[CTC] IPEF ministers wrap up first meeting without joint statement

[Arthur Stamoulis]

Two articles below (including mention that Commerce is leading the “digital trade” negotiations in the otherwise USTR-led trade pillar)….


IPEF ministers wrap up first meeting without joint statement
It's still not clear which countries are participating in each of the four separate pillars of the negotiations.
By Doug Palmer, Politico Pro
7/27/22 
 
Top trade officials from the United States and 13 other countries participating in talks on the proposed Indo-Pacific Economic Framework wrapped up their first ministerial meeting Wednesday with a number of questions still unanswered.
"The ministers had positive and constructive discussions and reaffirmed their collective goal to pursue a high-standard and inclusive economic framework through ongoing and intensified engagements," the Office of the U.S. Trade Representative and the Commerce Department said in a readout of the meeting. <https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/july/ambassador-katherine-tai-and-secretary-commerce-gina-raimondo-virtual-indo-pacific-economic>
However, it's still not clear which countries are participating in each of the four separate pillars of the negotiations. The talks on pillar 1 covering non-tariff aspects of trade are led by U.S. Trade Representative Katherine Tai, while Pillars 2, 3 and 4 covering supply chains; clean energy, decarbonization, and infrastructure; and tax and anti-corruption are chaired by Commerce Secretary Gina Raimondo.
Wendy Cutler, a former senior U.S. trade official who served in both Republican and Democratic administrations, said the ministerial meeting looked to her like a "check-in“ to review progress made by senior officials at a recent meeting in Singapore.
"Ideally, ministers at their next meeting would be in a position to launch the actual negotiations under each of the four IPEF pillars," Cutler said. "The prep work for this negotiation has taken quite a long time as negotiators will soon approach the one-year anniversary of [President Joe Biden] first announcing this initiative at the October 2021 East Asia Summit meeting."
Trade ministers discussed a ministerial statement covering all four pillars, Fiji's Minister of Commerce, Trade, Tourism and Transport wrote on Twitter.  <https://twitter.com/MCTTTFiji/status/1552180566401110016>However, no document was released at the end of the meeting, indicating more work needs to be done.
The initiative is intended as a U.S. counterweight to China, which is the region's most important trade partner. Beijing has a larger share than the United States of the import market in each of the 13 other IPEF members.
Biden administration officials believe they can expand U.S. exports in the region by creating stronger rules in areas like labor and the environment and reducing red tape and other non-tariff barriers that increase costs and impede trade.
However, it's unclear how the Biden administration will persuade IPEF members to adopt those reforms, since it has taken the traditional U.S. trade policy tool — tariff cuts — off the table in the talks.
Malaysian Trade Minister Mohamed Azmin Ali seemed to touch on that concern in one of several tweets during the course of the meeting.
"It is critical that tangible benefits are offered to partner countries for establishing strong policies and standards, provided that binding provisions are also accompanied by clear and binding commitments to allow for technical assistance and capacity building," he wrote on Twitter. <https://twitter.com/AzminAli/status/1551945759901093889>
The brief USTR and Commerce Department readout did not say how soon trade ministers would be meeting again. One possibility is when Indonesia host the G-20 trade ministers meeting in September, but U.S. officials have not confirmed that.
Despite the slow start, the Biden administration is expected to push for a conclusion of the agreement by the time the United States hosts the annual Asia-Pacific Economic Cooperation summit in late 2023, said Robert Holleyman, a former deputy U.S. trade representative who served in the Obama administration.
"I think we'll know more in about six months" whether that's possible, he added.
The 14 IPEF countries are Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam and the United States.
 

At IPEF ministerial, some call for transition periods to meet commitments
Inside US Trade, July 27, 2022 at 2:33 PM

U.S. officials spearheading the development of the Indo-Pacific Economic Framework for Prosperity this week heard pleas from partner countries for transition periods to ensure binding commitments can be met by all, according to ministers and reports.

The U.S. on Tuesday and Wednesday hosted a virtual ministerial with high-level officials from its 13 IPEF partners. U.S. Trade Representative Katherine Tai chaired Tuesday’s meeting on IPEF’s trade pillar, which she leads. Commerce Secretary Gina Raimondo chaired Wednesday’s meeting on the other three pillars, which cover supply chain resiliency; decarbonization and clean infrastructure; and tax and anticorruption.

All 14 IPEF members participated in the ministerial, according to a statement issued by Korea’s Ministry of Trade, Industry and Energy.

Tuesday’s meeting focused on the trade pillar, Fiji Minister for Commerce, Trade, Tourism and Transport Faiyaz Koya said on Twitter <https://twitter.com/FaiyazKoya/status/1552048279156060161>. A draft of a ministerial trade statement leaked earlier this month <https://insidetrade.com/node/174525> outlined broad areas of focus but did not detail the types of commitments members would be expected to meet.

According to Malaysian Trade Minister Mohamed Azmin Ali, any commitments members take on must be accompanied by transition periods to ensure parties can meet them.

“It is critical that tangible benefits are offered to partner countries for establishing strong policies and standards, provided that binding provisions are also accompanied by clear and binding commitments to allow for technical assistance and capacity building,” he tweeted <https://twitter.com/AzminAli/status/1551945723163209729> after the trade meeting on Tuesday. “This is essential to ensure a level playing field.”

