After 2.5 years, US President Joe Biden’s Indo-Pacific Framework for Prosperity (IPEF) is increasingly irrelevant due to its own limitations and broader US foreign policy shifts.

Ong Kar Jin

• Fair and resilient trade: This imposes ‘high standard’ rules, particularly for the digital economy, labour and the environment. Enforcing such standards is now widely seen as protectionist.
• Supply chain resilience: This seeks to establish reliable supply chains bypassing China. Many countries hope to benefit from such ‘friend-shoring’. However, most recent inflationary supply disruptions have been due to the new Cold War, pandemic, and sanctions.
• Infrastructure, clean energy, and decarbonisation will supposedly enhance mitigation efforts, ignoring the adaptation priorities of developing countries.
• Tax and anti-corruption: IPEF promises to improve tax information exchange and curb money laundering and bribery. But most developing countries have retrieved little from such efforts. Their recent experience with the OECD-led Inclusive Framework for taxation has deepened such suspicions.

Each IPEF pillar involved separate negotiations, allowing partners to opt in or out. While this accommodates diverse interests, the resulting fragmentation undermines likely effectiveness. Worse, IPEF is a White House initiative lacking Congressional support, raising doubts about its longevity.

Jomo Kwame Sundaram

IPEF’s advent over half a decade after Trump withdrew from the TPP suggests it was never a Biden priority. The US caricatures and dismisses the RCEP as a ‘low-standards’ China-led agreement, but East Asia does not seem to agree.

Instead, the Biden administration touted IPEF as a strong US-led response to the RCEP, but its modest offer has further undermined Washington’s reputation, fuelling caution and scepticism.

Taiwan is part of the US-led Asia-Pacific Economic Cooperation (APEC), and Washington is believed to be surreptitiously promoting its independence. But the island province has been excluded from IPEF, perhaps due to deliberate ‘strategic ambiguity’.

America First
The upcoming US presidential election compounds the uncertainty. If re-elected, former President Donald Trump has promised to ‘knock out’ IPEF, describing it as worse than the TPP!

Presidential candidate Kamala Harris has long been sceptical of international trade agreements, including the TPP. She is expected to replace Deputy Secretary of State Kurt Campbell, architect of Obama’s ‘pivot to Asia’ via the TPP and Biden’s IPEF.

The past decade has seen US domestic politics increasingly shaping foreign economic and trade policies, regardless of party affiliation, with protectionist sentiments surging in both parties.

Scepticism about FTAs and retreats from earlier US foreign policy ‘activism’ have become bipartisan rather than only associated with Trump.

Bretton Woods exception?
Historically, the doctrine of Manifest Destiny drove territorial acquisitions in the American hemisphere, the US ‘backyard’ since the Monroe Doctrine. At the same time, protectionist trade policies accelerated US industrialisation after the North won the Civil War.

Domestic politics favoured the US Neutrality Acts of the 1930s. The 1929 Crash led to the 1930 Smoot-Hawley Tariff Act, raising import duties on thousands of goods.

The US’s international role significantly grew after World War Two, creating postwar multilateral institutions like the United Nations, the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade (GATT).

Creating regional blocs soon superseded Roosevelt’s multilateral legacy as the Cold War changed perceptions of security threats and economic priorities. After the Cold War, the US briefly remained globally engaged as a unipolar power.

However, growing domestic discontent over economic globalisation and interventionist conflicts eroded support for earlier policies. Trump’s ‘America First’ mantra has driven this shift, even challenging plurilateral trade agreements.

While ‘re-engaging’ multilaterally to reassert dominance, protectionism has not retreated under the Biden administration, even increasing some Trump-era tariffs on Chinese imports.

More actions against Chinese tech firms like Huawei reflect the bipartisan belief that previous free trade policies had inadvertently benefited China without securing promised gains. With more rhetoric of ‘safeguarding’ critical industries and technologies, bipartisan scepticism toward FTAs has grown.

Geopolitics, not geoeconomics
Neoliberals claimed economic liberalisation would lead to political liberalisation and strengthen the rule of law. Thomas Friedman even claimed countries with McDonalds’ franchises would not go to war with one another.

China has not adopted the political reforms many in the West wanted. Instead, it looms larger on the world stage, pursuing policies at odds with US interests.

Likewise, integrating post-Soviet Russia into the world economy via World Trade Organization and G8 membership was expected to align it with the West. But such efforts ended before Russia’s forcible entry into Crimea and, later, Ukraine.

