On-the-Record Press Call on the Launch of the Indo-Pacific Economic Framework
7:09 P.M. JST
MR. PATEL: Good evening, everybody. Thanks so much for joining. This call will be on the record and embargoed until 4:15 Japan Standard Time tomorrow, May 23rd.
Joining us for this briefing, we have National Security Advisor Jake Sullivan, Secretary of Commerce Gina Raimondo, and U.S. Trade Representative Katherine Tai.
We, of course, will have some time for questions at the end, but I will turn it over to Jake to kick us off.
MR. SULLIVAN: Thanks. And thanks, everybody, for joining this evening. And thanks to my colleagues and partners, Secretary Raimondo and Ambassador Tai.
I wanted to just start with some broad comments about the thrust and purpose of IPEF, and then – and then turn it over to the Secretary and the Ambassador to dive into some more detail on the key substantive elements of the framework.
The Indo-Pacific Economic Framework, or IPEF, is part of President Biden’s commitment to putting American families and workers at the center of our economic and foreign policy, while strengthening our ties with allies and partners for the purpose of increasing shared prosperity and for the purpose of defining the coming decades for technological innovation in the global economy — especially in the most vital region for the coming decades, the Indo-Pacific.
The President will launch IPEF in Tokyo, Japan, on Monday. And joining him for that launch will be the initial IPEF partner countries. They are as follows: Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Alongside the United States, that’s 13 countries launching this — a baker’s dozen.
But, of course, as we’ve also indicated from the start, this is an open platform. So there are other countries that could conceivably join us as we move forward.
Together, this very diverse set of economies represent around 40 percent of global GDP. And the fact that we have such a range and a significant number of partner countries in on the ground floor for the launch reflects the far-reaching ambition of the framework and also indicates that there’s deep interest across the region in it. You’ve got major economies, emerging economies, economies with which we have free trade agreements, and others for which this will be the United States’ first economic negotiation.
And that diversity of members is consistent with both the vision of IPEF and consonant with the fact that the four-pillar structure that we’ve built has flexibility and creativity designed into it so that we can, in fact, accommodate this diverse range of countries.
One more thing, just to say on the membership: We believe that we’re heading into this launch with a really significant amount of momentum, really, especially coming out of the U.S.-ASEAN Summit that the President hosted just a few days ago. It was at that summit that he had the opportunity to really share his vision for this framework with key leaders in ASEAN. And we are proud that seven ASEAN countries have joined with many of our other close partners in the region as part of IPEF.
IPEF is a 21st century economic arrangement designed to tackle 21st century economic challenges, ranging from setting the rules of the road for the digital economy, to ensuring secure and resilient supply chains, to helping make the kinds of major investments necessary in clean energy infrastructure and the clean energy transition, to raising standards for transparency, fair taxation, and anti-corruption.
We believe that expanding U.S. economic leadership in the Indo-Pacific through vehicles like IPEF is good for America — American workers and businesses as well as for the people in the region.
With 60 percent of the world’s population, the Indo-Pacific is projected to be the largest contributor to global growth over the next 30 years. And trade with the Indo-Pacific supports more than 3 million American jobs, as well as being the source of nearly $900 billion in foreign direct investment in the United States — (inaudible) global economic growth.
And the United States, for our part, is an Indo-Pacific economic power. Foreign direct investment in the region from the United States totaled more than $969 billion in 2020 and has nearly doubled in the last decade.
And the United States is the primary exporter of services to the region, which in turn not only fuels regional growth and prosperity and greater security, but it also supports American jobs at home.
That being said, we and our partners in the region agree that much in the coming decades will depend on how well governments harness innovation, especially the transformations underway in clean energy and the digital and technology sectors, while at the same time fortifying our economies from a range of threats from fragile supply chains, to corruption, to tax havens.
The fact is that past models did not address these challenges — or did not address them fully and take them head on — leaving our workers, businesses, and consumers more vulnerable. So we believe that we need a new model that we can move on quickly to, in fact, take these challenges head on, and that’s what IPEF will do.
We’ve spent months engaging with major partners in the region. And the broad participation is a reflection of that investment of time and effort and energy, as well as with organized labor, the business community, bipartisan members of Congress and other key stakeholders to chart the way forward.
