The US Indo-Pacific Framework Doesn't Really Offer Anything

By Tom Fowdy

The United States is preparing to imminently launch a program for Asian countries which it calls the “Indo-Pacific Economic Framework”. According to the White House, this framework will seek to “set the rules of economic engagement” in the region, particularly concerning investment, technology and supply chains. It comes amidst pressure upon the United States to up its economic presence in Asia, having excluded itself from the two major trading blocs of the region, the RCEP and the CPTPP due to its protectionist policies on commerce.

However, there is no actual substance on what the “Indo-Pacific Economic Framework” actually represents in real terms, other than being an actual slogan which facilitates the bizarre rendering of a country which is not based in Asia or physically present in the regional economy, attempting to dictate the “rules” of how the game ought to be played, all whilst attempting to act as if the largest economy and centre of trade in that region doesn’t matter. At best, the Indo-Pacific economic framework is a slogan, and one which in substance offers nothing at all.

China is the regional nexus and hub of trade in the Asia-Pacific region. This is not a product of politics; it is a product of geography. As the largest and most populated country, China naturally possesses the largest import and export market in Asia, making China the biggest bilateral trading partner of every country around it include those aligned with the United States. Such heavily overlapping forms of trade subsequently create legal pressures for standards and regulations to be harmonized between countries, which drives the process of what is known as “regional integration”- that is when countries pool and coordinate aspects of governance together on matters of mutual interest.

This process of regional integration is what has driven the RCEP free trade agreement, as well as China’s bilateral free trade agreements with most countries in the region. As of present, China is also negotiating entry to the CPTPP free trade agreement, as well as a digital trade agreement with the region. Other countries in the region see obtaining such agreements with China as critical to securing their economic and regulatory interests. Meanwhile, the United States is currently not present in any major trading blocs with the Asia-Pacific region, particularly because its policy is focused on “America First” principles which espouses opposition to free trade on the premise that such erodes American manufacturing competitiveness and jobs.

Despite this, the United States is obsessed with bringing a regional ideological competition to Asia at all costs in the name of containing China, seeking to divide the region into competing blocs. As a result, the United States believes that it should economically dominate the region and not China, and that it, as opposed to Beijing, ought to have the greatest say in its future. As a result, the “Indo-Pacific Economic Framework” is an effort by the US to try and set the rules of region whilst not actually being economically integrated with it at all. The Indo-Pacific Economic Framework is not a free trade agreement, not a treaty, not an institution or multilateral body or anything substantial, it is merely a set of rules and principles which the US thinks it can utilize to isolate China.

In formulating the “Indo-Pacific economic framework”, the United States is likely to make an appeal to its primary partners in the region, including South Korea, Japan, Australia and New Zealand. Whilst ASEAN is the primary focus which the US seeks to dominate, ultimately none of these countries will be prepared compromise their economic ties with China which they see as critical to their own growth strategies. It is not surprising of course that, South Korea already, under its new pro-US president Yoon Seok Yeol, has announced it would “join” the framework. Whilst this may seem significant given its role in the global semiconductor supply chain, something the United States is keen to isolate Beijing from, in practice Seoul continues to rely overwhelmingly on China as its largest bilateral trading partner, including too in semiconductors, and cannot afford the price of increased confrontation. Last year, the US attempted to block the expansion of South Korean foundry Hynix in China. The move was unsuccessful.

Japan is likely to be a more prominent partner for the US in pushing the “Indo-Pacific framework” than Seoul, but again one must question is it truly prepared to make serious compromises to its heavily integrated commercial relationship with China? Tokyo is constantly touted to represent an alternative source of trade, finance and infrastructure investment to other countries in Asia than China, and there have been some obvious initiatives to try and push this in recent years. One might note for example how it is building a metro system in Ho Chi Minh City, Vietnam, whilst it has competed with China for High-Speed-Rail projects in Indonesia too. However, this is far from a bid to “set the rules” of the entire region because in reality, China’s GDP is ultimately far larger than Japan’s, an economy which is in practice stagnant. Even Tokyo cannot divorce itself from reality. The same rule applies for both New Zealand and Australia. Whilst the latter is overwhelmingly loyal to the United States, Wellington has taken a pragmatic and realistic view to economic integration with China on the back of the record trade surplus it receives from exports there.

Finally, India might be perceived as the biggest potential rival to China in the broader “Indo-Pacific” region primarily because of its almost equal population size and market potential. The United States and its allies have never hidden the fact they see New Delhi as the key strategic, military and economic counterweight to China’s rise, and it is absolutely logical. However, on an economic level, how can India facilitate the “Indo-Pacific economic framework?” A big problem lies in India’s steadfast economic protectionist policies which has shunned integration with intra-regional trade at large. India withdrew from the regional comprehensive economic partnership, putting it at a distinct disadvantage and making it impossible for New Delhi to set the “rules” of the game. However, the US and its allies will almost certainly look to attempt to consolidate strategic supply chains in a rising India. However, insufficient infrastructure, large scale unemployment, a huge level of poverty and a majority agrarian population, all stand as long-term obstacles to India’s ability to compete with China.

Therefore, in conclusion, the Indo-Pacific economic framework remains ultimately nonsensical because it is ignoring the realities of both geography and economics and is based solely upon ideology, if not wishful thinking. The US thinks that it can have greater weight over the future of the region than the actual biggest economy and trading nation in that specific area, making it illogical and for many reasons, a non-starter. As a result, the “Indo-Pacific Economic Framework” not only offers little, but ultimately means little too, and it is for this reason that such a slogan driven policy is almost undoubtedly going to be a failure. The United States believe they can dictate the future of a region whilst exempting themselves from making serious economic commitments to it in the name of self-interest, that’s not how things work, and there is no scenario whatsoever whereby the nations of greater Asia can envision an economic future for themselves which does not include a robust partnership with China.

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