Southeast Asian governments quickly realised IPEF was not a US political priority. Negotiating was intended not to offend the US. IPEF was supposed to reassert US leadership to counter China’s growing influence. But content-wise it appears to be about setting standards serving US corporate interests.

US reluctance to offer tangible benefits, such as improved market access, made IPEF less attractive, especially compared to China. IPEF’s limited ambition and commitments reflect the deeper malaise of US foreign policy.

As US domestic politics increasingly drive foreign policy, initiatives like IPEF seem less viable. Hence, IPEF seems like the last gasp of a fast-fading approach to engagement rather than a blueprint for future cooperation.

Ong Kar Jin is an independent researcher and writer focusing on the socio-political dimensions of technology.

IPS UN Bureau

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Greater government reliance on consulting companies has greatly enriched them while also undermining state capacities, capabilities, national economies, progress, governance and legitimacy.

The Big Con
Over recent decades, policy consultancy has gradually gained more public attention. With the COVID-19 pandemic, consultancies were paid billions, with meagre results, leaving even less for millions of others desperately struggling to cope.

Ong Kar Jin

Many argue that governments and corporations need such expertise as they cannot be expected to be good at everything, let alone familiar with the latest trends and challenges. Others argue consultancies provide much-needed second opinions, especially when organisations have lost their capacities and capabilities.

The Big Con argues their clients rarely get what they most need. Heavy dependence on consultancies also compromises accountability and retards needed innovation. Consequently, governments allow their capacities and capabilities to deteriorate, with consultancy firms profitably filling the gap.

‘Voluntary’ dependency
The Big Con provides many examples of problems arising from becoming “overly reliant on expensive contracts”. These include McKinsey’s role in France’s bungled vaccine programme, and Deloitte’s in the UK’s botched Test and Trace programme.

Consultancy firms have taken over many public services in France. The trend began in 2007 when Nicolas Sarkozy became president, promising to “make the French state cost-efficient”. His government gave 250 million euros ($269m) in contracts to management consultancies like McKinsey, Deloitte and the Boston Consultancy Group (BCG).

Jomo Kwame Sundaram

The UK spends more on consultants than all countries other than the US. Rather than have its National Health Service involved in its test-and-trace programme, ministers and civil servants turned to consultancies. At one point, over £1m was spent on consultants daily, with some ‘senior’ advisers billing over £6,000 per diem!

One consultant confessed, “It just seemed like every project had loads of wandering Deloitte people … the sheer volume of them that were around created the situation of these zombie emails just arriving all the time … taking our attention away from actual work.”

As its bankruptcy proceedings started in 2016, Puerto Rico hired McKinsey to advise a US federal oversight board. The team, led by recent US Ivy League graduates, was to prepare an ‘aspirational vision’ for the US island territory. Its recommendations included privatising state-owned enterprises, ‘rightsizing’ job cuts, and reducing social, especially labour protection.

While consultancies are often touted as involving experienced experts, most client governments, especially from developing countries, often host young graduates of reputable institutions, mainly adept at using the latest jargon and making impressive presentations.

Losing capacities and capabilities
Most governments have not tried hard to enhance their capacities and capabilities, e.g., to develop their public information and communications (ICT) or digital technology expertise. Instead, they ‘outsource’, depending on consultancies, even for sensitive strategic policy matters.

A book review suggests, “One also cannot help but gain the impression of the big consultancies as vultures, feasting on calamitous challenges like Covid-19, Brexit and climate change. Meanwhile, they pose as disinterested and expert helping hands.”

Management consultants are increasingly widely used by both governments and corporations, giving the impression of expert authority for mooted reforms. As a British minister noted, governments have been ‘infantilised’ by relying on management consultants.

The Big Con notes, “The more governments and businesses outsource, the less they know how to do.” Consultancies have eroded government and business capacities and capabilities. The presumption seems to be that clever young consultants, coming from abroad, know much better than experienced employees, and “knowledge can be purchased, as if off a shelf”.

So why have governments accepted all this? As the book’s title implies, successful consulting requires gaining customers’ confidence, e.g., persuading them that consultants have the answers, regardless of whether this is true.

Some decision-makers also simply want to be able to pass on responsibility for policy solutions, as it is generally politically easier to blame an external party, e.g., consultants, than to take responsibility. This is especially useful if policy recommendations are likely to be unpopular, e.g., involving downsizing or cuts.

