[CTC] Administration looking to complete IPEF, APEP this year

[Arthur Stamoulis]

Fernandez: Administration looking to complete IPEF, APEP this year
 
Inside US Trade, January 24, 2023 at 5:47 PM
 
The Biden administration is aiming to complete its two flagship regional initiatives – the Indo-Pacific Economic Framework and the Americas Partnership for Economic Prosperity – this year, Under Secretary of State for Economic Growth, Energy and the Environment Jose Fernandez said on Tuesday, while also acknowledging that APEP was “a little bit behind.”
 
Fernandez, speaking at the Center for Strategic and International Studies, noted that he has been tapped to “lead a big chunk” of APEP within the State Department. IPEF was formally launched last May; APEP was announced in June, with few details.
 
Accordingly, IPEF is much further along. A first in-person IPEF negotiating round was held in Australia last month and another one is planned, albeit without trade-pillar talks, in India next month.
 
The administration, meanwhile, has released very few details about APEP since its launch – including which countries may participate – although it keeps promising updates “soon.”
 
Nonetheless, Fernandez believes both can be finished in 2023.
 
“It is my hope that both can be completed this year. And that’s something that’s our intention,” Fernandez said. “On APEP, we’re starting a little bit behind, but hopefully we can catch up.”
 
Beyond the hoped-for deadline, Fernandez did not elaborate on the status of APEP. Asked whether the two initiatives could eventually lead to comprehensive free trade agreements, the under secretary noted the U.S. already has FTAs with nearly a dozen Latin American countries. He also echoed U.S. Trade Representative Katherine Tai, arguing the administration is looking “beyond” FTAs. Tai has also said APEP will build upon existing trade arrangements.
 
“I think we’re looking to move beyond traditional trade agreements. If you listen to Ambassador Tai, she will tell you that worker-centric agreements are USTR’s goals,” he said.
 
IPEF does not include traditional market-access negotiations; nor will APEP. The Biden administration’s decision to eschew tariff-liberalization in such initiatives has been criticized by some U.S. lawmakers, especially Republicans, and a number of analysts who have maintained the tariff cuts are the incentive to take on ambitious rules.
 
But Fernandez argued deals should be judged on more than what tariffs are cut.
 
“Often times, in my view, we make the mistake of analyzing trade agreements simply by reference to market access,” he said. “There’s a belief that unless you have broad market access, it’s weak tea. I would argue that that's not the case.”
 
“What deters a company from investing in a country isn’t necessarily the ability to import tariff-free,” he added, citing key considerations for the private sector such as stability, corruption and the regulatory environment.
 
“Our agreements, I would argue, try to establish a new global code of conduct,” he continued. “A code of conduct where countries work together on supply chains, where they work to deter corruption, where they work to bring benefits to their people to create the stability that I think investors need.”
 
Fernandez, noting his recent trip to Japan and Korea, also touted the administration’s efforts to counter China. He pointed to the Minerals Security Partnership, an initiative State launched last year to work with like-minded allies in ensuring a secure, diversified critical minerals supply chain. Members include Korea, Japan, the European Union, Canada and Australia, among others. Fernandez noted a 13th country would be joining the initiative soon.
 
He said up to 70 percent of critical minerals are mined by or in China and 80 percent are processed there – “and that’s a vulnerability.” According to the under secretary, the partnership countries aim to share information quickly, share “financing opportunities,” work with the private sector and begin work on recycling key materials.
 
“Our calling card will not be a race to the bottom. A lot of mining projects today are environmentally unsound, are not supported by communities, do not bring benefits to the people in whose communities the mines exist. We are going to stress – and our calling card will be – the highest ESG principles out there,” he said, referring to environmental, social and governance principles. “There is no reason why a Zambia needs to accept lower environmental standards, low governance standards [and] corruption in order to get investment.”
 
The partnership is part of the administration’s overall strategy for its relationship with Beijing: “[W]e'll compete with confidence; we'll cooperate wherever we can; we'll contest where we must,” as Secretary of State Antony Blinken has said.
 
“The broad strategy has not changed,” Fernandez insisted. “What you will see is in different times you have different emphases.”
 
Asked about Chinese economic coercion, Fernandez noted combatting it remained a priority for the administration, saying it happens “too often.” He cited in particular Chinese restrictions imposed on goods from Lithuania after that country allowed a diplomatic office to use the name “Taiwan.” Beijing considers Taiwan a part of China.
 
According to Fernandez, the U.S. was “very involved” in the issue, encouraging U.S. companies to explore doing business in Lithuania as well as extending credit through the Export-Import Bank after China cut off its own.
 
The U.S. and allies must continue to work together to “preserve a nation’s ability to take its own sovereign decision” without fear of economic coercion, Fernandez said. -- Hannah Monicken (hmonicken at iwpnews.com <mailto:hmonicken at iwpnews.com>)


Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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