Just a couple of more points before I turned to my colleagues — in terms of diving into the four pillars of IPEF.
One, the fact that this is not a traditional free trade agreement is a feature of IPEF not a bug. There are free trade traditionalists who have raised questions about it. Our fundamental view is that the new landscape and the new challenges we face need a new approach, and we will shape the substance of this effort together with our partners.
Second is that IPEF should be seen both as a coherent whole; it is a vision of the modern economy and the way to get — it’s a way to tackle the challenges and seize the opportunities of that economy. But it also — it should also be seen as an opportunity to drive initiatives, in part.
So, for example, if we can rapidly develop an early warning system for critical supply chains, we will not wait until all of IPEF is complete to roll that out and move forward on it. So different elements of this could end up moving at different speeds, even as all of the pieces will end up fitting into a larger integrated framework.
Finally — and I think this is really critical — this is a foundational element of our overall strategy towards the Indo-Pacific. We believe that IPEF brings shape and coherence to the economic pillar of our Indo-Pacific strategy. We think it sets us up for success in helping to shape the future of the region in a way that produces a region that is free, open, connected, resilient, and secure.
We all know that economics is a critical part of succeeding with any strategy in the Indo-Pacific region. And we see IPEF as a vital platform for our engagement and a chance, alongside all of the other ways in which we have elevated our engagement in the Indo-Pacific, to put our stamp on this critical region for decades to come, and to ensure that American leadership delivers good outcomes for our people and for all the people in the region.
So, with those opening framing comments, let me turn it over to Secretary Raimondo. Thanks.
SECRETARY RAIMONDO: Thank you, Jake. And thank you, everybody, for joining us on the call this evening. So I will add on with a few more points to what Jake said.
But I’ll begin by saying just how excited we are for the launch tomorrow of this Indo-Pacific Economic Framework. As Jake said, it consists of 13 countries, which account for 40 percent of global GDP. And on top of that, it includes some of the world’s fastest-growing, most dynamic economies.
It is — it is, by any account, the most significant international economic engagement that the United States has ever had in this region. And the launch of it tomorrow, here in Tokyo, marks an important turning point in restoring U.S. economic leadership in the region and presenting Indo-Pacific countries an alternative to China’s approach to these critical issues.
Since I’ve been Commerce Secretary, I have heard over and over again from the U.S. business community that they will benefit from — they and their employees will benefit from the U.S. restoring and re-exerting economic leadership in the region — an increasingly important region to U.S. businesses.
And there is also a strong demand signal coming from the region. We hear over and over again in the Indo-Pacific region that there is a desire for U.S. economic leadership and for the U.S. to have a proactive economic vision and economic agenda.
As Jake said, this framework is intentionally designed not to be a “same old, same old” traditional trade agreement. But it’s designed as a more innovative and flexible approach, designed to reflect the fact that our economies have changed. The most pressing issues that we need to tackle with our allies have changed, and we need a new approach going forward if we’re going to meet the needs of our citizens.
So, by focusing on economic priorities that affect all of our economies, this framework is designed to reflect the shared realities we face, which is climate change; the opportunity and challenges presented by moving, meeting the need of climate change and the opportunity of clean tech jobs; supply chain disruptions; and the need for a better-coordinated, high-tech manufacturing economy.
As Jake said, there are four pillars in the framework. The Department of Commerce will be leading three of the four pillars, which is: the supply chain resiliency pillar, clean energy and decarbonization pillar, and tax and anti-corruption.
Just very quickly on each one. On supply chains, I think we all have seen how — the cost of supply chains that aren’t resilient. And COVID exposes incredible economic costs of insufficient supply chain resilience.
We saw — frankly, we continue to say all the ways that bottlenecks and lack of transparency in the Indo-Pacific cause ripple effects throughout the United States economy, hurting workers and driving inflation. And, you know, we’ve learned that “just in time” leaves much to be desired.
I would say if we had had this Indo-Pacific Economic Framework and the agreement therein in place before COVID, I think we could have experienced much less disruption.
