On September 8 and 9, top trade officials of the United States and the other Indo-Pacific Economic Framework (“IPEF” or “Framework”) partner countries—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam—launched formal negotiations in Los Angeles.

This marked the first in-person ministerial-level meeting since the IPEF launched on May 23, 2022 and follows three informal meetings since May 2022, the latest event being the virtual ministerial on July 26-27, discussed in detail in our previous post.

The Los Angeles ministerial involved intensive discussions on what to include in the scope of the Framework. Ultimately, the IPEF partners reached consensus on ministerial statements for each of the four IPEF framework pillars: Trade, Supply Chain, Clean Economy, and Fair Economy. All 14 IPEF partners have joined three of the pillars, and 13 joined the fourth—with just India opting out of the Trade pillar. While this near unanimous support for the four pillars is certainly a positive sign, the real work begins now.

This blog post summarizes how the ministerial statements characterize the four pillars and outlines next steps for the Framework and key remaining questions.

Takeaways from the Ministerial Statements

The ministerial statements confirmed the four pillars of negotiation and provided added clarity on the scope and content of each pillar. While the statements add little to the substance, they indicate a political commitment among the partners to the Framework.

  1. Pillar I (Trade): In the Trade pillar, all IPEF partners but India agreed to seek “high-standard, inclusive, free, fair, and open trade commitments” and “intend to pursue provisions and initiatives related to” nine key areas that are foundational to resilient, sustainable, and inclusive economic growth: labor, environment, digital economy, agriculture, competition policy, transparency and good regulatory practices, trade facilitation, inclusivity, and technical assistance and economic development. On digital trade, for instance, the IPEF partners agree to address discriminatory practices and promote and support “trusted and secure cross-border data flows.” India opted out of the Trade pillar, citing concerns over possible commitments relating to environment, labor, digital trade, and public procurement.
  • Pillar II (Supply Chains): In this pillar, all 14 IPEF partners will seek to coordinate actions to mitigate and prevent future supply chain disruptions and secure sources of supply in critical sectors and key products. The partners will look for ways to “anticipate, withstand, or rapidly recover from shocks,” focusing particularly on six key areas: jointly establishing criteria for critical sectors and goods, increasing resiliency and investment in critical sectors and goods, establishing an information-sharing and crisis response mechanism, strengthening supply chain logistics, enhancing the role of workers, and improving supply chain transparency.
  • Pillar III (Clean Economy): The IPEF partners will seek to expand investment opportunities, spur innovation, and improve the livelihoods of citizens as the partners unlock the region’s abundant clean energy resources and address substantial carbon sequestration potential. This effort will include cooperation on climate-friendly technologies, as well as mobilizing investment and promoting usage of low- and zero-emissions goods and services. The partners will seek to promote clean energy transitions with the active participation of our stakeholders, including the private sector, workers, and local communities.
  • Pillar IV (Fair Economy): The IPEF partners will seek to “level the playing field for businesses and workers within IPEF member countries” by “preventing and combatting corruption, curbing tax evasion, and improving domestic resource mobilization.”  The partners in particular intend to effectively implement and expedite progress on international conventions and standards on anti-corruption, including the United Nations Convention against Corruption (UNCAC), standards of the Financial Action Task Force (FATF), and as applicable, the OECD Anti-Bribery Convention. The partners also seek to support, as applicable, the ongoing work of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting’s Two-Pillar Solution to Address the Tax Challenges Arising from Digitalization of the Economy.  

Next Steps

Ambassador Katherine Tai stated in her remarks at the closing of the ministerial that the Administration’s “intention now is to move towards negotiations with our partners on each pillar, with the first round of discussions taking place after this ministerial.” She also referred to continued discussions in the “weeks and months ahead,” although specific timelines for negotiations on each pillar remain unclear.

