When ASEAN leaders gathered on May 13 for a US-ASEAN special summit in Washington, they welcomed the US’ interest in playing a leadership role in the Indo-Pacific region, while also expressing the hope that the US’ interest was not merely lip service — that the fine words would be followed by serious action.
One clear signal of US seriousness would be to get Taiwan on board its Indo-Pacific Economic Framework for Prosperity (IPEF) and give the nation, at the very least, observer status.
Despite the official emphasis that the IPEF is an economic partnership aimed at cooperation between member states to achieve growth, prosperity and development, amid the crises enveloping the world in the form COVID-19, the Russia-Ukraine war, the possibility of a global recession and so on — Washington says the IPEF is not directed against China’s economic and military might — analysts say that the IPEF is expected to become a counterweight to China and deter it from any future adventurism against Taiwan.
Taiwan’s relevance for the IPEF becomes clear when one considers that the IPEF’s edifice rests on what Washington calls “four pillars.”
In essence, the IPEF is a US-led initiative purporting to build and foster closer ties with and between participating countries and, according to a White House fact sheet, “create a stronger, fairer, more resilient economy for families, workers and businesses in the United States and in the Indo-Pacific region.”
The IPEF member countries, aside from the US, are Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam — although others could eventually join.
US President Joe Biden said the IPEF would show that “we’re writing the new rules for the 21st-century economy,” and “going to help all our countries’ economies grow faster and fairer.”
“We’ll do that by taking on some of the most acute challenges that drag down growth,” he said.
US National Security Adviser Jake Sullivan sees the IPEF as “focused around the further integration of Indo-Pacific economies, setting of standards and rules, particularly in new areas like the digital economy, and also trying to ensure that there are secure and resilient supply chains.”
Although the IPEF is still being refined, it has four pillars:
First, a “connected economy,” which covers fair and resilient trade topics, including the seven subtopics of labor, environment and climate, digital economy, agriculture, transparency and good regulatory practices, competition policy and trade facilitation; second, a “resilient economy,” covering supply chain resilience; third, a “clean economy,” covering infrastructure, green energy and decarbonization; and fourth, a “fair economy,” covering tax and anti-corruption measures.
However, member countries have the option to join some or all of the pillars, although they are expected to “commit to all aspects of each pillar they join,” the Center for Strategic and International Studies said.
While US politicians and officials are playing down the geopolitical aspects of the framework — they emphasize that it is not directed against China — one cannot ignore geopolitical developments in the Indo-Pacific region, where China is aggressively pushing to extend its sphere of influence and bring smaller nations into its orbit.
Also, the IPEF should not be construed — yet — as a free-trade agreement. It is vague on the question of market access and tariff reduction. Nor is it being profiled as a security pact. The US, Australia, India and Japan have banded together separately with the Quadrilateral Security Dialogue.
The IPEF, formatted as an executive agreement and not requiring congressional approval, has become something of a substitute for the much larger Trans-Pacific Partnership (TPP) agreement that was conceived under former US president Barack Obama as a pivot to Asia, but from which former US president Donald Trump pulled out.
US President Joe Biden could have just rejoined the TPP-succeeding Comprehensive and Progressive Agreement for Trans-Pacific Partnership, but he came up with the IPEF after the implementation of the China-led Regional Comprehensive Economic Partnership.
As expected, China has displayed unease toward the new grouping and said that the IPEF would create exclusivity and stoke tensions in the region.
Chinese Minister of Foreign Affairs Wang Yi (王毅) dismissed the IPEF as “doomed to fail.”
Some experts say that by excluding Taiwan from the IPEF, the US is avoiding direct confrontation with China, while also considering the sensitivities of other member states, which did not want to anger China.
Then there is also the question of what name or moniker Taiwan could take to join the framework.
However, Taiwan’s inclusion in the IPEF would have yielded benefits for the US and other member states. For example, Taiwan offers an advantage in terms of providing technology and infrastructure to ensure an uninterrupted supply of computer chips, the lifeline of the digital economy that is being promoted as one of the four pillars of the IPEF.
A senior Pentagon official told the US Senate Foreign Relations Committee on Dec. 8 last year that Taiwan’s semiconductors were the major reason why its security “is so important to the United States.”
With China threatening Taiwan and making frequent incursions into its air defense identification zone, Washington is clearly worried over US chip dependency and deeply concerned that Beijing would gain control over Taiwan’s semiconductor capacity, giving Beijing the ability to blackmail other nations that rely on Taiwan’s semiconductor supplies.
US strategists believe that such a development could badly hit the US economy and also its military’s capability to operate sophisticated weaponry. China would also be affected, given its dependence on Taiwan’s semiconductors, but US strategists believe that this would not deter China from invading Taiwan.
Opening the door to Taiwan’s entry in the IPEF as an observer or a member would drive Taiwan to work hard for the IPEF’s success. The US and other members stand to benefit from Taiwan’s enterprise.
Taiwan, already recognized as a global leader in semiconductor fabrication, has made inroads upstream into design as well, going up against US companies that had mainly considered it a manufacturing hub. The US and the other members of the IPEF stand to benefit by allowing Taiwan to sit with all the other members of the framework under the same roof.
Manik Mehta is a New York-based journalist who writes extensively on foreign affairs, diplomacy, global trade and economics.
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