We understand the administration is bowing to political concerns surrounding the lack of enforceable labor and environment standards in the framework. But the inability to secure commitments from IPEF partners on labor and the environment should not be a surprise and is symptomatic of the administration’s refusal to include market access and address tariff barriers in the IPEF discussions. Without these key provisions, IPEF does not provide enough incentive to extract meaningful concessions from our trading partners. Commitments on market access would also be a tremendous boon for U.S. exporters and help them compete in other markets against China. It would also provide important incentives for retailers working to diversify their supply chains and enhance supply chain resilience.
The missed opportunity to announce meaningful outcomes on the IPEF trade pillar at the APEC meeting damages America’s credibility as a reliable trading partner. Despite the Administration’s commitment to continue the negotiations, we fear that the IPEF trade pillar will meet the same fate as the Trans-Pacific Partnership (TPP) – that other countries will forge ahead without U.S. involvement. IPEF participants have dedicated a significant amount of time and resources to negotiating with the U.S. on the trade pillar, only to be left discouraged by the Administration’s tentativeness. By slow walking the trade negotiations, the administration is leaving a vacuum in a critical region that China is eager to fill and signaling to our trading partners that the U.S. is not committed to the Indo-Pacific region.
At the APEC CEO Summit, Chinese President Xi Jinping said in prepared remarks that “China is applying high standards to its implementation of the Regional Comprehensive Economic Partnership Agreement. It is working to align itself with the high-standard economic and trade rules of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement to advance the process of acceding to these two agreements and expand a globally oriented network of high-standard free trade areas.” China is clearly positioning itself to join the CPTPP, which the U.S. abandoned. The administration’s hesitation to further trade relationships in the Indo-Pacific is leaving American workers, consumers, and businesses at a competitive disadvantage to China.
Therefore, we urge USTR to recalibrate its current approach and to seek an ambitious trade pillar of IPEF, covering as many disciplines as possible, that raises standards, reduces tariff and non-tariff barriers to U.S. goods and services, and is enforceable. Doing so will show trading partners that the U.S. is committed to high standard agreements, providing an alternative to China’s influence in the Indo-Pacific region and creating a level playing field for U.S. businesses.
For more information, please contact RILA Vice President of Trade Blake Harden.
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