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Thank you for subscribing to the Southeast Asia Insider, showcasing the best of Asia Times’ latest reporting, commentary and analysis from across Southeast Asia.
This week’s edition includes:
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ASEAN gives Biden’s
economic framework a chance
US President Joe Biden formally announced his administration’s Indo-Pacific Economic Framework for Prosperity (IPEF) earlier this week, with a dozen nations – including seven from the Association of Southeast Asian Nations (ASEAN) – stepping forward to join negotiations to formalize the new and loosely defined economic pact.
Appraisals of the initiative have thus far been mixed, with critics saying the proposed framework doesn’t offer participating countries enough value to serve as an effective economic counterweight to China. Asia Times’ correspondent and Southeast Asia Insider editor Nile Bowie has followed the story closely and shared his assessment of the IPEF in this week’s Q&A.
A dozen countries have thus far committed to entering negotiations on the IPEF. What do you make of that?
Initial take-up for this nascent economic grouping did exceed my expectations. The participating nations include Australia, Brunei, Indonesia, India, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together with the US, they represent 40% of the world economy’s gross domestic product (GDP). Ahead of the framework’s launch, it was a given that Japan, Australia, New Zealand and Singapore would join the IPEF.
But the inclusion of seven other ASEAN nations wasn’t clearly telegraphed. Earlier this month at the US-ASEAN summit in Washington DC, several Southeast Asian leaders expressed interest in the IPEF but appeared to take a noncommittal “wait and see” approach, with for example Vietnam saying more clarity on the details of the proposal was needed.
The Biden administration reportedly made an eleventh-hour call to lower the barriers to participation in the initial round of discussions around the framework’s so-called four “pillars,” which are supply chain resiliency, digital economy rules, clean energy and infrastructure, and taxation and anti-corruption. Signatories will have to set the parameters on what will be negotiated within each pillar, and uniquely, countries can opt-in and out of the individual pillars they want to participate in. That means participating countries won’t necessarily have to commit to all four pillars.
By offering a good deal of flexibility to participants to act upon the components that serve their interests, the White House has succeeded in attracting a higher number of participants than would otherwise have been expected. Countries have shown a willingness to engage, but crucially that doesn’t necessarily imply a commitment to join the final arrangement. As trade experts have pointed out, there isn’t a historical precedent for such a loosely defined framework in which participants choose à la carte what they’re prepared to abide by. There are also structural aspects of the proposed framework that have many observers questioning whether it will be effective in achieving its strategic aims.
What exactly are the IPEF’s aims?
The IPEF’s purpose is to add economic heft to an Indo-Pacific policy that has thus far focused on geopolitical alliances like the Quad and AUKUS. Washington hopes that the IPEF can fill the void created by Donald Trump’s withdrawal from the Trans-Pacific Partnership (TPP) and serve as a counterbalance to China’s increasing economic and political influence in the region.
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But crucially, the IPEF is not a trade agreement in the traditional sense because it doesn’t promise partner countries broader access to coveted US markets. That fact sticks out most as a critical flaw because without market access there are limited incentives for participating nations to commit to raising labor or environmental standards, let alone the costly restructuring of their supply chains.
The US is understandably reluctant to offer allies and partners tariff relief or wider market access. Free trade creates winners and losers. American multinationals have profited enormously from neoliberalism, which many working-class Americans associate with the offshoring of blue-collar jobs and the stagnation of living standards.
The Biden administration’s political instincts are correct that if it pursues the sweeping trade agreements of old, it will be skewered on both sides of the aisle. In this respect, Biden does deserve credit for attempting to reshape US trade policy in accordance with the legitimate concerns of his constituency. But there is a good deal of skepticism that the framework can achieve its intended purpose with its constraints and current scope.
Much like the TPP before it, the IPEF aims to establish the economic “rules of the road” for the region while excluding Asia’s largest economy by design. The Biden administration’s push for supply chain resilience appears to be aimed at cutting Chinese inputs out of regional supply chains. But without the bargaining chip of US market access, there are few meaningful incentives for IPEF signatories to create separate production lines for exports to the US market.
Apart from India, every country that has agreed to IPEF talks are parties to the binding Regional Comprehensive Economic Partnership (RCEP), and some could conclude that their interests are best served not by decoupling from China but by abstaining from the geoeconomically consequential pillars of the IPEF.
