Hurricane forecasters know that every once in a while, a storm that appears dead hangs on long after the public’s attention has waned, only to exceed expectations and grow back into a powerful force. The Biden administration’s Indo-Pacific Economic Framework for Prosperity (IPEF) might follow a similar path.
Many commentators pronounced IPEF dead after negotiations at last year’s ministerial meeting in San Francisco failed to reach agreement on the initiative’s trade pillar. But like a small storm gathering strength, the reality is that IPEF’s other three pillars—on supply chain cooperation, the green transition, and anti-corruption—have continued at pace and are now beginning to deliver tangible economic and foreign policy impacts.
And importantly, each pillar is not stagnant. Every one provides a platform for alliance-strengthening activities that can help the relationships fostered by IPEF grow stronger over time. For this reason alone, it is worth monitoring the initiative’s progress, as its impact cannot be measured merely in trade flows or investment. As more engagements occur, as businesses find investors from other IPEF markets, and as more networks are created between IPEF collaborators, the more influential the alliance of IPEF countries will become in the Asia-Pacific.
Moving from negotiation to implementation
Last week, ministers from the 14 IPEF countries—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the United States, and Vietnam—met in Singapore. The American delegation was led by U.S. Secretary of Commerce Gina Raimondo and was joined by 22 leading American companies that participated in IPEF’s inaugural Clean Economy Investor Forum. The forum brought together investors from across the IPEF economies with the aim to accelerate sustainable infrastructure and climate-aligned investments in the region. This is important because the IPEF economies account for around 30 percent of the world’s greenhouse gas emissions, and because the success of the forum—which included more than 300 participants from government, business, and the investment sector—provides a clear demonstration of the opportunity associated with investing in climate-friendly projects as part of a broader regional approach to sustainability.
The IPEF ministerial meeting was the first in-person convening of ministers—they met virtually in March of this year—since the substantial conclusion of negotiations for the Clean Economy Agreement and the Fair Economy Agreement, and the signing of the Supply Chain Agreement in November 2023. The meeting was designed to allow each country to take stock of progress on the agreements’ implementation thus far and to talk through the various workplans and initiatives on which demonstratable outcomes for IPEF rest.
A few highlights from the event deserve special attention. These include:
- All 14 IPEF partners officially signed the IPEF Clean Economy Agreement, the IPEF Fair Economy Agreement, and the overarching Agreement on IPEF (the IPEF Supply Chain Agreement has already entered into force).
- The IPEF partners identified more than $23 billion of priority infrastructure projects, including roughly $6 billion of investment-ready projects that proponents presented to investors.
- The IPEF Catalytic Capital Fund, which deploys concessional financing, technical assistance, and capacity-building support to climate-aligned projects in IPEF economies, was officially launched. The fund’s founding supporters include Australia, Japan, the Republic of Korea, and the United States, which collectively plan to provide $33 million in initial grant funding; this is expected to catalyze up to $3.3 billion in private investment.
- HolonIQ selected and announced the “Indo-Pacific Climate Tech 100” to highlight climate technology companies from IPEF economies. By highlighting quality startups, the hope is that investors interested in supporting climate tech firms will find it easier to invest in the region.
- Three new cooperative work plans were agreed to, which will cover emissions intensity accounting, e-waste urban mining, and small modular reactors.
- Secretary Raimondo announced that the IPEF Upskilling Initiative, which was launched in 2022 with the goal of providing training opportunities in digital skills to women and girls in IPEF emerging and middle-income countries, has already delivered 10.9 million in-person, hybrid, and online opportunities—far exceeding the program’s original goal of 7 million training opportunities.
The ministerial is just one example of continued progress. Last month, the Indo-Pacific Partnership for Prosperity—a collaboration of public, private, and nonprofit leaders—named its first executive director, David Talbot, formerly of the Milken Institute, to promote opportunities to support the three finalized IPEF pillars. The nonprofit organization is an innovative potential catalyst for IPEF, since it can ensure continued private sector engagement in support of the initiative’s long-term success.
In order to further commitments agreed to in the IPEF Fair Economy Agreement, the 14 participating countries also recently announced the establishment of a new regional anti-corruption network that includes 13 civil society organizations from 10 countries in the Asia-Pacific region. The network was launched with the support of the United Nations Office on Drugs and Crime and is set to be chaired by the Knowledge Hub for Regional Anti-Corruption and Good Governance Collaboration at Thailand’s Chulalongkorn University. This is a first for a major international agreement in that it considers corruption as an economic issue in addition to a legal one
Additionally, ministers from all 14 countries agreed at the Singapore meeting to hold the first virtual meetings of the Supply Chain Council and the Crisis Response Network in July, and to hold in-person meetings on the margins of a U.S. Department of Commerce-convened Supply Chain Summit in Washington, D.C., before the end of 2024.. The next step will be for the United States and its partners to publicly identify their representatives to the IPEF Supply Chain Council, the tripartite IPEF Labor Rights Advisory Board, and the IPEF Crisis Response Network.
Conclusion
Some have dismissed the importance of IPEF, given its voluntary nature and its conspicuous lack of market access. This is a mistake. The three IPEF agreements are intentionally different from the more traditional trade agreements of the past. They do not trade market access for corporate profits. And—importantly—they are written as a playbook for how partners will cooperate in the face of common challenges such as climate change and intense geostrategic competition, rather than a rulebook to govern how signatories will compete against one another.
On their own, these differences would make IPEF an important, foundational demonstration of the Biden administration’s new approach to trade. But IPEF is not just a demonstration; it is an agreement that includes economies that account for 40 percent of global gross domestic product. And it has the potential to be a bulwark against China’s rising influence in the region because, as the Center for American Progress has previously written, it provides a foundation on which future collaborative activities can—and will—be based.
IPEF is an agreement that includes economies that account for 40 percent of global gross domestic product, and it has the potential to be a bulwark against China’s rising influence in the region.
Still, more tangible results are needed to ensure that the economic alliance created by IPEF endures into the future. This will require the United States to marshal a whole-of-government approach to IPEF implementation, particularly because the primary topics addressed by IPEF—supply chains, climate change, and anti-corruption—are not neatly housed at any one department or agency.
The Commerce Department deserves credit for its leadership in bringing new, innovative disciplines to the center for international economic cooperation. However, continued progress likely depends on expanding leadership of IPEF-related activities, drawing on the expertise of the U.S. departments of Labor, State, the Treasury, and Homeland Security, as well as the U.S. Trade and Development Agency and the U.S. Agency for International Development. A similar, inclusive approach to IPEF implementation should be encouraged across the partner governments. That is the only way IPEF will become an alliance of governments and economies—not just an alliance of economics ministries.
Whether the announcements made last week in Singapore are the beginning of a lasting alliance that will define the Asia-Pacific remains to be seen. But what is clear is that the work of implementing IPEF continues. It is a story whose ending has yet to unfold and one that offers enough potential to be watched closely.