Analysts: US notches win in wooing ASEAN countries to join economic deal

The United States has scored a win in its efforts to counter Beijing’s influence in Southeast Asia by getting most members of the ASEAN bloc to join the Biden administration’s new Indo-Pacific Economic Framework for Prosperity deal, analysts say.

Although IPEF lacks the heft of a formal international trade agreement, according to analysts, the interest that seven members of the Association of Southeast Asian Nations have shown in it reflects their desire for greater U.S. engagement to balance out a regional economy dominated by China.

Even in the weeks before President Joe Biden unveiled the deal at a conference in Tokyo, few ASEAN states were expected to join it, said one expert.

“Well, I was surprised that so many ASEAN countries were initially part of the deal. This is a coup for the United States in a way,” Elina Noor, deputy director at the Asia Society Policy Institute in Washington, told BenarNews.

The Biden administration has touted the framework as the bulwark of its economic strategy in the Indo-Pacific region. IPEF’s stated goals are ensuring the smooth and supple flow of goods, the use of the same digital economy standards, green and clean work processes and fair and honest business.

“IPEF will strengthen our ties in this critical region to define the coming decades for technological innovation and the global economy,” the White House said in a statement launching IPEF on May 23.

In addition to Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – all members of the 10-nation ASEAN bloc – Australia, India, Japan, New Zealand and South Korea also signed up as initial members.

Hunter Marston, an international affairs analyst at Australian National University, had expected Singapore and Thailand to join the IPEF at the start, but that other ASEAN members would join later.

“[I]t did surprise me a bit [that others joined initially]. … It was a major policy win for Biden,” Marston told BenarNews.

“It shows that the region still supports the U.S. It is a signal there is a lot of interest in Washington’s continued engagement in the region. They see Washington’s engagement as critical to maintaining balance of power in the region.”

China’s economic reach in Southeast Asia eclipses that of the U.S.

China has been ASEAN’s largest trading partner for 12 consecutive years, with 2020 trade reaching nearly U.S. $517 billion, according to the regional bloc’s statistics, and $685 billion according to China’s statistics. By contrast, in 2020 U.S-ASEAN trade stood at $362 billion.

Meanwhile, a regional survey of policy experts in ASEAN states conducted late last year showed that China is still seen as the most influential economic and political power, but that “has created more awe than affection.” Trust in Beijing dropped by about three percentage points, while trust in the U.S. rose by 18 percent compared with the previous year.

“China is the only major power that has increased its negative ratings … the majority worry that such economic heft, combined with China’s military power, could be used to threaten their country’s interest and sovereignty” according to the State of Southeast Asia 2021 Survey published by the ISEAS-Yusof Ishak Institute in Singapore.

In such a scenario, “if there is one thing the U.S. could do to reassure a Southeast Asia worried about U.S. commitment to the region, it is expand economic ties,” analyst Anne Marie Murphy at Seton Hall University told BenarNews before Biden launched IPEF.

According to Marston, a security partnership alone would make ASEAN uncomfortable.

 “It is less appealing without an economic component because an economic role gives ASEAN the pretense of working with the U.S. on other fronts not aimed at containing China,” he said.

Four pillars

But does the IPEF go far enough?

“The framework doesn’t have a lot of substance,” Marston said.

He was referring to how the IPEF is not a trade deal like the CPTPP, or Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or its predecessor, the Trans-Pacific Partnership.

The U.S. once belonged to and had led negotiations on the latter until President Donald Trump pulled the superpower out of the agreement. China isn’t part of the CPTPP, but has applied to join, and Singapore, an influential economic member of ASEAN, has backed Beijing’s bid.

The major trading bloc in the region is the Regional Comprehensive Economic Partnership (RCEP), which the U.S. isn’t part of, but which includes China, most ASEAN states, as well as other big Indo-Pacific economies.

IPEF is no RCEP or CPTPP, in Marston’s view.

“This is definitely not a trade deal,” he said.

“Calling it an economic framework is better, as watery as it sounds. It’s like the COP 26 – a pledge to participate that doesn’t require any enforcement,” he said, referring promises to reduce carbon emissions that were made at the 26th United Nations Climate Change conference.

That means the U.S. doesn’t offer its partners in the agreement access to its markets or any tariff breaks. Therefore, any business deal under IPEF – whether one insists on green protocols or anti-corruption mechanisms – has no binding clauses, unlike in a trade agreement where in exchange for market access, partners have to adhere to certain standards.

IPEF is the opposite of a multilateral trade agreement, “the traditional grail of free-traders,” according to Robert Kuttner, a professor at Brandeis University.

“Countries can decide which areas they want to join; and not all deals with all participating countries will be the same,” he wrote in an article in Prospect magazine.

Some critics say that is the reason Washington found so many Southeast Asian takers as initial partners in IPEF.

Analyst Robert Manning, who calls walking away from what was called the TPP “a major strategic mistake,” is one of them.

“I wasn’t surprised [so many countries joined]. The U.S. lowered the bar on all four pillars. No one had to sign on to any standards,” Manning, a senior fellow at the Atlantic Council, a Washington think tank, told BenarNews.

The four pillars Manning referred to are resilient economy, or the creation of a robust supply chain; connected economy, or ensuring digital economic standards; clean economy, or promoting de-carbonization; and fair economy, or combatting corruption. Members can choose which pillar or pillars they would like to join – they have yet to commit.

‘Get a foot in the door’

After Biden launched IPEF, China made noises about the deal.

The U.S. was “politicizing, weaponizing and ideologizing economic issues and using economic means to coerce regional countries to choose sides between China and the United States,” was how Wang Yi, the Chinese foreign minister, described it..

Marston, however, says he doesn’t believe China is upset.

“I don’t think China should be worried about this framework and Beijing understands that that I think,” he said.

”Compared to RCEP … this is just an agreement around open internet commerce and nothing more.”

Marston said that many states that signed on to IPEF did so because of the digital component.

“Essentially they get to set norms for e-commerce … e-commerce is huge in Southeast Asia,” he said.

“Indonesia and Vietnam, they have major portions of economy and GDP from e-commerce, so it gives them first-move advantage to create an open commercial digital space,” Marston said.

Many countries also joined IPEF because as they are probably hoping it will lead to a trade agreement, said Noor, the expert at the Asia Society Policy Institute.

“Among certain countries there are sentiments that this is the starting point for market access,” she said.

“The idea is to get a foot in the door, to engage with the U.S. in some form of economic arrangement so it leads to something more substantive.”

BenarNews is an RFA-affiliated online news service.