For example, during COVID, we saw semiconductor packaging operations in Malaysia be closed on account of COVID outbreaks. The result of that was thousands of workers were put out of work in Michigan auto-manufacturing plants. And if we had had more transparency, more communication, more data-sharing, and an early alert system, that may not have happened. And the workers who were furloughed in a Michigan plant would not have experienced that.
So, in IPEF, we are seeking to develop a first-of-its-kind supply chain agreement that better anticipates, predicts, and, importantly, prevents disruptions in supply chains.
On the clean energy and infrastructure pillar, we all know jobs of the future are going to be in clean tech manufacturing and innovation, and so we want to work with partners in this agreement to view clean energy as a driver of job creation and economic growth. And to support this pillar, we will be signing agreements to pursue concrete, high-ambition commitments such as renewable energy targets, carbon removal purchasing commitments, energy efficiency standards, and new measures to combat methane emissions.
And finally, the third pillar Commerce is leading on is the tax and anti-corruption. And we’re going to be working to ensure everybody plays by the same set of rules, because corruption is a huge drag on everyone’s economy. And we’re going to be seeking commitments to enact and enforce effective tax, anti-money laundering, anti-bribery schemes in line with our values.
So, I guess I’ll just close by saying: This is an exciting time. I want to thank all of our partner countries for working with us. I’m looking forward — tomorrow is the beginning; I’m anxious to begin and get to work and discuss the next steps ahead as we negotiate the specific terms and develop the details of this framework and, you know, establishing a new approach to regional economic engagement.
This has never been done before, in terms of the ambition and inclusivity across a broad range of regional partners. And I’m confident that there’ll be benefits for U.S. businesses.
And I would say, especially as businesses are beginning to increasingly look for alternatives to China, the countries in the Indo-Pacific Framework will be more reliable partners for U.S. businesses.
So we’re excited to get going and develop a framework that will be durable and beneficial for American businesses and workers.
And with that, I will turn it over to my partner in this endeavor, Ambassador Katherine Tai.
AMBASSADOR TAI: Thank you so much, Gina. I will spend some time to talk about the trade pillar. From day one of his administration, President Biden has been clear that we have to rethink what trade policy can be in the 21st century and that it must benefit more people.
For decades, trade policy was often reduced to a zero-sum game that left many of our workers behind. And that is why we are designing trade policies that aim to deliver real economic prosperity and advance our global priorities, like combating climate change, protecting labor rights, and building resilient supply chains. These issues are not mutually exclusive; we can and must do both.
Over the last several months, USTR, the NSC, and the Department of Commerce have worked with our trading partners, members of Congress, and a diverse range of stakeholders on the Indo-Pacific Economic Framework that the President will launch tomorrow.
At its core, the Economic Framework will link major economies and emerging ones to tackle 21st century challenges and promote fair and resilient trade for years to come. At the same time, it will be designed to adapt to address barriers and obstacles that may arise in the future as well.
You heard Gina describe three of the pillars. And I’ll walk through the details of the trade pillar that USTR will lead in order to create a more connected and resilient economy.
We will work with our IPEF partners on a wide range of trade issues, including the digital economy and emerging technology, labor commitments, the environment, trade facilitation, transparency and good regulatory practices, and corporate accountability.
The digital economy in particular best represents an area where we need to work with our IPEF partners, given the prominent role it plays in today’s global marketplace and how it affects our workers, our consumers, and our businesses. And that’s why we will address issues in the digital economy that will help build connectivity and trust between key markets, including standards on cross-border data flows and data localizations.
We will also work with our partners to address other digital concerns such as online privacy, discriminatory and unethical use of artificial intelligence.
Collectively, the trade pillar will unlock enormous economic value, including for small- and medium-sized businesses that historically have not benefited from trade agreements as much as their large counterparts have.
We also intend to pursue an accelerated implementation of the World Trade Organization’s Trade Facilitation Agreement, which will also address and improve the movement of goods across borders. We will see commitments with IPEF partners that facilitate agricultural trade through science-based decision making and the adoption of sound, transparent regulatory practices. This will help our farmers, our ranchers, and our fishers gain certainty for getting their products to the region.
While these provisions will help promote inclusive economic prosperity, we also want this framework be part of our broader strategy to make trade a race to the top. And that is why the IPEF will pursue an agenda for setting strong labor and environmental standards and corporate accountability provisions.
