Fourteen countries in US-led trade talks in the Indo-Pacific region agreed on supply chain coordination, the most substantial progress in US President Joe Biden’s initiative for the region.
US Secretary of Commerce Gina Raimondo made the announcement on Saturday alongside US Trade Representative Katherine Tai (戴琪) at a gathering of ministers from countries participating in the Indo-Pacific Economic Framework (IPEF).
The US began the initiative as a way to counter China’s growing influence and make up for lost ground after pulling out of previous efforts to set regional trade rules.
Photo: Reuters
The IPEF countries include India, Japan and South Korea, which rank among the 10 biggest national economies in the world. The nations included in the framework represent about US$38 trillion in economic output.
The framework is the most significant US economic engagement in the region since former US president Donald Trump pulled out of the Trans-Pacific Partnership in 2017, but it stops short of reducing tariffs like a traditional free-trade agreement, which some countries have sought.
The IPEF supply chain agreement includes creating a “response network” to provide emergency communications on supply chains and the establishment of a labor rights advisory board, Raimondo said.
The framework’s supply chain work aims to avoid the kind of bottlenecks that occurred during the COVID-19 pandemic, as well as future layoffs and stoppage of manufacturing and assembly lines, Raimondo said.
The supply chains agreement would offer a “concrete, practical solution” to future disruptions, she said during a separate briefing earlier last week.
Steps on supply chains include establishing a council to coordinate in different sectors; preparing emergency responses; and creating a labor rights advisory board to address worker training.
No sectors are singled out in the agreement, as the US needs to work with partners to determine what is most important, Raimondo said, adding that she anticipated it would be useful for technologies such as computer chips and other critical inputs.
Supply chains are one of the four “pillars” in the framework that countries began discussing last year — along with clean economy, which focuses on the transition to renewable energy and fighting climate change; fair economy, which includes taxation and corruption issues; and trade.
The US hopes to reach an overall agreement for the remaining aspects of the framework by the time that Biden hosts leaders from the Asia-Pacific Economic Cooperation forum in San Francisco in November, Raimondo said.
While an agreement on supply chains marks progress, some of the remaining pillars could be harder to resolve, such as trade, in which India is not participating due to concerns about potential environment and labor commitments.
Trade is an issue where, historically, countries have struggled to come to agreement.
Separately, the US is taking an analytical approach to its review of whether to keep tariffs on Chinese goods in place, and would not base outcomes on any “breakthrough” in US-China trade relations, Deputy US Trade Representative Sarah Bianchi said.
The Biden administration is not assuming any such breakthrough would happen, but would continue dialogue with China at different levels, Bianchi said on the sidelines of an IPEF ministerial meeting.
“We are conducting the review from an analytical perspective. We’re not base-casing any breakthrough in the trade relationship” with China as part of the review, Bianchi said. “We’re not assuming that that will happen.”
The Office of the US Trade Representative is continuing to study industry and stakeholder comments on the duties consulting with the US Department of Commerce, the US Treasury and other agencies to determine which categories make strategic sense, she said.
“We’re taking a look at what’s economically sound,” added Bianchi, who oversees the office’s engagement in Asia.
Trump imposed the tariffs in 2018 and 2019 on thousands of imports from China valued at about US$370 billion at the time, after a Section 301 investigation found that China was misappropriating US intellectual property and coercing US companies to transfer sensitive technology to do business.
The duties range from 7.5 percent on many consumer goods to 25 percent on vehicles, industrial components, semiconductors and other electronics. Among the major categories that escaped tariffs were cellphones, laptop computers and videogame consoles.
The review was required by Section 301 of the US Trade Act of 1974 four years after the tariffs were imposed, and it started with initial notification steps in May last year.
Bianchi declined to say when the review would be completed, but added that by the end of this year would be “reasonable.”
Additional reporting by Reuters
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