US President Joe Biden on Monday unveiled a new trade deal with 12 Indo-Pacific nations that aims to bolster their economies, warning Americans worried about inflation that there will be a “process” until they feel some relief. The president added that it is not inevitable that there will be an economic recession in the United States.
At a news conference after meeting with Japanese Prime Minister Fumio Kishida, Biden admitted that the US economy is in “trouble” but said it is better positioned than other countries.
“This is going to be a process. This is going to take a while,” he said, though he rejected the idea that a US recession is inevitable.
The president made his comments before introducing the Indo-Pacific Economic Framework, a trade agreement his administration designed to show US interest in the disputed economic region and address the need for trade stability.
The countries that joined the initiative are Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Together with the United States, they account for 40% of world GDP.
The partners said in a joint statement that the deal will help them “future-proof our economies” following disruptions caused by the pandemic and the Russian invasion of Ukraine.
In his meeting with Kishida, Biden said the new framework will also increase US cooperation with other countries in the region.
The White House said the mechanism will help the United States and Asian economies work more closely on issues such as supply chains, digital trade, clean energy, worker protection and anti-corruption. Details have yet to be negotiated among member states, making it difficult for the administration to spell out how the pact will deliver on its promise to help American businesses and workers while meeting global needs.
Critics point out that the mechanism has big loopholes. It offers no incentives to potential partners such as tariff reductions or guarantees of greater access to US markets, which makes the plan an unattractive alternative to the Trans-Pacific Partnership (TPP), an initiative that it carried on after the United States abandoned it. China, the largest trading partner for many countries in the region, also wants to join the TPP
“I think a lot of partners are going to look at that list and say, ‘That’s a good set list. I’m happy to be involved,’” said Matthew Goodman, former director of international economics at the National Security Council under former President Barack Obama. However, he pointed out, they might also wonder if there are any tangible benefits to joining.
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The initiative is a new step by the Biden administration to try to preserve and expand US influence in the region, which until recently seemed under the increasing influence of China.
Kishida gave a formal reception for Biden at Akasaka Palace, with a military honor guard and band outside the building. Biden reviewed the troops and placed his hand over his heart as he passed the American flag, as well as giving a slight nod as he passed the Japanese ensign.
In their meeting, Kishida said he was “absolutely delighted” to host Biden in Tokyo on the first trip to Asia of his presidency. Like Biden, he took a hard line on Russia over its invasion of Ukraine, which he said “undermines the foundations of the world order.”
Biden, who is on a five-day tour of South Korea and Japan, described the alliance between Washington and Tokyo as a “cornerstone of peace and prosperity in the Indo-Pacific” and thanked Japan for its “strong leadership”. ” against Russia.
The White House announced its plans to build the economic framework in October as a replacement for the TPP, which the United States abandoned in 2017 under President Donald Trump.
Kishida welcomed the launch of Biden’s new trade deal, although he said he hoped Washington would reconsider its position on the TPP.
“Our position remains unchanged,” Kishida said. “We believe that it is desirable for the United States to return to the TPP.”
The new pact comes at a time when the government perceives an advantageous position in its competition with Beijing. A Bloomberg Economics report published last week estimated that the US Gross Domestic Product would grow around 2.8% in 2022 compared to 2% in China, which is trying to keep the coronavirus at bay with strict quarantines and dealing with a housing bubble. Slowing growth has dampened expectations that China would automatically replace the United States as the world’s largest economy.
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