[CTC] IPEF trade pillar faces existential questions as ministerial begins

Mon Nov 13 09:45:17 PST 2023

IPEF trade pillar faces existential questions as ministerial begins
Inside US Trade, 11/13/23

Indo-Pacific Economic Framework for Prosperity country trade ministers are gathered in San Francisco to weigh and announce the progress their negotiating teams have made so far in the 14-month-old talks, but key U.S. lawmakers have thrown the fate of the framework’s trade pillar into question.

Negotiating teams were tasked with working right up to the last minute to prepare an outcome for the ministerial. The U.S. hosted an IPEF negotiating round in San Francisco that concluded on Sunday; the two-day ministerial begins on Monday <https://insidetrade.com/node/178299>.

Senate Finance Committee member Sherrod Brown (D-OH) last week said IPEF should not include a trade pillar <https://insidetrade.com/node/178355> because it is expected to lack enforceable labor provisions. The Office of the U.S. Trade Representative has been pushing its IPEF partners for such provisions but has faced pushback from some of the negotiating teams.

Sources have told Inside U.S. Trade that USTR will not consider labor and environmental provisions that are largely symbolic -- the U.S. wants strong labor and environmental chapters and will work even past this week’s ministerial to get them, they said <https://insidetrade.com/node/178156>.

For Brown, though, the “entire pillar” must go if those standards aren’t in them this week.
“Any trade deal that does not include enforceable labor standards is unacceptable,” Brown said in a statement on Thursday. “That goes against everything I stand for -- and everything we successfully fought against when we led the opposition to the Trans-Pacific Partnership.”

Senate Finance Committee Chair Ron Wyden (D-OR) also opposes the inclusion of a trade pillar that lacks enforceable labor provisions, Politico reported last week <https://subscriber.politicopro.com/article/2023/11/senior-dem-senators-push-biden-to-drop-trade-from-ipef-00126211>.

IPEF members could announce the substantial conclusion of the clean economy and fair economy pillars this week and might sign the supply chain pillar agreement struck in May, leaving trade as the only outstanding pillar that will need further negotiation.

“We also expect discussions on some IPEF elements will not be completed on this aggressive timeline and thus we expect it to fully be able to continue past November,” National Security Council spokesman John Kirby said on Friday when asked about expectations for IPEF heading into this week.

IPEF already will not touch on controversial digital trade issues, a group of Democrats said earlier this month <https://insidetrade.com/node/178313>. Inside U.S. Trade had previously reported <https://insidetrade.com/node/178044> that USTR had suspended discussions in those areas, which included provisions on cross-border data flows and data localization.

Instead, IPEF is expected to in substance cover many of the same issues as the U.S.-Taiwan Initiative on 21st Century Trade. The first stage in those negotiations concluded in May <https://insidetrade.com/node/176918> and included provisions on trade facilitation, domestic regulation of services, good regulatory practices and small and medium-sized businesses.

But an IPEF that doesn’t include the strong digital provisions Republicans prioritize and the strong labor and environmental provisions Democrats want might not have any congressional defenders, a congressional aide told Inside U.S. Trade last week.

San Francisco is the center of the trade world this week for reasons beyond the IPEF ministerial. President Biden and Chinese President Xi Jinping will meet in the Bay Area on Wednesday -- their first in-person meeting in roughly one year. The U.S. goal for the meeting is to continue to stabilize the relationship, according to senior administration officials who continue to harp on the need for the two sides to manage competition responsibly.

The officials last week told reporters not to expect a list of deliverables <https://insidetrade.com/node/178350> from the meeting, describing such an outcome as characteristic of the U.S.-China relationship of five to 10 years ago. Instead, the U.S. will work to “create a framework for a successful management of the difficult and complicated, complex relationship,” one official said.

The Biden-Xi meeting is happening on the sidelines of the Asia-Pacific Economic Cooperation leaders’ summit, slated for Nov. 16 and 17. The theme of the APEC meeting will be “creating a resilient and sustainable future for all,” according to the APEC website. Assistant USTR for Japan, Korea and APEC Christopher Wilson last week told reporters that APEC members were working to <https://insidetrade.com/node/178329> “develop a set of shared principles for incorporating sustainability and inclusion more directly in the way that each of us as APEC economies develops and implements our trade policies.”

As part of the leaders' summit, the APEC Business Advisory Council Dialogue will meet leaders on Nov. 16 and 17.

USTR Katherine Tai, already in town for the IPEF ministerial, will join Biden for the APEC meetings, as will Secretary of State Antony Blinken and Treasury Secretary Janet Yellen. The APEC finance ministerial is on Monday, when Yellen will offer public remarks and participate in a closing press conference.

On Tuesday, Blinken and Commerce Secretary Gina Raimondo will participate in a “2+2” economic ministerial <https://insidetrade.com/node/178353> with their Japanese counterparts, the second such ministerial meeting under the countries’ Economic Policy Consultative Committee.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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