President Biden announced a new trade agreement with 12 Indo-Pacific nations on Monday, warning Americans concerned about high inflation that it will be “a haul” before they feel relief. The president stated that an economic downturn in the United States is not unavoidable.
Mr. Biden, speaking at a news conference following talks with Japan’s Prime Minister Fumio Kishida, acknowledged that the United States’ economy has “problems,” but that they are “less consequential than the rest of the world has.”
He continued: “This is going to be a long journey. This will require some time.” In response to a question, he denied that a recession in the United States is unavoidable.
His remarks came shortly before Mr. Biden’s announcement of the Indo-Pacific Economic Framework. His administration claims that the trade agreement is intended to signal the United States’ commitment to the contested economic sphere and to address the need for commercial stability following disruptions caused by the pandemic and Russia’s invasion of Ukraine.
Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam have all signed on to the agreement. Together with the United States, they account for 40% of global GDP.
The countries said in a joint statement that the pact will help them “prepare our economies for the future” in the aftermath of the pandemic and the war in Ukraine.
Mr. Biden and Mr. Kishida were joined at the launch event by Indian Prime Minister Narendra Modi, with representatives from other countries appearing via video. Modi was in Tokyo for the Quad, a four-country security group that also includes the United States, Japan, and Australia.
According to the White House, the framework will enable the US and Asian economies to collaborate more closely on issues such as supply chains, digital trade, clean energy, worker protections, and anti-corruption efforts. The details are still being worked out among the member countries, making it difficult for the administration to say how this agreement will help U.S. workers and businesses while also meeting global needs.
The framework, according to critics, has significant flaws. It does not provide prospective partners with incentives such as lower tariffs or greater access to US markets. Because of these constraints, the US framework may not be an appealing alternative to the Trans-Pacific Partnership (TPP), which moved forward without the US after former President Donald Trump withdrew. China, the region’s largest trading partner, is also attempting to join TPP.
Kishida hosted Mr. Biden’s formal state welcome at Akasaka Palace, which included a white-clad military honor guard and band in the front plaza. Mr. Biden inspected the assembled troops, placing his hand over his heart as he passed the American flag and slightly bowing as he passed the Japanese standard.
The new agreement comes at a time when the administration believes it has the upper hand in its rivalry with Beijing. Bloomberg Economics published a report last week projecting 2.8 percent GDP growth in the United States in 2022, compared to 2 percent in China, which has been battling the coronavirus with strict lockdowns while also dealing with a property bust. The slowdown has called into question expectations that China would automatically supplant the United States as the world’s leading economy.
The White House has billed the launch of the Indo-Pacific Economic Framework, also known as IPEF, as one of the highlights of Mr. Biden’s Asia trip and his ongoing effort to strengthen ties with Pacific allies. Throughout it all, administration officials have been keeping a close eye on China’s growing economic and military power in the region.
The US president has also paid close attention to the Quad, an informal alliance formed in response to the 2004 Indian Ocean tsunami, which killed an estimated 230,000 people. Mr. Biden and other alliance leaders will meet in person for the second time in less than a year on Tuesday in Tokyo.
The United States recognizes Beijing as China’s sole government and has no diplomatic relations with Taiwan. It does, however, maintain unofficial contacts with Taiwan, including a de facto embassy in the capital, Taipei, and supplies military equipment to the island for defense.