According to Australian Trade Minister Don Farrell, the IPEF partners have agreed to hold a virtual ministerial in November 2022 and an in-person ministerial in January 2023, in addition to monthly meetings among senior officials. According to news reports, U.S. Commerce Secretary Gina Raimondo similarly said during a closing press conference that the next ministerial could be held early next year.

Key Remaining Issues

Many of the questions about the IPEF flagged in the previous post remain unanswered. For instance, it remains to be seen how and through what incentive structure the Biden Administration will seek to accomplish its goal of building consensus around high-standard commitments, particularly given the diversity in levels of economic development among IPEF partners. The IPEF partners continue to seek what U.S. Commerce Secretary Gina Raimondo calls “concrete and tangible economic benefits” notwithstanding the Biden Administration’s unwillingness to offer greater access to the large U.S. market through tariff reductions. While some officials of the IPEF partners, including Commerce Secretary Gina Raimondo, suggested members could reach a preliminary agreement on certain topics—a so-called “early harvest”—U.S. Trade Representative Katherine Tai recently called such an idea “premature.” 

Notably, Ambassador Tai and Secretary Raimondo announced during the IPEF ministerial that select U.S. companies have agreed to provide virtual training and career development for 5,000 women in IPEF countries by 2032. This undertaking, known as the “IPEF Upskilling Initiative,” is a public-private program to provide primarily women and girls in IPEF emerging economies and middle-income partners access to training and education in digital skills. Initial countries taking part in the Initiative include Brunei, Fiji, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Whether the Biden Administration will offer more public-private programs like the IPEF Upskilling Initiative—and whether any such assistance programs may incentivize other IPEF partners to embrace high-standard commitments in other areas—remains to be seen.

It also remains unclear through what mechanisms the Biden Administration will achieve enforceable and durable agreements under the Framework. According to press interviews with some of the trade ministers of the IPEF partners, the partner countries are working toward incentive-based, self-enforcing commitments, in lieu of a dispute resolution mechanism with formal remedies, as is typically included in traditional trade agreements. But the specifics of any enforcement approach remain unknown.

While the IPEF is viewed by many as an effort to counterbalance China’s economic influence in the region, there is no indication so far that it is explicitly focused on addressing the economic and trade practices of third countries such as China. In contrast, the U.S.-EU Trade and Technology Council has committed itself to joint efforts to address “non-market economic policies and practices,” which is understood as a reference to China.  The difference might simply reflect the reality that some IPEF partners—as neighbors closely tied to China economically—are reluctant to be seen as taking active steps against China.  In fact, Beijing has strongly objected to the IPEF in the past, publicly accusing the U.S. of “destroying peace,” “weaponizing and ideologizing” economic issues, and coercing regional countries into taking sides.

Lastly, there is an ongoing discussion about the role of Congress in the IPEF negotiations and in any agreements concluded under the Framework. Despite bipartisan concerns from members of Congress, the Biden Administration appears to be set on pursuing an executive agreement that would not require formal Congressional approval. No details have been made available on any formal consultation process with Congress, although the Administration has emphasized its intention to consult actively with Congress.

Conclusion

Companies should closely follow negotiations on all four IPEF pillars, especially as the IPEF partners begin to engage in formal, text-based discussions. It is possible that Commerce and USTR may roll out a formal process for engagement with industry and other stakeholders. Because it aims to deal with cutting-edge issues, the Trade pillar, in particular could have wide-ranging effects for labor and economic regulations, corporate accountability, the digital economy, and more. We will continue to monitor these developments and provide guidance to clients seeking to evaluate the potential impact of IPEF negotiations and agreements.

Photo of Minwoo Kim Minwoo Kim

Minwoo Kim advises global corporations, industry associations, non-profit corporations, and governments on international trade policies, international law, and cross-border disputes.

In his disputes practice, Minwoo has handled high-stakes commercial and treaty-based arbitrations. He has also represented sovereign states before the International Court of…

Minwoo Kim advises global corporations, industry associations, non-profit corporations, and governments on international trade policies, international law, and cross-border disputes.

