William Krist's Blog, page 24

Food Outlook – Biannual Report on Global Food Markets

The increasing cost of food is heightening concern and distress throughout the world. The FAO Food Price Index reached a record nominal high in March 2022, before marginally falling in April. Most of all, the rising cost of producing food, driven by soaring prices of fertilizers, energy and other inputs, gives much cause for alarm as it increases consumer prices, imperilling food security. From another perspective, the spike in the price of inputs raises questions about whether the world’s farmers can afford to buy them, to the extent that productivity and hence global food supply could be adversely affected in the 2022/23 season and beyond.

Generally, periods of high food prices are considered a boon for producers, especially in countries that supply the international market, raising the profitability of farmers. However, such periods tend to be short-lived when price incentives instigate a supply response, facilitated by continuous cropping seasons in the northern and southern hemispheres that bring food markets swiftly back into equilibrium. This has often been the case in the last two decades, but today, different forces are seemingly conspiring to protract the current crisis, casting doubt on whether supply responses can be both quick and sufficient.

Agricultural sectors are highly energy-intensive and largely depend on fossil fuels. Much of today’s turmoil dates to 2021, when energy prices began to surge, adding to producer costs. But higher energy prices have far more deleterious effects, raising the cost of key nitrogen fertilizers, which are primarily manufactured from natural gas and are by far the most important agricultural nutrient in raising crop yields. Prices of nitrogen, N, in the form of urea or ammonium nitrate, reached record highs by the end of 2021. This price momentum carried into 2022, and the international prices of other important mineral fertilizers, such as phosphate, P, and potash, K, have joined suit, reaching record peaks in April 2022. As the world’s largest fertilizer exporter, the Russian Federation began tightening supplies to international markets soon after its invasion of Ukraine through the introduction of export restrictions that will be extended through to the 2023/24 season.

The upshot is that with no let-up in the current war, the margins of global food producers (crops and livestock) are being squeezed, now and seemingly into the foreseeable future, by higher input costs. Not only energy and fertilizers for crops and pastures, but seeds, feeds and pesticides are becoming more costly than ever, to the extent that farmers may reduce input applications or switch to crops that are less input-intensive. This, by way of lowering productivity, is likely to suppress exports of key foodstuffs (particularly wheat, rice and maize) to the international market, and to put at risk countries that are heavily dependent on imports to meet their staple food needs.

This Special Feature examines the implications of higher input prices on countries that are forced to import them in large quantities owing to a lack of productive endowments. Nor are major exporting countries immune from higher input costs, which could limit their capacity to supply international markets. That being said, the overall objective of the feature is to assess the prospects of whether a global supply response is possible, and whether it will be sufficient and swift enough to restore equilibrium to food markets. The analysis is facilitated by the Global Input Price Index (GIPI) – a summary metric introduced in the November 2021 edition of the Food Outlook report – and the new compilation of agricultural input import bills.

Food Outlook – Biannual Report on Global Food Markets

To read the full report from the Food and Agriculture Organization of the United Nations. please click here.

 

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ASG Analysis: Europe’s Energy Transition Amid the War in Ukraine

The war in Ukraine has prompted a wholesale reassessment of the European energy environment. The EU is trying to end its dependence on Russian fossil fuels as quickly as possible while avoiding economic repercussions and meeting climate targets through increased renewable energy production.

At the core of the EU’s response is the RePowerEU scheme, which aims to address all three concerns simultaneously. Announced in mid-May, RePowerEU, along with existing components of the European Green Deal, presents a generational opportunity for businesses across the Atlantic to engage with European governments, from the EU to the local level, to build a new energy ecosystem, rooted in energy independence and renewables. At the core of the package is a contradiction: the need to support short-term investment in fossil fuels to mitigate rising prices and the effects of sanctions and the need to speed up long-term investment in renewables. The extent to which the package leans towards the former or latter will likely be the subject of much debate as it turns to implementation.

Members of the European Parliament (MEPs) have already expressed their discontent with the European Commission’s proposal to include financing for new oil and liquefied natural gas (LNG) infrastructure. The package is also tangled in a debate in the European Parliament over reforms to the EU’s Emissions Trading System (ETS), a sort of cap-and-trade scheme, with criticism of the Commission’s plan to fund RePowerEU by selling more carbon credits. While the proceeds would be mostly used to fund new renewable energy projects, the effective outcome would be to increase Europe’s total carbon emissions in the short run.

ASG_Analysis_Europe_s_Energy_Transition_Amid_the_War_in_Ukraine_1_.01

To read the full report by the Albright Stonebridge Group, please click here.

