Biden launched a trade agreement with Indo-Pacific nations and warned US economy about inflation.
Tokyo(Japan)- After talks with Japan’s Prime Minister Fumio Kishida, Biden acknowledged the US economy has “problems”. But said they are “less consequential than the rest of the world has.”
President Joe Biden launched a new trade agreement with 12 Indo-Pacific nations on Monday. Warning Americans concerned about high inflation that it would be “a haul” before they felt relief. The president stated that an economic downturn in the United States is not unavoidable.
“This is going to be a long haul,” he added. This will take some time,” he said, denying that a recession in the United States was unavoidable.
The remarks came just before Biden announced the Indo-Pacific Economic Framework. His administration designed a new trade agreement. Which signal the United States’ commitment to the contested economic sphere. And to address the need for commercial stability following disruptions caused by the pandemic and Russia’s invasion of Ukraine.
Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam have joined the Indo-Pacific Economic Framework. Together with the United States, they account for 40% of global GDP.
The countries said in a joint statement that the agreement would help them “prepare our economies for the future” in the aftermath of the coronavirus pandemic and Russia’s invasion of Ukraine.
Indian Prime Minister Narendra Modi joined Biden and Kishida. While other countries’ representatives appeared via video to help launch the pact. Modi was in Tokyo for the Quad meeting on Tuesday, including the United States, Japan, and Australia.
Indo-Pacific Economic Framework
According to the White House, the framework will enable the US and Asian economies to collaborate more closely on supply chains, digital trade, clean energy, worker protections, and anti-corruption efforts. The details are still working out among the member countries. This makes it difficult for the administration to say how this agreement will help US workers and businesses. While also meeting global needs.
The framework, according to critics, has significant flaws. It does not provide prospective partners with incentives such as lower tariffs or greater access to US markets. These constraints may not make the US framework an appealing alternative to the Trans-Pacific Partnership, which is still moving forward despite the US bailout. China, the region’s largest trading partner, is also attempting to join TPP.
“I think many partners are going to look at that list and say: ‘That’s a good list of issues. I’m happy to be involved,'” said Matthew Goodman. A former director for international economics on the National Security Council during President Barack Obama’s administration. But he said they also might ask. “Are we going to get any tangible benefits from participating in this framework?”
Biden’s visit to Japan
Kishida hosted a formal state welcome for Biden at Akasaka Palace. Including a white-clad military honour guard and band in the front plaza. Reviewing the assembled troops, Biden placed his hand over his heart. He passed the American flag and bowed slightly as he passed the Japanese standard.
Kishida said at their meeting that he was “absolutely delighted” to welcome Biden to Tokyo on the first Asia trip of his presidency. Along with Biden, he drove a tough line against Russia over its invasion of Ukraine, saying it “undermines the foundation of global order.”
Biden, who is in the midst of a five-day visit to South Korea and Japan, called the U.S.-Japanese alliance a “cornerstone of peace and prosperity in the Indo-Pacific” and thanked Japan for its “strong leadership” in standing up to Russia.
In October, the White House announced plans to build the economic framework as a replacement for the Trans-Pacific Partnership, which the US dropped out of in 2017 under then-President Donald Trump.
While welcoming the new Biden trade pact, Kishida said he hoped Biden would reconsider the United States’ position on TPP.
“Our position remains unchanged,” Kishida said. “We think the United States should return to the TPP.”
US Economy
The new pact comes when the administration believes it has the edge in its competition with Beijing. Last week, Bloomberg Economics published a report projecting US GDP growth at about 2.8% in 2022 compared to 2% for China, which has been trying to contain the coronavirus through strict lockdowns while also dealing with a property bust. The slowdown has undermined assumptions that China would automatically supplant the US as the world’s leading economy.
“The fact that the United States will grow faster than China this year, for the first time since 1976, is a quite striking example of how countries in this region should be looking at trends and trajectories,” said the White House national security adviser Jake Sullivan.
The two leaders were also set to meet with families of Japanese citizens abducted by North Korea decades ago. The Japanese premier took office last fall and is looking to strengthen ties with the US and build a personal relationship with Biden. He’ll host the president at a restaurant for dinner.
The launch of the Indo-Pacific Economic Framework, also known as IPEF, has been billed by the White House as one of the more significant moments of Biden’s Asia trip and of his ongoing effort to bolster ties with Pacific allies. Through it all, administration officials have kept a close eye on China’s growing economic and military might in the region.