desirable for the United States to return to the TPP.”
The new pact comes at a moment when the administration believes it has the edge in its competition with Beijing.
Bloomberg Economics published a report last week projecting US GDP growth at about 2.8% in 2022 compared with 2% for China, which has been trying to contain coronavirus through strict lockdowns while also dealing with a property bust.
The slowdown has undermined assumptions that China would automatically supplant the US as the world’s leading economy.
“The fact that the United States will grow faster than China this year, for the first time since 1976, is a quite striking example of how countries in this region should be looking at the question of trends and trajectories,” said White House national security adviser Jake Sullivan.
Mr Biden’s first stop on Monday was a private meeting with Emperor Naruhito of Japan at Naruhito’s residence on the lush grounds of the Imperial Palace before the talks with Mr Kishida.
The two leaders were also set to meet with families of Japanese citizens abducted by North Korea decades ago.
The Japanese premier took office last autumn and is looking to strengthen ties with the US and build a personal relationship with Mr Biden.
He will host the president at a restaurant for dinner.
The launch of the Indo-Pacific Economic Framework (IPEF) has been billed by the White House as one of the bigger moments of Mr Biden’s Asia trip and of his ongoing effort to bolster ties with Pacific allies.
Through it all, administration officials have kept a close eye on China’s growing economic and military might in the region.
In September the US announced a new partnership with Australia and Britain called Aukus that is aimed at deepening security, diplomatic and defence co-operation in the Asia-Pacific region.
Through the Aukus partnership, Australia will purchase nuclear-powered submarines, and the US is to increase rotational force deployments to Australia.
The US president has also devoted great attention to the informal alliance known as the Quad, formed during the response to the 2004 Indian Ocean tsunami that killed some 230,000 people.
Mr Biden and fellow leaders from the alliance, which also includes Australia, India and Japan, are set to gather in Tokyo for their second in-person meeting in less than a year.
The leaders have also held two video calls since Mr Biden took office.
And earlier this month, Mr Biden gathered representatives from nine of the 10 members of the Association of Southeast Asian Nations in Washington for a summit, the first ever by the organisation in the US capital.
Mr Biden announced at the summit the US would invest some 150 million dollars (£119 million) in clean energy and infrastructure initiatives in ASEAN nations.
Taiwan – which had sought membership in the IPEF framework – is not among the governments that will be included.
Participation of the self-ruled island of Taiwan, which China claims as its own, would have irked Beijing.
Mr Sullivan said the US wants to deepen its economic partnership with Taiwan, including on high technology issues and semiconductor supply on a one-to-one basis.
Mr Biden also issued a stern warning to China over Taiwan, saying the US would respond militarily if China were to invade the self-ruled island.
“That’s the commitment we made,” Mr Biden said.
The US recognises Beijing as the one government of China and does not have diplomatic relations with Taiwan.
However, it maintains unofficial contacts with Taiwan, including a de facto embassy in Taipei, the capital, and supplies military equipment to the island for its defence.
Mr Biden’s comments were likely to draw a sharp response from China, which has claimed Taiwan to be a rogue province.
A White House official said Mr Biden’s comments did not reflect a policy shift.