 

 

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A Populist Progressive Path Forward on Trade Policy

This trade policy reform update is situated in a specific Rosa Luxemburg Stiftung (RLS) editorial lineage. Seven years ago, I surveyed the landscape of civil society opposition to the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and Trade Promotion Authority (TPA). TPP & TTIP: Partners in Crime (hereafter Partners in Crime) outlined the critiques of several sectors within the Fair-Trade movement – unions, family farm networks, faith-based groups, environmental activists, consumer advocates and even populists. Five years ago, in collaboration with the Institute for Policy Studies (IPS) and the Canadian Centre for Policy Alternatives (CCPA), RLS collected the policy aspirations of the Fair Trade movement in Beyond NAFTA 2.0: A Trade Agenda for People and Planet (hereafter Beyond NAFTA) a compendium of progressive goals across a spectrum of progressive policy priorities that are affected by corporate globalization.

In 2020, RLS published The US-China Trade War (hereafter China Trade) which describes a progressive alternative to “transform the China issue from a vulnerability into a strength for the left” and then partnered with IPS, CCPA and the Institute for Agriculture and Trade Policy (IATP) to launch GreenNewTrade.org (hereafter Green New Trade) because “governments are afraid to introduce climate policies that might conflict with existing trade rules.” Last year, coincident with Biden’s inauguration, RLS commissioned IATP to share some Hopes for New Beginnings on US Trade Policy (hereafter Hopes).

This piece is to take stock and review the progressive agenda and evaluate its current position. Are we in a stronger place? Do we have momentum in the Biden Administration and the 117th Congress? Our purpose is to influence the political debate so understanding where we stand is essential. After detailing strides made since the US Mexico Canada Agreement (USMCA) ratification and Biden’s election, this sequel to Partners in Crime will vector into some RLS unchartered territory — the realpolitik of trade reform, beginning with this argument:

Progressive trade policy reform is faltering in the US and especially in Washington DC. While our Congressional champions have incubated fair trade policies with some success, these same Democrats who explicitly critique neo-liberalism and reject ‘free trade’ are ignoring populist undercurrents and mobilization at their own, and our collective, political peril. Therefore, as the 117th Congress closes and the mid-term election looms, Democrats must distinguish themselves from right wing populism that is animated by reflexive protectionism, antipathy towards immigrants and visceral opposition to China. In short, they must offer a positive path forward.

A Populist Progressive Path Forward on Trade Policy - RLS-NYC

To read the full report by the Rosa-Luxemburg-Stiftung, please click here.

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OECD Ministerial Statement and Outcomes

THE FUTURE WE WANT: BETTER POLICIES FOR THE NEXT GENERATION AND A SUSTAINABLE TRANSITION

1. On the occasion of the 2022 OECD Ministerial Council Meeting, we1 have assembled on 9-10 June 2022 under the leadership of Italy as MCM Chair, and with Mexico and Norway as Vice Chairs, under the theme of “The Future We Want: Better Policies for the Next Generation and a Sustainable Transition”.

2. Russia’s unjustifiable, unprovoked and illegal war of aggression against Ukraine is a flagrant violation of international law that shakes the very foundation of the international order. Any unilateral attempts to change it and redraw internationally recognised borders by force or by other means is unacceptable. Against this tense backdrop, we believe that the OECD has a greater role to play as an international organisation that can unite under our shared values. We are firmly determined to rise resolutely to various geopolitical challenges ahead to preserve and promote our shared values. We condemn Russia’s aggression against Ukraine in the strongest possible terms. We have suspended Russia’s and Belarus’ participation in OECD bodies. We call on Russia to immediately cease all hostile and provocative actions against Ukraine, withdraw all military and proxy forces from the country, and turn to good-faith diplomacy and dialogue in order to bring a peaceful end to its ongoing war as soon as possible. We call on all partners to refrain from taking export restrictions measures for agricultural products in the context of the rising food insecurity crisis, in coordination with other international partners. We stand in solidarity with Ukraine. Our priority is to help the Ukrainian people, support their democratically elected government, and protect refugees throughout this crisis. We encourage the OECD’s continuing analyses of the economic, environmental and social repercussions of the war, including the needs of women and children, and OECD proposals in support of Ukraine’s recovery and reconstruction, together with relevant international partners. In this regard, we welcome the establishment of the OECD Kyiv Office.