In raising regional standards, we can set an example for the rest of the world to follow, which in turn helps all of our workers and communities. Our aim is for the IPEF to address the challenges in the 21st century global economy.
Tomorrow begins the next chapter of our collaboration with our key partners in the region.
I look forward to convening our partners in the months ahead in a range of forms. We will continue to work with stakeholders, as we have done for the last several months, to ensure a diverse range of interests and concerns are represented.
We will work with members of Congress in both parties.
And, of course, we will make frequent trips to the Indo-Pacific to engage leaders in this region and continue our discussions to create a fairer, more resilient economy for families, workers, and business in the United States and here in the Indo-Pacific.
This is truly a team effort. And I’m grateful to Jake Sullivan and Secretary Raimondo for their work in bringing this framework to life. We believe it will deliver on the President’s vision of trade policy that promotes widespread economic growth and advances our shared global priorities. And I’m excited to continue to keep all of you updated on our progress as we move forward.
MR. PATEL: Thanks so much. We will move into taking some folks’ questions. As a reminder, this call is on the record, but it is embargoed until 4:15 Japan Standard Time tomorrow, May 23th.
So with that, why don’t we start with Nancy Cook at Bloomberg.
Q Hi, thank you so much for doing the call. I appreciate it. Just an overview question. You know, you talked a lot in the call about the commitments that you’re going to seek for these — for countries to join this agreement. Are there any requirements? Like, are you requiring participants to do anything? Or is it really, like, suggestions and recommendations and commitments that you’re seeking?
Really, I’m asking: Are there binding things or non-binding things?
SECRETARY RAIMONDO: So, this is Secretary Raimondo. I would say there will certainly be — like any other agreement, it will be a negotiation at which will — which will, you know, begin post-launch. So after tomorrow, we’ll spend the next — you know, the weeks ahead, scoping out each pillar.
But, yes, there will be firm commitments. There will be signed agreements. And like any agreement, you know, we plan to have high-standard commitments that will be enforceable.
Now, also, like any agreement, I would say the greatest enforcement is that if you don’t hold up your end of the bargain, you don’t receive the benefits. And so there will be incentives to go ahead and live up to the commitments that will be part of the agreement.
Q Just to follow up, Secretary Raimondo: But tomorrow — like, what you’re unveiling tomorrow, there are not commitments in place at this point. There are not, like, binding things. Those are going to be negotiated moving forward. Is that right?
SECRETARY RAIMONDO: Yep. Yes, exactly. Tomorrow is the beginning. Tomorrow — tomorrow is the starting gate.
It’s incredible that we have, you know, a dozen countries signed up to this. But, yes, tomorrow we begin the negotiations. And we will, in the weeks and months ahead, define precisely the de- — exactly what’s in each pillar and what each country will be committing to and signing up for.
MR. PATEL: Great, thanks so much.
Next, let’s go to Peter Baker with the New York Times.
Q Hi there. Thanks for doing the call, especially for doing it on the record. Could you just outline for us a little bit more about what was wrong with the TPP negotiated by the Obama-Biden administration, that we’re not getting back into it and that you’re trying to distinguish this from? In other words, what’s the big difference?
And what is the incentive for countries in the region that want market access and tariff reductions but don’t seem to be getting it as part of this agreement?
AMBASSADOR TAI: Hi, Peter. This is Katherine Tai. So let me take your question first and see if the others want to join in after.
With respect to TPP, I think that the biggest problem with it was that we did not have the support at home to get it through. If you look back at the years 2015 and 2016, and despite Herculean efforts, it could not be gotten through Congress. And then, in 2017, it was President Trump who took the United States out of it.
I think that there’s a very, very strong lesson there: that TPP, as it was envisioned, ultimately was something that was quite fragile and that the United States was not able to deliver on. And that informs very much our thinking about bringing the Indo-Pacific Economic Framework, as it’s designed here, to the region — which is that trade is an important component of this, but not the only component. So that we are bringing in more robust and comprehensive approach to our partners in this region.
There has been a lot of swirl about the fact that there is not tariff liberalization incorporated into the scope of what we are engaging on here. And I think that also goes to the fact that the kinds of trade agreements, the traditional ones that we’ve done before, are very much a part of the practice that has brought us to where we are, both in terms of the fragility of where that trajectory has taken us.
