The choice of destination to begin a five-day trip toSouth Korea and Japan underscored the challenges of Biden’s effort to rebuild USties to a region where longtime allies have grown uncertain about Washington’scommitments amid anti-trade sentiment at home, while China has expanded itsdominance in the economic arena.
The president hopes to lure countries back into the USorbit despite the decision by his predecessor, President Donald Trump, fiveyears ago to abandon a far-reaching trade pact known as the Trans-PacificPartnership — but not by rejoining the economic bloc, even though it wasnegotiated by the Obama administration that he served as vice president.Instead, under pressure from his liberal base at home, Biden plans to offer afar less sweeping multinational economic structure that has some in the regionsceptical about what it will add up to.
Biden will formally unveil the Indo-Pacific EconomicFramework on Monday in Tokyo, bringing together many of the same countries fromthe trade partnership to coordinate policies on energy, supply chains and otherissues, but without the market access or tariff reductions that powered the originalpartnership. Eager for US leadership to counter China, a number of countries inthe region plan to sign up and hail the new alignment but privately haveexpressed concern that it may be an empty exercise.
The framework is essentially “a new packaging ofexisting Biden administration priorities in this economic policy area,” saidScott A Snyder, director of US-Korea policy at the Council on ForeignRelations. “And whether or not it really takes off depends on whether partnersbelieve that there’s enough there there to justify being engaged.”
Snyder added that he thought South Korea, for one, wastaking seriously the Biden administration’s commitment to invest in the region.“I think they’re believing,” he said. “And we’ll see whether they’re whistlingpast the graveyard.”
But even Biden’s own ambassador to Japan, RahmEmanuel, acknowledged the uncertainty in the region over the new economicframework. Countries want to know, “What is it we are signing up for?” he toldreporters in Tokyo on Thursday. Is this an alternative to the Trans-PacificPartnership? “Yes and no,” he said.
The framework is not a traditional free tradeagreement but instead an architecture for negotiation to address four majorareas: supply chains, the digital economy, clean energy transformation andinvestments in infrastructure. Jake Sullivan, the president’s national securityadviser, said it would be “a big deal” and a “significant milestone” forrelations with the region.
“When you hear some of the, ‘Well, we don’t quiteknow. We’re not sure because it doesn’t look like things have looked before,’ Isay, ‘Just you wait,’ ” he told reporters on Air Force One as it made its wayacross the Pacific. “Because I think this is going to be the new model ofeconomic arrangement that will set the terms and rules of the road for tradeand technology and supply chains for the 21st century.”
Sullivan said there will be “a significant roster ofcountries” joining the framework when Biden kicks it off Monday, butadministration officials have not identified which countries. Japan, which hassignalled it would rather the United States rejoin the Trans-PacificPartnership, will nonetheless embrace the new framework as the best it can getat the moment, as will South Korea. Singapore, Thailand and the Philippineshave indicated interest in joining, while India and Indonesia have expressedsome reservations.
Prime Minister Pham Minh Chinh of Vietnam said thismonth that it was still not clear what the new framework would mean in concreteterms. “We are ready to work alongside the US to discuss, to further clarifywhat these pillars entail,” he said at a forum held by the Center for Strategicand International Studies.
The Financial Times reported that the administrationhad diluted the language of the organising statement to entice more countriesto join. Some countries are concerned that the United States will force labourand environmental standards on them without the trade-offs of better tradingterms, which are off the table because of liberal opposition within Biden’sparty.
“There’s a reason that the original TPP was derailed,”Sen. Elizabeth Warren, D-Mass., said at a hearing last month. “It would haveoffshored more jobs to countries that use child labour and prison labour andpay workers almost nothing. Let me be clear: The IPEF cannot be TPP 2.0.”
Emanuel said the administration would describe the newframework process as a “consultation to negotiation,” as he put it. “We have tohave an approach that respects countries where they are,” he said. “Meaningwhere Japan is or where Australia is is not necessarily where Vietnam orThailand or the Philippines are.”
Moreover, he said, the administration wanted aframework that could survive beyond Biden’s presidency, unlike theTrans-Pacific Partnership. “We have an interest in saying we are still a playerin the Pacific, and China has an interest in saying the US is on its way out,”Emanuel said.
Biden’s visit to the Samsung semiconductor facilityimmediately after disembarking from Air Force One served as a reminder of howcritical the region is to his immediate priority of unsnarling the supply-chainproblems that have hurt American consumers back home.
Shortly after landing at Osan Air Base, Biden joinedPresident Yoon Suk-yeol of South Korea at the plant, praising it as a model forthe type of manufacturing that the United States desperately needs to head offsoaring inflation and to compete with China’s growing economic dominance.
“This is an auspicious start to my visit, because it’semblematic of the future cooperation and innovation that our nations can andmust build together,” Biden said, noting that Samsung will invest $17 billionto build a similar plant in Taylor, Texas.
“Our two nations work together to make the best, mostadvanced technology in the world,” Biden added, surrounded by monitors showingSamsung employees listening to his remarks. “And this factory is proof of that,and that gives both the Republic of Korea and the United States a competitiveedge in the global economy if we can keep our supply chains resilient, reliableand secure.”
While demand for products containing semiconductorsincreased 17% from 2019 to 2021, there has not been a comparable increase insupply, partly because of pandemic-related disruptions. As a result, automobileprices have skyrocketed, and the need for more chips is likely to increase as5G technology and electric vehicles become more widespread.
The United States already faces an “alarming” shortageof the semiconductors, Gina Raimondo, Biden’s commerce secretary, warned thisyear, adding that the crisis had contributed to the highest level of inflationin roughly 40 years.
The soaring consumer prices have helped to drive downapproval ratings for Biden, who has seized on global supply-chain problems tourge Congress to pass proposed legislation that would provide $52 billion ingrants and subsidies for semiconductor-makers and $45 billion in grants andloans to support supply-chain resilience and American manufacturing.
The Samsung stop was just one effort to encourageAsian allies to invest in the United States. On Sunday, Biden will join thechairman of Hyundai to celebrate the South Korean company’s decision to investin a new electric vehicle and battery manufacturing facility in Savannah,Georgia.
With questions hanging over his economic strategy inAsia and a manufacturing bill stuck in Congress, Biden is seeking a helpfulpartner in South Korea, said Daniel Russel, a vice president at the AsiaSociety who was assistant secretary of state for Asia in the Obamaadministration.
“I think that the relationship, which is already quitestrong, can flourish,” Russel said. “There’s a strong convergence of viewsbetween the Biden team and the Yoon team on security policy, including concernsabout China, the need for global cooperation and working together onsemiconductors and trade.”
Yoon, a conservative politician and a formerprosecutor, is one of the leaders in the region who has welcomed the Bidenadministration’s traditional approach to foreign policy after the chaotic Trumpyears. Soon after Yoon was elected in March, he sent a delegation of senioradvisers to Washington to build ties with the Biden administration.
Sue Mi Terry, director of the Asia program at theWilson Center in Washington, said she expected Biden and Yoon to have naturalchemistry. “While President Yoon has a stern image as a former prosecutor, heis actually folksy, middle class and down to earth — just like the ‘ordinaryJoe’ in the White House,” she said.
The Yoon administration has coordinated with Americanofficials on sanctions against Russia and agreed to abide by export controls oncritical technologies. Although South Korea remains a major buyer of Russianoil, it has signaled that it is trying to reduce those purchases. According topeople familiar with his thinking, Yoon is also seeking to identify whichsupply chains can be moved out of China for greater economic security.
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