3. In this context, we will work toward consolidating the economic and social foundations of democracy, through realising a sustainable and inclusive growth as well as addressing disparities and inequalities. We will also step up efforts to maintain and strengthen the rules-based international economic order, while preserving our economic security and countering economic coercion. Furthermore, we will bolster our external engagement to promote adherence to OECD standards and to achieve sustainable development all over the world.

4. We want the next generation to inherit a peaceful, prosperous, sustainable and inclusive future. The OECD’s shared values, as reflected in its 60th Anniversary Vision Statement, are the basis for our like-minded action in support of a rule based international order and in pursuit of sustainable growth, while protecting our planet and reducing inequalities. We believe democracy and the rule of law, the promotion of human rights, equality, diversity and inclusion, gender equality, the market-based economic principles, an open, free and fair, and rules-based multilateral trading system, transparency and accountability of governments, and the promotion of environmental sustainability will help improve the lives and prospects of everyone – inside and outside the OECD’s membership, now and in the future. We intend to continue our successful collaboration with non-member countries. We commit to preserving the like-minded nature of the OECD in its enlargement process, and welcome the adoption of Accession Roadmaps for Brazil, Bulgaria, Croatia, Peru and Romania. We reaffirm the openness of the Organisation, the continued importance of all of our regional programmes and the strategic priority of South East Asia as identified in our Global Relations Strategy, and our commitment to the 2030 Agenda for Sustainable Development. Solid multilateral co-operation and institutions have never been more important. Recognising the challenges to the OECD’s standards and norms by emerging donors, we will reinforce our global engagement through consolidating OECD’s role as a platform for the exchange of experiences and best practices, as well as advancing its standards globally, through membership and partnerships and a sound approach to development. The war in Ukraine, the scarring effects of the pandemic and the climate emergency have critical consequences particularly for developing countries. Extreme poverty, severe food insecurity and forced displacement are intensifying. We recognise the importance of an urgent and coordinated response and of international cooperation to help developing countries manage these shocks. We are committed to supporting developing countries to achieve their development goals through policy dialogue, expert analysis, demand-driven policy support, domestic resource mobilisation and international finance – including Official Development Assistance and other official and private flows – to meet both urgent needs and longer term sustainable development priorities. We will take a positive role in measuring these international financial flows to contribute to the achievement of the SDGs.

2022-MCM-Statement-EN

To read the full report from the OECD Council, please click here.

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Understanding the African Continental Free Trade Area and how the US can Promote its Success

Thank you very much, Chair Karen Bass, Ranking Member Christopher Smith, and distinguished members of the subcommittee, for your extraordinary leadership on U.S.-Africa relations. I am incredibly honored by and grateful for the opportunity offered to me by the members of this committee to testify on “Understanding the African Continental Free Trade Area and How the U.S. Can Promote its Success.” I am Landry Signé, Managing Director and Professor at the Thunderbird School of Global Management, Senior Fellow at the Brookings Institution’s Africa Growth Initiative, Distinguished Fellow at Stanford University’s Center for African Studies, and a member of the World Economic Forum’s Regional Action Group on Africa, and the World Economic Forum’s Global Future Council on Agile Governance.

The African Continental Free Trade Area (AfCFTA) was signed in March 2018, ratified by the required number of countries by May 2019, and came into force in January 2021.

The significance of the AfCFTA cannot be overstated. It is the world’s largest new free trade area since the establishment of the World Trade Organization (WTO) in 1994. It promises to increase intra-African trade through deeper levels of trade liberalization and enhanced regulatory harmonization and coordination. Moreover, it is expected to improve the competitiveness of African industry and enterprises through increased market access, the exploitation of economies of scale, and more effective resource allocation.

My research has shown that the AfCFTA—and its accompanying increased market access—can significantly grow manufacturing and industrial development, tourism, intra-African cooperation, economic transformation, and the relationship between Africa and the rest of the world. In fact, under a successfully implemented AfCFTA, Africa will have a combined consumer and business spending of $6.7 trillion by 2030 and $16.12 trillion by 2050, creating a unique opportunity for people and businesses —and meaning the region can be the next big market for American goods and services.

UNECA has predicted that by 2040 implementation of the AfCFTA will raise intra-African trade by 15 to 25 percent, or $50 billion to $70 billion. The World Bank estimates that the AfCFTA will lift 30 million people out of extreme poverty and substantially increase the income of 68 million people who are just slightly above the poverty line. The International Monetary Fund (IMF) similarly projects that, under the AfCFTA, Africa’s expanded and more efficient goods and labor markets will significantly increase the continent’s overall ranking on the Global Competitiveness Index.

