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Biden Administration Launches Indo-Pacific Economic Framework to Boost Profile in Asia

On May 23, 2022, President Biden launched the Indo-Pacific Economic Framework, along with nation partners representing over 40 percent of the world’s gross domestic product (GDP), expanding economic leadership in Asia.

The four-pillared agreement now includes 14 countries and an aggressive 12- to 18-month timeline for negotiations. It aims to replace other trade deals that have gone sour by improving the region’s economic situation by setting stronger standards and rules in growing areas such as the digital economy and as well as reinforcing the stability of supply chains. Through these efforts, the U.S. will expand its leadership in the region, benefiting American businesses and families with more stable trade and jobs – as well as benefiting the region’s people.


The IPEF initiative includes Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Vietnam, and the United States.

The U.S. selected the other 13 members of the group in an effort to partner with countries that have significant economic ties to the US as well as characteristics meeting at least one of the pact’s four pillars, outlined below. Together with the United States, the member countries represent about 40 percent of the world’s GDP. Over time, these original members will develop criteria for allowing other countries to join the pact.


An interesting element of IPEF is a lack of tariff reductions. Most trade deals work to reduce tariffs to make U.S. exports cheaper abroad. The IPEF, however, focuses on four economic areas: economic connection, resilience, sustainability, and fairness. Each IPEF member country needs to support at least one of these pillars, but not necessarily all four.

Economic Connection

The first IPEF pillar looks to connect the regional economy by implementing higher standards for the digital economy, addressing the rapid growth in the e-commerce sector, online privacy, and artificial intelligence.

Economic Resilience

Resilience goals of the second pillar of the agreement include making supply chain commitments for anticipating and preventing disruptions such as those seen in recent years. An early warning system, a map of critical supply chains, diversification, and key sector traceability improvements will all work towards improving resiliency, preventing market price fluctuations that affect American businesses and families.


The third pillar seeks to make innovative commitments regarding clean energy, infrastructure, and decarbonization. These actions will contribute to tackling climate change while simultaneously promoting well-paid employment in those sectors.

Economic Fairness

Finally, the fourth pillar commits to preventing money laundering and bribery while enforcing effective taxation in a fair economy.

Although the four pillars provide broad goals for enhancing economic growth and cooperation, many of the finer details of the initiative remain to be established. The U.S. trade representative will continue talks on ironing out the details for the fairness pillar. These efforts will likely focus on protecting U.S. workers from job losses due to competition from China.

Negotiations for the other pillars will fall under the Commerce Department.


While the U.S. already holds significant economic power in the Indo-Pacific region, further expansion of its leadership benefits American businesses, workers, and families. It also benefits the people of the region as the participating countries can work together to lower overall prices and stabilize supply chains.

Criticisms and Support

Unsurprisingly, China has expressed disapproval of the agreement, which it sees as an exclusive clique. The country’s foreign ministry said the IPEF is “doomed to fail” and accused it of working towards “destroying peace” in the region by creating divisions.

Relatedly, the agreement also excludes Taiwan, as it has always been a major point of tension between the U.S. and China. Criticisms from within the U.S. include disapproval by more than 50 senators of the exclusion of Taiwan.

Despite these political reservations, U.S. businesses appear to be looking forward to an increased economic influence in the region. Jake Colvin, president of the National Foreign Trade Council, expressed that IPEF has the potential for providing real economic gains to American businesses. He emphasized that adding “as many countries in the region as possible” would be optimal, but he also conceded that “hard decisions will have to be made” about which countries to ultimately include.

Optimally, the IPEF will improve trade relations in the region in the long term, helping smaller countries reduce dependency on and competition with China. However, implementation is unlikely to commence within the next year as the IPEF members continue ironing out the details of the agreement.

While the effects of this agreement are yet to be seen, rest assured that ClearFreight stands ready to help you manage your supply chain. Contact our team today to learn how our decades of experience and specialized supply chain solutions can make logistics easier for you.

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