40 Asia The Economist June 11th 2022
T
alk to officialsin Asian capitals
and a theme emerges. America, they
say, is happy to engage with their coun
tries on matters of security and geopoli
tics, but seems uninterested in talking
about trade. Such complaints are espe
cially common in East and SouthEast
Asia, where governments worry that
China will use its economic power in the
region to undermine their sovereignty.
They are keen for America to deepen
economic ties as a way of reducing their
reliance on China. But ever since Donald
Trump, the previous president, pulled
America out of the TransPacific Part
nership, a big trade agreement signed by
his predecessor, it has been clear that
America will do no such thing.
So the IndoPacific Economic Frame
work for Prosperity (ipef), unveiled by
President Joe Biden in Tokyo on May
23rd, ought to have been warmly wel
comed. In addition to America, a dozen
countries, including economic heavy
weights like Australia, India and Japan,
were signatories at the launch (Fiji
joined a few days later). These countries,
Mr Biden said, “are signing up to work
toward an economic vision that will
deliver for all peoples”.
Yet barely did the wheels of Air Force
Oneleave the ground than the grumbling
started once more. The chief complaint
is that ipef, which American officials
call an “initiative” or an “arrangement”
rather than a trade deal (which it is not),
does not give signatories any greater
access to the American market. Instead,
the idea is to promote four pillars: boost
ing trade, especially of the digital kind;
making supply chains more resilient;
tackling climate change through clean
energy; and fighting corruption in busi
ness. What all of that means in practice
remains to be hammered out. A formersenior official from Asia describes it as “a
hamburger without the beef”.
“In terms of investment and trade,
there is not much substance yet,” Lee
Hsien Loong, Singapore’s prime minister,
told reporters after a summit of Asian
leaders with Mr Biden in Washington
earlier in May, where the visitors are said
to have been encouraged to join. Seven out
of ten members of the Association of
SouthEast Asian Nations (asean), a re
gional grouping, did indeed show up for
the launch, even though just two—Singa
pore and Thailand—had been expected to
do so a week before the event. India,
which also shies away from trade deals, is
a signatory, too. “But,” Mr Lee continued,
“looking at it from another angle, it has its
own value. It is, after all, a new start.”
That is the point of the thing. Asian
leaders are not insensitive to America’s
domestic politics and the constraints they
impose upon any president. Even if ipef
does not immediately—or eventually—
result in a trade deal, there is value in
being at the table when regional trading
structures and new standards are beingdiscussed. It is also useful to have anoth
er venue to speak regularly to America,
especially for leaders of smaller coun
tries that lack such opportunities. Nor do
they want to send America a signal that
they are uninterested in talking. “There
is not much to lose and potentially a lot
to gain,” says Susannah Patton of the
Lowy Institute, a thinktank in Sydney.
The very vagueness of the framework
is appealing too—it would be hard to get
countries like India and Indonesia to
agree to things like loosening data
localisation rules or setting strict limits
on stateowned enterprises. With just
vague goals, it is easier to show enthusi
asm. For India in particular, it also has
the benefit of allowing it to deflect crit
icism that it is overly protectionist.
For America, ipefis a way of signal
ling that it hears Asian worries, and is
trying its best to respond to them. The
thinking may be, “We’re going to engage
you for many years, to see what we can
do”, and hope that perhaps structural
forces at home eventually change, says
Aaron Connelly of the International
Institute for Strategic Studies, a British
thinktank. If it helps limit Chinese
influence, all the better.
The most optimistic way of looking at
the initiative is that by setting high stan
dards on emissions, decarbonisation,
the digital economy, tax collection,
corruption and so on—all agreed to by
several big Asian economies—ipef
creates an environment which makes its
members more attractive to American
investment, says Ms Patton. The likeli
hood of achieving such a breakthrough is
perhaps as slim as that of it resulting in a
trade deal agreeable to all its signatories.
For now ipefis simply a talkingshop.
But as Asian officials recognise, that is
better than not talking. It may not be a trade deal, but the Indo-Pacific Economic Framework has its usesBanyan A little more conversation
Jongwoon, a professor of nuclear engi
neering at Dongguk University in Gyeong
ju.That, and the close ties between regula
tors and industry, creates loopholes. Even
today, the putatively independent Nuclear
Safety and Security Commission should
really be called the “nuclearfriendly com
mission”, quips Mr Park.
Another problem is cost. The rising
price of imported fossil fuel and an eight
year freeze on domestic energy prices re
sulted in a 7.8trn won ($6bn) operating loss
for kepco, the listed power utility, in the
first quarter of 2022, its worst performanceever. Nuclear plants are cheap to operate.
The company’s own analysis suggests that
without them its losses would have been
worse. But building new ones is expensive
and takes time, as does passing safety
checks. They may also not be the cheapest
option in the long run, says Kim Joojin of
Solutions for Our Climate, an ngo, given
the falling cost of renewables. Industry re
mains to be convinced—the unreliability
of renewables limits their appeal.
Sorting out the domestic market is a
precondition for another pillar of Mr
Yoon’s plan: turning South Korea into anexporter of nuclear power plants. Philip
AndrewsSpeed of the Energy Studies In
stitute at the National University of Singa
pore reckons that the Russian invasion of
Ukraine provides an opening for South Ko
rea to capture more of this market. Many
countries are less keen to buy plants from
Rosatom, a Russian staterun power com
pany and plant manufacturer, for fear it
could be sanctioned. But the economic re
turns of such deals are hard to assess in ad
vance andcantake decades to mature. The
same holdsforMrYoon’s plan to revive nu
clear power.n