Although there is a great momentum behind the agreement, its successful implementation is dependent on smart choices and thoughtful policy options. The United States can and should play an extraordinary role in promoting the AfCFTA’s success to increase intracontinental and global trade, as well as achieve mutual African and U.S. prosperity.

In this testimony, I will first briefly examine a few challenges to trade in Africa and their consequences for the continent’s development. Second, I will explain why the AfCFTA can constitute a solution to these challenges. Finally, I will discuss how smart U.S. foreign policy and assistance (both financial and technical) can promote its success in increasing intracontinental and global trade.

Landry-Signe-Testimony-April-27-2022

To read the full testimony from Brookings, please click here.

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FACT SHEET: U.S.-EU Trade and Technology Council Establishes Economic and Technology Policies & Initiatives

New Policies Will Strengthen Our Economic Partnership, and Update Rules of Global Economy

The U.S.-EU Trade and Technology Council (TTC) held its second ministerial meeting in Saclay – Paris, France on May 15-16, 2022. U.S. co-chairs, Secretary of State Antony J. Blinken, Secretary of Commerce Gina Raimondo, and United States Trade Representative Katherine Tai were joined by EU Co-Chairs European Commission Executive Vice Presidents Margrethe Vestager and Valdis Dombrovskis to review progress, meet with a range of U.S. and EU stakeholders, and advance Transatlantic cooperation and democratic approaches to trade, technology, and security that deliver for people on both sides of the Atlantic.

Thanks to the close and enduring ties between the United States and the European Union, we have resolved long-standing bilateral issues, including disagreements on tariffs, and leveraged the strength of our partnership to counter non-market, trade distortive practices, and respond swiftly to Putin’s war with unprecedented sanctions and export control measures. Building on these successes, the United States and European Union, home to 780 million people who share democratic values and the largest economic relationship in the world, will advance the TTC agenda on a number of critical economic and technology policies and initiatives designed to strengthen our bilateral economies, meet current geopolitical challenges and update the rules of the global economy.

TTC working groups are deepening U.S.-EU cooperation by expanding access to digital tools for small- and medium-sized enterprises and securing critical supply chains such as semiconductors. They are collaborating closely on emerging technology standards, climate and clean tech objectives data governance and technology platforms, information and communications technology services’ (ICTS) security and competitiveness, and the misuse of technology threatening security and human rights. The TTC working groups are also coordinating on export controls, investment screening and security risks, and a range of global trade challenges, including countering the harmful impact of non-market, trade-distortive policies and practices on technological development and competitiveness in sectors of shared priority. To ensure that the government dialogues are informed by the broad perspectives of the U.S. and EU communities inform their work, the TTC working groups are continuing robust engagement with a diverse range of stakeholders, including those in industry, labor organizations, think tanks, non-profit organizations, environmental constituencies, academics, and other civil society members.

During their ministerial meeting, the U.S. and EU TTC co-chairs reviewed the outcomes generated by the joint working groups and announced key outcomes.

TTC-US-text-Final-May-14

To read the full report from the White House, please click here.

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The Northern Ireland Protocol: Current position and ways forward

The Protocol on Ireland/Northern Ireland (the Protocol) was included in the Withdrawal Agreement between the UK and the EU with the stated objective of protecting peace in Northern Ireland (NI), and in particular the operation of the Belfast (‘Good Friday’) Agreement (GFA). It aimed to avoid customs and regulatory checks or controls and related physical infrastructure at the border between Ireland and NI, while also protecting the EU single market. At the same time, the parties intended to minimise the impact of the Protocol on everyday life in Ireland and NI, and to have regard to the importance of maintaining the integral place of NI in the United Kingdom’s internal market.

In practice, it has caused economic disruption and political instability. The NI Court of Appeal found that its implementation in law has suspended the parts of the Act of Union that promise equality in trade between Great Britain and Northern Ireland . Early in 2022 the Democratic Unionist Party withdrew from the devolved government in NI, and implementation of the protocol by local agencies and officials has been beset with legal and political challenges . This has destabilised the institutions of the GFA that the Protocol was designed to protect.

The macroeconomic effects of the Protocol have been difficult to separate from the effects of Brexit generally and the Covid pandemic. It is clear that the costs of dealing with the new trade barriers run into hundreds of millions of pounds and there are many reports of products becoming unavailable or more expensive, with little evidence so far that the benefits from continued participation in the single market outweigh such costs.

Since the Protocol was agreed, the UK and the EU have been working to implement it and manage its impacts, both through a dedicated joint committee and through unilateral measures.

