May 31, 2022
HANOI – On May 23, the new Indo-Pacific Economic Framework for Prosperity (IPEF) was launched in Japan. Prime Minister Phạm Minh Chính spoke at the event virtually. Former Ambassador to the US Phạm Quang Vinh, Senior Advisor of the Center for Strategic Studies and International Relations Development (CSSD), speaks with Vietnamnet about the event.
Could you please tell us what the focuses of the Indo-Pacific Economic Framework are?
The idea of IPEF was first raised by US President Joe Biden at the East Asia Summit in October 2021. This framework is part of the US strategy to engage with the Indian and Pacific Ocean regions.
Also, for a long time, ASEAN countries in discussions with the US have said that, after the US withdrew from TPP, there was a lack of economic coherence with this region. While the potential of the TPP was not enough, the US’s potential is huge. The US focuses on security but lacks economic cohesion – an aspect that countries in the region desperately need.
Regarding IPEF, we can temporarily look at two issues: What is the content and how to approach it, especially the fact that 13 countries have joined the IPEF.
Economically, this framework creates a free, open, sustainable and inclusive space for development, creating conditions and opportunities for all countries to promote cooperation. It is the most common model for a peaceful and prosperous region.
Participants will share about four extremely important areas considered as pillars focused on setting new rules for trade and the digital economy, fostering cooperation across supply chains, new commitments on climate change and efforts to prevent money laundering and bribery.
Looking at those factors, we can see that this framework will create high standards for cooperation between countries, including the US and many key countries in the region.
The US cannot return to the TPP at the moment, but it is still a leading economy with a lot of potential that countries in the region need, especially at the moment, when supply chains are broken and we all are having difficulties with post-pandemic recovery. The US economy is strong in technology and digital transformation and this country is promoting an economy to adapt to climate change including green energy, green finance, and green technology. This is what countries in the region need very much.
On the other hand, this region, after being affected by the pandemic, is also starting to step out of the pandemic to promote the connection of supply chains and economic development and urgently needs development orientation for the future.
In reality, membership in the IPEF is a choice. Those are the countries that can share the above values and discuss them together. Statements by 13 countries at the IPEF discussion kick-off ceremony showed that IPEF creates a space for countries to consult and negotiate so that a trade agreement can be reached later. This means that this is a space for dialogue and consultation, not necessarily regulations.
Participating countries must proceed in two steps. The first step is conducting a consultation to share. From such ideas and pillars, what will be planned to be exchanged, which means joint consultation. The second step is to enter into negotiations to reach an agreement.
It is worth noting that after consultation, the countries concerned are not required to choose all four pillars. Depending on the interests of each country, they will be free to decide their choice.
Ultimately, IPEF is the beginning to secure US’s engagement as the number one economy in the Indo-Pacific region, where the world’s dynamics grow.
Personally, I think that the US’s engagement with the region through this framework has not only economic value but also geostrategic value.
So why did the US withdraw from TPP 5 years ago, but now initiate IPEF?
Perhaps President Trump just decided to withdraw from the TPP, but before the election in November 2016, American voters changed their perception of America’s participation in free trade agreements around the world.
American people may feel at a disadvantage when participating in these free trade agreements. Therefore, until now, it is difficult for the US to return to a free trade agreement like the TPP. The IPEF, if it can later create agreements, will rely more heavily on areas under Biden’s jurisdiction.
The US return to the Indian and Pacific Oceans for both geostrategic and geoeconomic interests. If we combine the 13 member countries, the economy accounts for 40 per cent of the world’s GDP. That means, if an agreement is reached, it will bring benefits not only to the region but also to the world as well. Countries, especially ASEAN, also expect the US to invest more in economic and trade terms with this region. In contrast, the Indo-Pacific is also extremely important to the US.
In this cooperation framework, what is the position of Asia?
There are several points in the statement at the IPEF announcement ceremony.
It will promote the Indo-Pacific region both politically and economically, considering it as the development engine of the world economy and the driving force of world growth.
Members do not only want to cooperate in economic activities but also share legal and policy frameworks so that they can work together in terms of economy, trade, infrastructure, financial investment, technology and so on, to ensure sustainability and reliability.
In the region, there is not only IPEF but also many other economic and commercial initiatives. This demonstrates the dynamic development of the region, which can be based on many different economic and trade agreements, at different levels, even with different standards.
In the IPEF, there are a number of important economies that have not joined the TPP before or the CPTPP later, such as India, Korea, and in ASEAN, there are Indonesia, Thailand and the Philippines. Their engagement in the current context will create a new impetus, complementing the existing trade agreements in the region and will create a huge space for economic cooperation.
In your opinion, why does Việt Nam join this framework and what benefits do we get?
This framework orients economic development and cooperation with key economies in the region, which are also key economic sectors of the future, in a sustainable and competitive manner. This is in line with Việt Nam’s economic development orientation in the coming time.
For example, sustainable and fair trade and digital transformation are what Việt Nam is aiming for. Then clean energy is also the area we look forward to with our commitments to respond to climate change and switch to using renewable energy sources. Or we also need technology and creativity, including legal corridors to ensure reliable, high-quality and sustainable technology.
In general, the pillars proposed by IPEF are reliable, sustainable, green, clean, digital, etc., which are consistent with Việt Nam’s development orientation.
Participating in this framework shows that we participate in many levels of economic cooperation in the region and the world, complementing each other to create a driving force for development.
The IPEF initiative was formed during an exchange process with many stakeholders, including Việt Nam. We can contribute our voices and orient the appropriate areas of cooperation.
This is just the first step, in the coming time, surely all countries must prepare actively to actively raise their proposals, demonstrating national and regional interests.