But also, if you look at the world economy today, I just am — have arrived in Tokyo from the APEC meetings in Bangkok. And of all of the counterparts that I had the chance to speak with in depth, each one of them reiterated for me that their priorities in their economic policymaking, including in trade, are to promote an economic recovery that advances resilience, sustainability, and inclusion for their economies.
And they’re looking for engagement, especially from us, around a vision for trade and economic engagement that will reinforce those priorities, given where we are in the global economy and a couple of very, very turbulent years that we’re all still working to recover from.
Q And then, just to be clear then, the thing that made it — TPP — no good was it wasn’t able to be delivered, you couldn’t get it through Congress. Are these agreements that will come out of this process agreements that will go to Congress at some point?
AMBASSADOR TAI: Peter, on that, let me say this: I think that the robust stakeholder engagement that you are hearing all of us talk about — stakeholders throughout our economy, expanding the table for engagement with our stakeholders, engaging with our traditional stakeholders — we can’t — they have to be part of the solution and part of our engagement.
But bringing to the table and ensuring that other stakeholders, like our workers, like our environmental organizations, the ones who are the smartest about climate and the policy solutions that we need, that they have premier seats at the table and that they will be influencing and shaping the policies that we create.
Our trading partners, our members of Congress — along the way, this engagement is designed for maximum supportability and durability because, ultimately, we know that this engagement is something that we need to stick for our partners and for our stakeholders at home in this region.
Q All right, I’m confused. Does Congress vote on these agreements or not?
AMBASSADOR TAI: Let’s see where these negotiations take us, and let’s see where the discussions go. But along the way, we have to keep — regardless, we have to keep Congress close, and Congress needs to be a part of shaping what we do with our partners here.
MR. PATEL: Thanks so much. Let’s try to limit our follow-ups so we can get through as many of our colleagues as we can.
Next, let’s go to Asma Khalid from NPR.
Q Hey, thank you guys for doing this. I had two quick questions. And one, I know, Jake, you touched on, actually, earlier a bit about Taiwan. But if I could just get clarity here on the record about why Taiwan was not a part of this initial grouping of countries or self-governed democracies — whatever you want to call Taiwan — given its role in supply chains.
And then the follow-up question is something that I also wanted to get clarity on — I believe Nancy touched on — around the incentives for countries to join. Can you articulate at all what those incentives are? Or have they not been, I guess, decided upon yet since negotiations haven’t begun with various countries?
MR. SULLIVAN: I’ll make a couple of comments but then invite both Secretary Raimondo and Ambassador Tai, particularly on the second question. And Ambassador Tai should speak to the first one as well because she just met with her counterpart.
But I would just say that we intend to pursue a deeper bilateral engagement with Taiwan on trade and economic matters in the coming days and weeks. And we think that that track can help strengthen both of our economies while we’re also pursuing IPEF with the countries that we listed. And we think it puts us in the best position for us to be able to enhance our economic partnership with Taiwan and also to carry IPEF forward with this diverse range of countries.
Just briefly on what the U.S. has to bring to the table: I’d just start by saying that, you know, the premise of the question is that without market access, you know, countries wouldn’t be really interested. Well, we’ve got an incredible range of countries who’ve signed up to this, including some with whom we haven’t had meaningful economic negotiations before.
So why is that? One reason is because having the opportunity to work closely with the United States on rules and standards; on greater clarity and transparency and coordination on supply chains; on innovation, as it applies to the digital economy and the decarbonization; on technical expertise; on anti-corruption matters and taxation; on investment in infrastructure and in growing businesses, both foreign direct investment in the U.S. where we have a huge market to offer people for that and the enormous investment we’re making in the region — the United States is going to be a partner of choice on all of the elements of this framework, even setting aside the question of traditional tariff liberalization.
And so we think we bring a huge amount to the table. And we think that proposition has been validated by the fact that we’ve gotten such an overwhelming and broad-scale response from, you know, the Indian subcontinent, to Down Under, to Southeast Asia, to Northeast Asia.
And let me stop there and see if Katherine or Gina has anything they want to add.