The UK published proposals in July 2021 for what it considers to be a durable solution. This involved amending the Protocol in a way that the UK believes would avoid border controls between NI and Ireland, while protecting the single market and also respecting the constitutional integrity of the UK and the economic interests of NI. The EU responded in October 2021, with a much more limited and heavily conditioned set of proposed mitigations.

This briefing paper summarises the provisions and effects so far of the Protocol, then considers each side’s proposals to improve it. Finally, it suggests how the British government could proceed.

Northern-Ireland-Protocol-Current-Position-and-ways-forward

To read the full report by the Institute of Economic Affairs, please click here. 

Victoria Hewson | Institute of Economic Affairs

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WTO 2025: Getting Back to the Negotiating Table

A Place Created for Trade Negotiations

The multilateral trading system has three pillars: negotiation, dispute settlement, and administration. Of these, negotiation is the one of greatest importance. The World Trade Organization (WTO) is the only place where fully multilateral—that is, global—trade negotiations can take place. It has representatives present from 164 Members, accounting for more than 98 percent of world trade. Most of the remaining countries that are not Members, some two dozen, are in the process of accession and almost all of them are observers.

The WTO has unrivalled infrastructure to facilitate negotiations—a skilled Secretariat made up of experienced experts thoroughly versed in the existing rules of the trading system, teams of interpreters and translators on call, numerous meeting rooms with audiovisual equipment for simultaneous interpretation into three languages (and more on special occasions), and connections via the web for remote participation. It is the meeting place for a large number of working committees, a repository of their past proceedings, and beyond this, it holds the records of over 600 cases litigated among its Members. In terms of physical facilities and support staff, everything is ready for negotiations.

Almost all Members have resident missions located within a few minutes’ drive from the WTO headquarters in Geneva. The missions have a core of staff attending committee meetings. The heads of delegation—the permanent representatives to the WTO who are ambassadors sitting as the General Council of the organization—have been delegated the full plenary powers of the Ministerial Conference. They are empowered, in the view of their counterparts, to commit their countries to trade agreements. Ever since the International Court of Justice issued its Eastern Greenland Decision, ministers (particularly foreign ministers) have been able to bind their governments even with a verbal declaration, enough so that they can definitively transfer sovereignty to another nation of substantial tracts of their nation’s territory. All the physical and legal elements are present for trade negotiations to take place.

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To read the full report from the Peterson Institute for International Economics, please click here.

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The New Wave of Defensive Trade Policy Measures in the European Union: Design, Structure, and Trade Effects

This study undertakes a comprehensive review of proposed and adopted defensive trade policy instruments in the EU, with the purpose of better understanding their design, functioning, and implications. The study covers eight policy instruments at different stages of development. These are: Anti-Coercion Instrument (ACI), International Procurement Instrument (IPI), Carbon Border Adjustment Mechanism (CBAM), Foreign Subsidy Instrument (FSI), Corporate Sustainability Due Diligence (DD), Level Playing Field Provisions in the EU-UK Trade and Cooperation Agreement (LPF), Enforcement Regulation (ER), and the Deforestation Initiative (DI).

It is understandable that the EU seeks both redressive and retaliatory measures in its trade policy. However, these measures would have the total effect of Europe producing more for itself and being less dependent on imports. This is a significant policy shift, because in their totality the defensive trade policies make the EU more inward-looking. This can lead to major negative consequences. An extensive distortion of trade and markets would reduce the gains from trade and prompt a reallocation of European resources. Notably, the EU is a larger supplier of goods and services than it is a buyer, and an inward-looking policy that leads to retaliation from EU’s trading partners can harm its exports and trade surplus. There are also potential strategic consequences that could follow, and their importance has increased considerable as a result of the Russian war against Ukraine. Under these measures, the EU could introduce new trade frictions with friends and allies, and with countries that the EU seeks closer cooperation with to provide for a safer geopolitical environment.

For each of these defensive measures, the study takes an extensive look at the objectives of the instruments, their legality, proportionality, and subsidiarity, the working of the instruments and the division of labour between institutions, as well as their enforceability in conjunction with existing multilateral and bilateral rules affecting the EU. It also attempts to capture the impact and potential for retaliation for the EU and its partners as a result of the implementation of the instruments. The study highlights the areas where the instruments lack clarity, particularly in the implementation of the instrument, the division of labour between the EU and EU member states, and the compliance of the instruments with WTO rules and bilateral FTA provisions.

