The rivalry between China and the US in the Indo-Pacific region is being waged not only through military threat, but also through the formation of economic blocs in the area. Since the Trump administration stepped out of the TTP-agreement in January 2017 –an ambitious Indo-Pacific trade deal initiated by his predecessor Barack Obama– President Biden’s Indo-Pacific Economic Framework (IPEF) is the newest multilateral trade deal initiative by the US.

The US-President launched IPEF in May 2022, and he described the initiative as “writing the new rules for the 21st century economy”. Yet it is clear the initiative also wants to counter China’s growing influence in the region. Of course, there are important economic reasons why IPEF was set up –the region has a young population and a growing middle class. But the trade deal also clearly aims at geopolitical security for the West in the Indo-Pacific.

At the East Asia Summit, in October 2021, President Biden said: “The US will explore with partners the development of an Indo-Pacific Economic Framework that will define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.”

Beyond the lowering of tariffs, IPEF clearly seeks to establish trade rules. And it looks as if, in the face of China building its Belt and Road, the US is securing its own alliances and supply chains in the Indo-Pacific, explicitly excluding China.

Fourteen countries agreed to take part in IPEF so far, representing 40% of world GDP. These countries are: Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South-Korea, Thailand, the US and Vietnam.

The exclusion of China makes this economic trade deal rather political. It may come as no surprise that China objected against it, saying it is meant to decouple the Chinese economy from other economies in the region.

The question is whether IPEF can counter China’s economic influence in the Indo-Pacific. In 2020 China signed the Regional Comprehensive Economic Partnership (RCEP), together with Australia, New Zealand, Brunei, Cambodia, Japan, Laos, Malaysia, Myanmar, Singapore, South-Korea, Thailand and Vietnam. RCEP is led by China, and the member states account for 30% of world GDP.

The RCEP-agreement mainly focusses on free trade and lowering of tariffs in regional trade, yet it doesn’t include topics like labor and environmental sustainability, which are explicitly going to be taken into account in the IPEF-treaty.

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