In his disputes practice, Minwoo has handled high-stakes commercial and treaty-based arbitrations. He has also represented sovereign states before the International Court of Justice and UNCLOS Annex VII tribunals. He is a Professorial Lecturer in Law at George Washington University School of Law (Arbitration).

In his trade practice, he routinely helps global corporations, industry associations, and governments interpret and assess foreign regulatory practices under international trade agreements, including the World Trade Organization (WTO) agreements, as well as preferential trade agreements.

Prior to joining the firm, Minwoo was a judicial intern for Hon. Rudolph Contreras, U.S. District Court for the District of Columbia, a legal intern at the Integrity Vice Presidency, the World Bank, and an intern at the National Assembly of Korea, the Foreign Affairs and Unification Committee. Minwoo also maintains an active pro bono practice.

Photo of Jay Smith Jay Smith

Jay Smith is a partner in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and…

Jay Smith is a partner in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and Litigation groups draws on this academic and policy experience.

He is currently helping clients develop and implement strategies to mitigate supply chain risks arising from U.S. trade actions, such as product exclusions from the restrictions on imported steel and aluminum imposed under Section 232. In addition, Jay regularly represents respondents in U.S. trade remedy proceedings and related litigation, helping to secure a number of negative injury determinations at the ITC in recent years. Jay also advises clients on the negotiation and enforcement of international treaty commitments under the WTO, bilateral and regional trade agreements such as the USMCA, and other international fora—including the ongoing Indo-Pacific Economic Framework negotiations. Much of his policy work is at the intersection of trade and other areas, such as intellectual property, the environment, or labor rights.

Photo of Christopher Adams Christopher Adams

Christopher Adams advises clients on matters involving China and the region. A non-lawyer, Chris served as the Senior Coordinator for China Affairs at the Treasury Department. He coordinated China policy issues across the U.S. government, led negotiations with China on a broad range…

Christopher Adams advises clients on matters involving China and the region. A non-lawyer, Chris served as the Senior Coordinator for China Affairs at the Treasury Department. He coordinated China policy issues across the U.S. government, led negotiations with China on a broad range of trade and investment issues, managed the highest level U.S.-China economic policy dialogues for the Obama and Trump administrations, and advised the Treasury Secretary and other cabinet officials.

Chris helped develop and implement U.S. trade policy toward China with the Office of the United States Trade Representative (USTR) from 2007 to 2015 as Deputy Assistant U.S. Trade Representative for China Affairs, Senior Policy Advisor to the Deputy USTR, and Minister Counselor for Trade Affairs at the U.S. Embassy in Beijing, USTR’s first representative in China.

Chris directed government affairs, public relations, and corporate marketing in China for the Eastman Kodak Company from 2001 to 2006 as Chief Representative for China; Vice President, North Asia Region; and Director, Olympic Programs. During this time, Chris was elected to four consecutive terms as a Governor of the American Chamber of Commerce in China and served on the Chamber’s Public Policy Development Committee.

Chris assisted companies with market access issues as a commercial officer in the U.S. Foreign Commercial Service in Beijing and Taipei, from 1993 to 2001. Before joining the Commerce Department, Chris managed media relations and information programs with the American Institute in Taiwan and directed business advisory services at a private trade association in Washington, DC.

Photo of Marney Cheek Marney Cheek

Marney Cheek co-chairs Covington’s International Arbitration and Disputes practice and has advised companies, non-governmental organizations, and governments on high-stakes international disputes and legal strategy for more than 20 years.

Marney serves as both counsel and advocate before numerous international arbitral tribunals and courts…

Marney Cheek co-chairs Covington’s International Arbitration and Disputes practice and has advised companies, non-governmental organizations, and governments on high-stakes international disputes and legal strategy for more than 20 years.