The instruments share some general characteristics. Many of the instruments have been created as retaliatory measures against coercion and unfair trade practices by partner countries. Very often, the partner countries most affected by the instruments are also the same. The United States, China, Russia, the UK, and Turkey are likely to be on the receiving end of the instruments due to the significant volumes of trade and economic interdependence with the EU, but also because they either do not follow the same trade rules as the EU, or the EU wants to maintain with them the current level of competitiveness. Most instruments also use restrictions to the EU market as the main policy lever. The objective is not just about creating an equal playing field but also ensuring that the rest of the world follows EU rules. Particularly, the EU aims at regulating non-EU companies directly and unilaterally through EU policies, which increases the risk of retaliation against the EU.

At the same time, there are also important areas of departure in the specifics of each instrument, as illustrated by the varying objectives, measures, compatibility with international obligation, affected sectors, and whether the measures apply automatically or at the discretion of the EU.

ECI_22_OccPaper_Defence_04_2022_LY10

To read the full report from the European Centre for International Political Economy, please click here.

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What Should U.S. Economic Diplomacy Look Like in the Indo-Pacific?

Introduction

In the five years following the withdrawal of the United States from the Trans-Pacific Partnership (TPP), Asian economic production continues to grow while the US lacks clear direction on how to engage with the region. Following the US withdrawal, eleven Indo-Pacific countries continued with negotiations and pursued the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Together, economies of the CPTPP make up roughly 13% of the world’s GDP and the agreement creates one of the world’s largest free-trade zones. As economic giants such as China and the United Kingdom begin the process of joining the CPTPP, it becomes essential for the US to establish clear economic goals in the region in order to not be left behind.

Secretary of Commerce Gina Raimondo’s statement that the US will not seek to join the CPTPP came with the announcement of the Indo-Pacific Economic Framework (IPEF) a plan being developed by Biden administration officials to engage with the region through means other than the CPTPP. This paper will provide background on policies and issues that the administration will need to prioritize as they begin to reveal more details on this framework.

Background

Little is known about what exactly the IPEF will do to enhance the US’ engagement in the region. The administration’s announcement of the framework in October outlined half a dozen areas on which the framework will focus: trade facilitation, digital standards, supply chain resiliency, decarbonization and clean energy, infrastructure, and worker standards. The Biden administration has indicated that this framework will not feature new free trade agreement proposals and will not commit to any new market access opportunities for Asian countries. The anti-trade rhetoric used during the 2016 presidential election and the early days of the Trump administration has quieted in the first year of Biden’s presidency. Still, it is worth nothing that the Biden administration does not feel the political climate will allow for multilateral, binding trade agreements to pass during this Congress and will not put the IPEF before the body.

The IPEF’s long-term impact will be reliant on the number of binding commitments that the US can agree upon with countries in the region. Even in the absence of congressional approval on a formal trade deal, having negotiations and securing agreements on high standard commitments will legitimize the IPEF. Because the Indo-Pacific encompasses such a large and diverse region, the US will be effectively forced to choose specific countries for participation in the IPEF. Presumably, the US will initially focus on engagement with Japan, Australia, and the Republic of Korea. These countries’ advanced economies and established trade deals with the US make them easy partners for the Biden administration to focus on. But, in order for the IPEF to maximize its goals of improving labor conditions and environmental protections and shaping trade in Asia, the Biden administration will need to engage with developing ASEAN countries.

Engagement with less-developed Asian and Southeast Asian countries is important as these countries (including Vietnam, Bangladesh, Cambodia, etc.) are key exporters of textiles, footwear, and machinery to the US. In 2020, the US imported over $1 trillion dollars’ worth of goods (nearly 50% of all imports) from countries on the Asian continent. Although the region has leading export numbers, the Asia-Pacific is home to poor working conditions, undeveloped labor protections, and infrastructure vulnerability. Integrating countries with these vulnerabilities and issues into the IPEF will allow the US to encourage and enforce labor standards around the world.

The following analysis section focuses on supply chain resiliency and establishing robust digital economy and technology standards. These two areas will have an immense impact on the US’ success in the Indo-Pacific. The US’ engagement with supply chain resiliency will enable companies and countries to trade more efficiently as new knowledge of supply chains will decrease supply chain bottlenecks and recognize flaws in their supply chains. Furthermore, fostering high standards in the digital economy and technology arena will prove amenable to US interests as an increasing number of its vital industries handle their domestic and international businesses on virtual platforms.

leebaker-briefingpaper-220517

To read the full report from the Yeutter Institute, please click here.

 

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