The United States, seeking to counter China’s dominance and reassert American influence, launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with a dozen initial partners: Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together, these nations represent 40 percent of the world’s GDP.
IPEF should enable the United States and allies to decide on rules of the road that ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific. This framework seeks to help lower costs by making the US supply chains more resilient in the long term, protecting businesses and consumers against costly disruptions that have led to some of the higher prices we’ve seen since the start of the Covid-19 pandemic.
US foreign direct investment in the region totaled more than $969 billion in 2020 and has nearly doubled in the last decade, and the US is the leading exporter of services to the region, helping fuel regional growth. Trade with the Indo-Pacific supports more than three million American jobs and is the source of nearly $900 billion in foreign direct investment in the United States. With 60 percent of the world’s population, the Indo‑Pacific is projected to be the largest contributor to global growth over the next 30 years.
The framework will focus on four key pillars:
- Connected Economy: High-standard rules of the road in the digital economy, including standards on cross-border data flows and data localization. Work to seize opportunities and address concerns in the digital economy, to ensure small and medium sized enterprises can benefit from the region’s rapidly growing e-commerce sector, while addressing issues is such as online privacy and discriminatory and unethical use of Artificial Intelligence.
- Resilient Economy: Supply chain commitments that better anticipate and prevent disruptions in supply chains to create a more resilient economy and guard against price spikes that increase costs for American families. Establishing an early warning system, mapping critical mineral supply chains, improving traceability in key sectors, and coordinating on diversification efforts.
- Clean Economy: Commitments on clean energy, decarbonization, and infrastructure that promote good-paying jobs. Pursue concrete, high-ambition targets that will accelerate efforts to tackle the climate crisis, including in the areas of renewable energy, carbon removal, energy efficiency standards, and new measures to combat methane emissions.
- Fair Economy: Commitments to enact and enforce effective tax, anti-money laundering, and anti-bribery regimes that are in line with existing multilateral obligations to promote a fair economy. These will include provisions on the exchange of tax information, criminalization of bribery in accordance with UN standards, and effective implementation of beneficial ownership recommendations to strengthen our efforts to crack down on corruption.