US launches Indo Pacific Economic Framework for Prosperity

May 2022

In brief

US President Joe Biden on May 23 launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with 12 initial partners: Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. According to a White House fact sheet, these countries represent 40% of the world’s Gross Domestic Product (GDP).

Action item: Companies that engage in trade or are considering engaging in trade with any of the IPEF countries should determine how the framework could enhance opportunities in those countries.

In detail

According to the fact sheet, the IPEF will focus on four key pillars “to establish high-standard commitments that will deepen” US economic engagement in the region. These pillars are:

Connected economy: The United States will engage comprehensively with its IPEF partners on a wide range of issues. It will pursue “high-standard rules of the road in the digital economy,” including standards on cross-border data flows and data localization; work with its partners to seize opportunities and address concerns in the digital economy; and “seek strong labor and environment standards and corporate accountability provisions that promote a race to the top for workers through trade.” 

Resilient economy: The United States will seek novel supply-chain commitments that better anticipate and prevent disruptions in supply chains “to create a more resilient economy and guard against price spikes that increase costs for American families.”

Clean economy: The United States also will seek novel commitments on clean energy, decarbonization, and infrastructure that promote good-paying jobs. The United States will pursue “concrete, high-ambition targets that will accelerate efforts to tackle the climate crisis,” including in the areas of renewable energy, carbon removal, energy efficiency standards, and new measures to combat methane emissions.

Fair economy: The United States will seek commitments to enact and enforce effective tax, anti-money laundering, and anti-bribery regimes “that are in line with existing multilateral obligations to promote a fair economy.” These will include provisions on the exchange of tax information.

Note: Biden Administration officials have stated that IPEF countries do not need to participate in all of the pillars of the agreement, but there will be a focus on negotiating strong labor and environmental standards, including a commitment to develop what the fact sheet calls “corporate accountability provisions that promote a race to the top for workers through trade.”

At a May 23 press briefing, US Trade Representative Katherine Tai stated that the IPEF will not include negotiations to reduce tariffs, explaining, “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.”

Contact us

Anthony Tennariello

Principal, Customs and International Trade National Practice Leader, PwC US

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