Countries in what the US calls the Indo-Pacific care most about market access and infrastructure financing, and in both of those areas the US is trailing behind China, with its sprawling Belt and Road Initiative (BRI) and participation in multilateral trade deals like RCEP and ambitions to join the successor to the TPP, both of which Washington has steered clear of.
That said, Asian nations place high value in the US as a counterbalance and economic engagement – whatever its shape – has indeed been broadly welcomed within the region. Shortcomings aside, it is early days for the IPEF and the formidable grouping of nations could very well find ways to shape a meaningful agreement. The definitive shape of things is still to come.
How long will IPEF negotiations likely take?
Parameters for the negotiations are expected to be set by late June or early July. The Biden administration reportedly aims to conclude negotiations for each pillar within 12-18 months, with the Asia-Pacific Economic Cooperation (APEC) leaders’ meeting, which will be hosted by the US in November 2023, being seen as an informal deadline for finalizing the framework. Each signatory government would then have to ratify the framework.
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It isn’t clear what possible enforcement mechanisms could be written into the framework. Observers say the lack of market access provisions means the IPEF ultimately won’t require congressional sign-off. As the economic linchpin of the Indo-Pacific policy, there is a great deal riding on this initiative and its failure would mark a significant setback for American interests in the region. But it remains to be seen how meaningful the framework will ultimately be, or if it will be durable enough to survive the Biden administration if Republicans are returned to power in 2024.
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Hun Sen weighs in on leadership succession Prime Minister
Hun Sen told Nikkei's Future of Asia forum earlier this week that victory for his ruling Cambodian People’s Party at national polls in 2023 would equate to a popular endorsement of his leadership succession plan. Hun Sen, who has been in power for 37 years, announced in December his intention for his eldest son, Hun Manet, to take the reins. "In the upcoming election, if people continue to vote for the CPP with Hun Sen as the prime minister candidate and Hun Manet as the future candidate for prime minister, that means the people are in agreement with the CPP continuing to lead the country, led by Hun Sen and then by Hun Manet after that," he said. The long-serving autocrat declined to provide a timeline for the transition.
China voted ASEAN’s top partner in opinion poll
An Ipsos poll commissioned by Japan's foreign ministry found that China was seen as an “important partner” for the future by the largest share of respondents in a survey in Southeast Asia, eclipsing Japan as the region’s preferred partner. When asked which among the Group of 20 leading economies will be an "important partner in the future," 48% chose China while 43% picked Japan and 41% picked the United States. The results, released earlier this week, are a reversal of the 2019 poll, which placed Japan in the lead with 51% while China garnered 48% and the US, under then-president Donald Trump, received 37%. The results marked the first time that Beijing has ranked first since the Japanese foreign ministry began conducting the survey in 2015.
Thaksin-linked candidate clinches win as Bangkok’s governor
Chadchart Sittipunt, an ex-transportation minister with links to exiled former prime minister Thaksin Shinawatra, won a landslide in Bangkok’s gubernatorial election on May 23, the first held since Thailand's military seized power in 2014, beating a candidate from the conservative camp favored by the ruling Palang Pracharat Party (PPRP). Chadchart ran as an independent and secured 1.3 million out of a total of 4.48 million votes, or about 30% of all those cast, in 50 districts. Chadchart has long been associated with the main opposition Pheu Thai Party (PTP) and political observers interpreted his thumping win as a sign of rising dissatisfaction with Prime Minister Prayut Chan-ocha's leadership, which may portend an opposition comeback at the next general election.
Chicken exports halted in Malaysia amid price inflation
Malaysia announced on May 23 that it will curb the export of chickens from June 1 for an indefinite period to ensure that there is sufficient supply in the domestic market amid ongoing poultry shortages that have driven price hikes. The export of around 3.6 million chickens per month will be halted under the ban to create a buffer stock of domestic poultry supplies. According to the Department of Statistics Malaysia, chicken prices were up 7.5% in April. Chicken shortages have been linked to poultry diseases and higher prices of wheat and other ingredients used to produce chicken feed. Singapore, which imports about 34% of its chicken from Malaysia, has reported poultry shortages following the announcement as customers rush to buy up available stocks.