Transition periods are needed across IPEF pillars, Azmin argued, outlining Malaysia’s positions on all of them. On the tax and anticorruption pillar, he said in a Twitter thread Wednesday <https://twitter.com/AzminAli/status/1552153723610157057> that he “articulated that principles of transparency, accountability and good governance are the prerequisites for the deepening of anti-corruption measures, and underscored the importance of fairness and rule of law in ensuring that the benefits of economic growth are broadly and equitably shared.”

“In order to advance our scoping exercise, Malaysia highlighted the imperative of the inclusion of transition periods and other reasonable flexibilities,” he continued. “This would pave commencement of the negotiations, thereby translating the Framework into actionable plan.”

According to a report in Nikkei <https://www.nikkei.com/article/DGXZQOUA2740P0X20C22A7000000/> citing a Japanese official, Malaysia was not alone in seeking transition periods; they were requested by multiple Asian countries. At least one country suggested IPEF be based on a system that makes it easy for countries to participate, the report said.

The group is expected to reconvene in September, Azmin said, when members hope to issue ministerial statements. “Across the board, the member countries are resolute in our discussion to maintain the momentum and aim to conclude the Ministerial Statements well ahead of our meeting in September,” he said on Wednesday. A statement issued by Thailand’s Office of Industrial Economics also mentioned a September IPEF meeting, according to an informal translation.

In a statement to Inside U.S. Trade, Australian Minister for Trade and Tourism Don Farrell said Canberra wants “IPEF to be a broad and inclusive framework” and added that he’s “been pleased with the strong engagement from members across the Indo-Pacific and welcome our continued discussions with members on how we can build cooperation to tackle these new and emerging issues.”

Korean Trade Minister Ahn Duk-geun said in a statement <https://english.motie.go.kr/en/pc/pressreleases/bbs/bbsView.do?bbs_cd_n=2&bbs_seq_n=1028> that “creating practical outcomes in areas like supply chain and clean energy is imperative.” On the supply chain pillar, Azmin said “Malaysia believes that it is crucial to outline the tangible benefits of this trade and multilateral economic Framework.”

Korea is focused on involving the private sector in the IPEF talks. “With regard to IPEF, the South Korean government has thus far launched the public-private joint strategic meeting in June for relevant ministries’ effective communication, and is presently operating a ‘one team’ consisting of government officials, business entities and experts to gather diverse opinions and promote public awareness,” Korea’s statement said. “The Government plans to continue its active participation in IPEF discussions to effectively incorporate domestic industries’ interests.”

Private-sector participation will be key to an outcome on the decarbonization and clean infrastructure pillar, Azmin noted. “On Pillar 3 in respect of the green economy, it bears repeating that we cannot win the war on climate change without the private sector’s contribution and active participation,” he tweeted. “This is a shared responsibility.”

USTR and Commerce on Wednesday provided little insight into the ministerial. “The ministers had positive and constructive discussions and reaffirmed their collective goal to pursue a high-standard and inclusive economic framework through ongoing and intensified engagements,” they said in a statement <https://insidetrade.com/sites/insidetrade.com/files/documents/2022/jul/wto2022_0521.pdf>. Requests for comment were not answered.

Commerce comments

Under Secretary of Commerce for International Trade Marisa Lago, speaking on Tuesday during a meeting of the Environmental Technologies Trade Advisory Committee, suggested the U.S. private-sector’s willingness to invest in other IPEF countries should be a key incentive for participation in the framework.

Lago told the committee that administration officials hear “repeatedly” from Democratic and Republican lawmakers that they want market access to be part of the framework, something the administration has said will not happen.

However, she said, when Commerce Secretary Gina Raimondo is asked “what’s in it for me?” by Asian counterparts, she outlines what “we and the other major economies bring to the table: Our private sector. As we strike a high-quality arrangement with high standards, that sends a message to U.S. industry that there are better opportunities, there’s a better climate for investment.”

Lago also noted that while USTR leads the IPEF trade pillar, Commerce is leading the negotiations on the digital economy portion of that pillar.

After the IPEF idea was introduced last year, Lago acknowledged, some were skeptical about which countries would agree to join it -- thinking the U.S. “would only be dealing with the usual suspects” like Japan, Australia, South Korea and others. However, she noted, the administration was “very, very focused on reaching out to a broad array of [Association of Southeast Asia Nations],” and is pleased that 13 countries have agreed to join. “We think we were fortunate the 13th member … which joined right after the launch was Fiji, and while you may, as businesspeople, look and say [it’s] a tiny economy, it has an extremely strategic position given its geography.”

The “next step that is coming up for IPEF,” Lago continued, is partner nations will “have the choice of joining one, two, three or all four of the pillars. And we think that it will be very interesting to see.”

She added that “some countries have already told us we’re signing up for all four pillars, including some more emerging ASEAN members since they view it as a sign of how they want to grow with their legitimacy to sign up for all four pillars.” -- Brett Fortnam (bfortnam at iwpnews.com <mailto:bfortnam at iwpnews.com>) and Maydeen Merino (mmerino at iwpnews.com <mailto:mmerino at iwpnews.com>)


Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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