Biden’s blurry Indo-Pacific economic vision brings few new ideas to benefit Asia

The US president’s visit to Asia holds symbolic importance, but it is unclear what tangible benefits will emerge
Details on the Indo-Pacific Economic Framework are in short supply, and the plan seems to offer little that Asia’s current bilateral and multilateral deals do not

David Dodwell

Published: 6:45am, 23 May, 2022

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For those not already suffering “pivot fatigue”, US President Joe Biden’s visit to South Korea and Japan must be seen as significant. It is his first visit to Asia since taking office in January last year. His predecessor Donald Trump’s first visit to Asia also started off with Japan and South Korea, but was followed by a visit to China.

Whether the meetings succeed in generating any substantive messages, or what those messages might be, remains open to question. Just before flying out on Air Force One, National Security Adviser Jake Sullivan did his best. He said the president would be bringing “a message of an affirmative vision of what the world can look like if the democracies and open societies of the world stand together to shape the rules of the road to define the security architecture of the region to reinforce strong, powerful historic alliances”. Clear as mud.

Perhaps the single clearest message might be that the Biden administration has the foreign policy bandwidth to temporarily turn away from Nato, the war in Ukraine and Russian President Vladimir Putin’s existential threat to the Europe.

Beyond that, the message must surely be that the United States remains in a muddle on how to develop relations across the Asia-Pacific. The “ pivot to Asia” might be sincerely intended, but it seems constantly to be distracted by pressing matters elsewhere.

These include the “war on terror” following the destruction of the World Trade Centre towers in New York in 2001, the invasion of Iraq and other Middle Eastern conflicts, and the latest Russian assault on Ukraine. The shape of any strategy to build alliances across Asia remains elusive.

So there is little doubt Biden’s current visit to Asia – which is built on the foundation of his hosting Southeast Asian leaders in Washington a week ago – is of huge symbolic importance. It might even deliver some substance, but at present that is unclear.

In Seoul, attention was focused not on regional issues but on North Korea, missile tests and reaffirmation of security cooperation that dates back to 1953. Biden will undoubtedly take comfort from the conservatism of South Korean President Yoon Suk-yeol, who took office less than two weeks ago.

02:30

Joe Biden arrives in South Korea for a tour of Asia to strengthen US ties in the Indo-Pacific

In Japan, the overriding priority is to strengthen links across the Quad – comprising Japan, the US, India and Australia – and perhaps edge it towards its development as an Indo-Pacific Nato. But with Anthony Albanese set to replace Scott Morrison as Australian prime minister after the Labor Party’s victory in Saturday’s election, Japanese Prime Minister Fumio Kishida having been in office less than eight months and Biden dealing with declining approval ratings at home, Indian Prime Minister Narendra Modi seems the only stable point in the Quad.

What stability does Modi provide, though? He must count as the group’s most equivocal member, with India still refusing to formally condemn Putin for Russia’s invasion of Ukraine.

05:58

Why India is walking a diplomatic tightrope over Ukraine-Russia crisis

Responding to complaints the US is “all guns and no butter” – too focused on security issues and unconcerned about the stronger trade and economic relationships desired by most Asian economies – Biden is expected to unveil some of the contents of his Indo-Pacific Economic Framework (IPEF). Details on the plan have been difficult to pin down.

Sullivan has said the IPEF would “chart the course for effective, principled, American leadership and engagement in a region that will define much of the future of the 21st century”. He added that it would be “setting the rules of the digital economy, ensuring secure and resilient supply chains, managing the energy transition, investing in clean, modern high standards infrastructure”.

But even before Biden landed in Seoul, reports emerged he was considering watering down the IPEF in a move to attract more countries to join the deal. It is still unclear how that would be useful.

Asian leaders have made two key points clear. They do not want to join a deal that forces them into a choice between China and the US, and they want a deal that offers better trade and investment access to the US market. Given the US political consensus over the need to contain China and the reluctance to further open the US market to Asian products, it is difficult to imagine what substance the IPEF can offer.

‘Japan is feeling anxious’ as Biden’s visit coincides with US’ IPEF launch

There are already several economically focused deals bringing clear benefits to countries across Asia. In addition to bilateral agreements and groupings such as Apec and Asean, there are the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. What the vaguely defined IPEF can bring that these do not is far from clear.

Even if the Biden administration is committed to this latest pivot, it cannot exclude China. According to Unctad’s 2021 World Investment Report, China has become the world’s largest outward investor and is on a par with the US as a leading destination for investment. It is the world’s second-most important export market for developing economies behind the US, and the largest if Chinese exports through Hong Kong are included.

China is by far the largest source of imports for developing economies, amounting to more than US$1.2 trillion in 2020 or about 16.6 per cent of global imports. It is the largest market for most of Asia, and virtually all supply chains in the region include China.

The IPEF and Biden’s pivot to Asia must be a non-starter if they fail to directly engage China. The pivot might be possible if Biden is just talking guns, but the minute he includes butter – as most in Asia want – progress will evaporate. Only time will tell if Biden’s team learns this during his important visit to Asia.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view