Marcos appoints central bank governor to top financial job
Philippine President-elect Ferdinand “Bongbong” Marcos Jr nominated central bank Governor Benjamin Diokno to head his incoming government’s finance department in a move that signaled policy continuity as the fast-recovering nation grapples with various rising risks. Diokno, 74, has served as the budget minister under two presidents before moving to the central bank in 2019 and is an advocate of what he calls “a whole-of-government approach” to address economic headwinds. Marcos, who takes office on June 30, said in an interview this week that his first priority “is going to be the economy,” which beat expectations to grow 8.3% in the first quarter but is under threat from accelerating inflation and other headwinds.
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China’s Quad nightmare coming to fruition
Richard Javad Heydarian | May 26, 2022
Dismissed and derided by Beijing in the recent past, the latest Quad Summit in Tokyo is a testament to how the once inchoate grouping is starting to come of age. After a number of false starts, recent years have seen the Quad launch new mega-initiatives and high-profile summits, underscoring the sense of urgency now driving the new bloc.
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Baptism of fire for new President Marcos
Tom Smith | May 26, 2022
The prospects for the Philippines under newly elected president Ferdinand “Bongbong” Marcos Jr have as much to do with a murky past as they do with modern challenges. Cold hard truths lie ahead for the Philippines, all the more so as crimes of members of the Marcos clan’s own very recent past still haven’t been fully accounted for.
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Indonesia palm oil export ban reverberated globally
Steffi Hamann | May 25, 2022
Indonesia accounts for almost two-thirds of global palm oil exports. So, when Indonesian President Joko Widodo announced an unprecedented ban on palm oil exports in late April to curb rising domestic oil costs, he sent a shock wave across global agri-food markets, sending the price for edible oils rising to almost 250% of standard price levels.
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Rethinking Australia’s approach to Myanmar’s carnage
David Scott Mathieson | May 25, 2022
Australia’s general election result on August 21 was probably not followed closely in the Myanmar military capital of Naypyidaw. But the increasingly embattled generals should take note that the new Labor government in Canberra may well be a marked departure from the moribund and morally spent Morrison administration they could count on for mute criticism.
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Flicker of hope for Cambodia’s rubbed out opposition
David Hutt | May 24, 2022
Few observers thought the Candlelight Party, which had been moribund since 2012, stood a chance of competing against the country’s dominant Cambodian People’s Party (CPP). But some now reckon it has a shot of weakening the CPP’s monopoly of locally-elected posts in upcoming commune polls, which could act as a springboard for general elections in July 2023.
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Biden bids to win back Asia with IPEF trade gambit
Richard Javad Heydarian | May 24, 2022
After almost a year of intense anticipation, Biden unveiled the much-vaunted Indo-Pacific Economic Framework (IPEF) during his five-day visit to Asia. The new economic initiative aims to plug in the strategic gap left by the Trump administration’s nixing of the Trans-Pacific Partnership Agreement (TPP) and offer economic alternatives to China.
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Biden’s IPEF woefully more form than substance
William Pesek | May 24, 2022
Shakespeare seemed to be in the room this week when Chinese Foreign Minister Wang Yi dismissed Joe Biden’s big play for Asian leadership as “doomed to fail.” The recently unveiled Indo-Pacific Economic Framework (IPEF) already seems doomed in Washington, where lawmakers must approve any trade scheme with real impact.
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US-China Relations: Perilous Past, Uncertain Present
By Robert G. Sutter
Rowman & Littlefield Publishers, March 2022
Much has changed in US-China relations since the first edition of this book over a decade ago. This fourth edition provides a comprehensive assessment of historical and contemporary determinants of Sino-American relations up to the present, giving special focus to the recent dramatic hardening amid acute competition between the world’s leading powers. The catalyst and main driver of this negative change remains a unique bipartisan Congressional-Administration consensus that sees multiple challenges from China now posing an overall existential threat. Urgency to counter these challenges dominates US policy-making toward China. The consensus came about despite acute partisanship and erratic presidential leadership during the Trump administration and it continues strong with the more consistent foreign policy of President Biden. China remains uncompromising, forecasting continued trouble ahead.
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