Marney serves as both counsel and advocate before numerous international arbitral tribunals and courts, including the International Court of Justice and major arbitral institutions such as the AAA, ICSID, PCA, and SIAC. She represents clients in complex international business disputes, having successfully defended a client in a $1.8 billion claim filed by a collaboration partner. Ms. Cheek serves as both counsel and arbitrator in numerous investment treaty arbitrations. She is an expert on public international law and currently represents the Government of Ukraine in its landmark cases before the International Court of Justice adverse to the Russian Federation, including Allegations of Genocide under the Convention on the Prevention and Punishment of the Crime of Genocide (Ukraine v. Russian Federation). In addition to leading complex investment treaty and international commercial disputes under the rules of major arbitral institutions, Marney routinely advises clients on public international law matters and issues arising under numerous multilateral treaties. She also is at the forefront of business and human rights disputes, having represented global labor unions in the first binding arbitration brought under a business and human rights compact, the Bangladesh Accord on Fire and Building Safety.

Drawing upon her experience as Associate General Counsel at the Office of the U.S. Trade Representative, Marney routinely counsels clients on international trade matters and is a member of the roster of arbitrators for several U.S. free trade agreements. Her pro bono work includes representation of Radio Free Europe/Radio Liberty, among other matters.

Marney is a member of the Council on Foreign Relations and serves as a Vice President of the American Society of International Law. She has previously taught investment law at Columbia University School of Law. She is recognized as an “extraordinarily thoughtful” and “creative” lawyer with a “wealth of knowledge” on international law matters in Chambers and Legal 500.

Photo of John K. Veroneau John K. Veroneau

Ambassador John Veroneau is a Chambers-ranked international trade lawyer in the firm’s International Trade Practice Group. Having served in senior positions in both Executive and Legislative branches, he provides legal and strategic advice to clients on a broad range of international trade…

Ambassador John Veroneau is a Chambers-ranked international trade lawyer in the firm’s International Trade Practice Group. Having served in senior positions in both Executive and Legislative branches, he provides legal and strategic advice to clients on a broad range of international trade matters. Ambassador Veroneau held Senate-confirmed positions under President Bush as Deputy United States Trade Representative (USTR) and USTR General Counsel, and under President Clinton as an Assistant Secretary of Defense.

Photo of Kate McNulty Kate McNulty

Kate McNulty is a senior associate in the Washington office who helps clients navigate complex international trade and investment matters, providing legal and strategic advice to clients on global policy issues and geopolitical risks. She counsels companies, trade associations, and governments on the…

Kate McNulty is a senior associate in the Washington office who helps clients navigate complex international trade and investment matters, providing legal and strategic advice to clients on global policy issues and geopolitical risks. She counsels companies, trade associations, and governments on the use of international treaties—including free trade agreements (FTAs), bilateral investment treaties (BITs), and the World Trade Organization (WTO)—to open markets and resolve disputes, also regularly advising clients on the negotiation and implementation of such agreements. She has represented corporate clients in both commercial and investment treaty arbitrations, including under ICSID, ICC, UNCITRAL, and ICDR rules, and also represents clients in proceedings before U.S. administrative bodies and U.S. courts, including in trade remedy proceedings (AD/CVD) and customs matters.

Kate also focuses her practice on U.S. anti-forced labor laws as well as business and human rights matters, advising clients on matters relating to the enforcement of Uyghur Forced Labor Prevention Act (UFLPA) and Withhold Release Orders (WROs). She helps clients develop and implement strategies to mitigate supply chain risks, including building compliance programs, developing due diligence procedures, and conducting risk assessments. She also advises clients on conducting human rights-related investigations and implementing related findings.

Kate also maintains an active pro bono practiced focused on international human rights, and her work includes representation of Radio Free Europe/Radio Liberty, the Clooney Foundation for Justice, the American Bar Association Center for Human Rights, and journalists wrongfully detained by foreign governments.

Kate joined the firm after serving as a Foreign Affairs Officer in the Office of Multilateral Trade Affairs at the U.S. Department of State, where she managed trade enforcement and trade policy issues, and participated in the negotiation of international trade agreements on behalf of the U.S. Government.