SECRETARY RAIMONDO: No, I think that’s exactly right. You know, I would just offer additionally, having spent time in the region, the demand to have the United States increasingly present economically is so strong, which is why, as Jake said, you know, a dozen countries have decided to join us tomorrow for the launch.
You know, so, broadly, there is a strong desire to have U.S. businesses, the United States government engaged in the region.
Now, if you’re asking for kind of a list of specific issues, you know, it’s everything from trade facilitation — which, by the way, you know, we talk about there are non-tariff barriers, which often can be, you know, more expensive than tariffs, which — so, one, you know, we’ll have trade facilitation, as Katherine mentioned earlier; we’ll work together on technology standards to promote interoperable Internet and other kinds of standards.
I mean, the Commerce Department sets standards in technology. If you’re — if you don’t set standards in a way that allows your company to participate, you’re out of — out of business, you know? So that’s a binary.
Decarbonization of key industries.
Capital. You know, we expect that for the infrastructure pillar, there will be sources of public and private capital flowing from the United States into the region; you know, into infrastructure projects in countries in the region.
So, anyway, the list is long. But I think that there will be, you know, a very concrete benefit to countries in the region.
By the way, just today, you know, you see reporting that Apple is looking to boost production outside of China. And many companies — many U.S. companies are looking to diversify away from China. Well, countries — Vietnam, Malaysia, Indonesia — that are actually signed up and in the Indo-Pacific Framework will obviously have an advantage to get that business from American companies, because they will have signed up to be the high-standard agreement that we plan to sign pursuant to the IPEF.
So I think once we get underway, the concrete benefits are going to become pretty clear.
AMBASSADOR TAI: This is Katherine Tai. Let me just very, very quickly — on the Taiwan question, I did just meet Minister John Deng in Bangkok. And we had a great conversation. It was a really, really encouraging and really dynamic meeting that we had.
And coming out of the conversation we had — I think this was just two days ago — both Minister Deng and I have committed that our teams would be in touch and that we’d be in touch in the next couple of weeks. So please stay tuned for that.
In terms of the tariff question — again, the tariff liberalization, let me just put an additional point, add on to what — all of the great examples that Gina has just provided, which is: You know, in our trade policies, our trade experiences and trade relationships, we have so many examples of situations where there are no tariffs between us and another country. And yet, you know, we have farmers who can’t get, for example, a single potato across the border and into the other market.
And so, I just want to reinforce Secretary Raimondo’s point that, in terms of economic value, we’re looking at connectivity and we’re offering a program relating to connectivity for our stakeholders. And that goes beyond tariffs.
In fact, average bound tariff MFN for the United States right now is 2.4 percent. It’s very low. In terms of where the value is that is left to be unlocked in the global economy right now, it is in the areas where we are engaging through this framework.
MR. PATEL: Thanks so much. I think we have time for one last question before our speakers have to head to another commitment.
Why don’t we go next to Trevor Hunnicutt with Reuters.
Q Thanks for taking the question. It’s a quick one. Jake said that this is an open architecture arrangement. Does that mean that it’s open to all countries in the region, regardless of how they perform on indices of economic freedom and democracy? And what role do you see China potentially playing in this in the future?
MR. SULLIVAN: So I think one of the things we will do on a going-forward basis with addi- — in terms of additional members is work with the other countries that are now in — with the founding partners, so to speak — to determine both the process and criteria by which to add additional members.
And it won’t just be if you raise your hand, you’re automatically in. But we also want to maintain a proposition of inclusivity and diversity of economies.
So the short answer is that we will not dictate, just as the United States, who comes in going forward, but we’ll have to work that with our partners. And that will be part of those initial discussions that Secretary Raimondo referred to. But that will immediately follow from the launch event tomorrow.
Oh, and on China, just broadly speaking, those — the — what I just said would apply to that case.
MR. PATEL: Thank you so much. As a reminder to everybody, this call was on the record, but it is under embargo until tomorrow at 4:15 Japan Standard Time. Again, until 4:15 tomorrow, May 23rd, Japan Standard Time.
Thanks so much, everyone, for joining and a special thanks to our speakers. And we’ll all be in touch again over the course of this trip.
7:49 P.M. JST