Growing con
The Big Con notes that a con gains momentum with seeming success. The authors argue the bigger the consultancies and their scope of work, the weaker governments become. As governments lose confidence in their own abilities, consultancies become the default solution.

Some governments have become so taken with consulting that they have set up ‘internal’ consultancy arms, e.g., Malaysia set up PEMANDU, PADU and other entities for this purpose. This is part of a wider trend of increasing corporatisation of public institutions to pursue ‘efficiency’.

Perhaps urged by major donors, the United Nations Development Programme (UNDP) has championed ‘entrepreneurship’, ‘impact investing’ and ‘accelerating social enterprises’ in recent years. It now has labs, team leads, and strategic innovation units, all spouting corporate buzzwords.

This turn reflects growing faith in what Daniel Greene terms the ‘access doctrine’, i.e., the belief that poverty and other social problems can be simply overcome by new technologies and technical skills, regardless of their complexities. Policymakers increasingly embrace and proselytise such technical fixes, ensuring consultants’ status as the cult’s new high priests.

Threatened by fiscal austerity and criticisms of being obsolete, public institutions increasingly embrace the access doctrine. They shift resources to foster ‘startups’ or ‘accelerating innovation’ to retrieve legitimacy and secure much-needed resources as public spending is threatened by fiscal austerity.

By redefining poverty as a problem of technology access, consultants reframe problems as seemingly more manageable for staff, politicians, other decision-makers, donors and others. The technological fix fetish has provided a powerful rationale for cutting social protections, replacing them with upskilling programmes and entrepreneurship ‘boot camps’.

Neoliberal consultancies
With the counter-revolution against Keynesian macroeconomics and development economics, policymakers embraced ostensibly market and private solutions from the 1980s.

As state-owned enterprises were privatised, the public sector was expected to function like businesses. Governments embraced ‘performance-related pay’ and cost-benefit analyses to promote private sector values in the public realm.

After Margaret Thatcher became UK prime minister in 1979, her party chairman declared: “The management ethos must run right through our national life – private and public companies, civil service, nationalised industries, local government, the National Health Service.”

Such policies were mimicked in many developing countries, either for access to concessional finance or voluntarily, as the Washington Consensus gained hegemony in policymaking circles. The consultancy cult’s osmosis into public institutions in recent decades as well as its more novel recent iterations are their consequences.

The book ends with a call to change the role of consultancies, arguing they have caused the public sector to become less capable and innovative. Investing in public sector expertise will be necessary to retrieve the space ‘voluntarily’ ceded to ‘the big con’.

IPS UN Bureau

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US President Joe Biden’s Indo-Pacific Framework for Prosperity (IPEF) is the economic arm of his administration’s Indo-Pacific Strategy, aimed at countering China’s influence in the region.

Despite its lofty pronounced goals, IPEF’s shortcomings expose a disconcerting lack of political will, inconsistent trade policies, and US inability to match China’s infrastructure initiatives.

Ong Kar Jin

Many had anticipated a robust reply to China’s growing economic influence in the region, particularly following US depiction of the Regional Comprehensive Economic Partnership (RCEP) as an instrument of Chinese expansion.

China may well stand to benefit most from RCEP by virtue of its size and economic relations with the region. But outside the US echo chamber, RCEP is seen as truly East Asian led. It has involved not only ASEAN leadership, but also Japan, South Korea, Australia, New Zealand and Singapore, all long-term US allies.

In sharp contrast, IPEF has disappointed many. It seems to be little more than a half-hearted economic cooperation appendix to the Biden administration’s Indo-Pacific strategy.

The alternative US infrastructure initiative – coordinated with NATO allies in Europe – is small potatoes compared to the Asian Infrastructure Investment Bank, which – unlike most of its allies – the US has attacked from the outset.

Also, the US has no answer to China’s flagship ‘Belt and Road Initiative’ (BRI) – which succeeded ‘One Belt One Road’ (OBOR) and earlier Chinese Silk Road initiatives. BRI ostensibly focuses on critical transport and communications infrastructure like internet cables, roads, ports and railways.

These projects are seen as directly contributing to economic development, making them highly attractive to developing nations. In contrast, IPEF offerings appear more like diplomatic gestures with little for infrastructure development.

The chasm between IPEF’s lofty rhetoric and its actual content shines light on modest US capacities and commitment. US inability to offer substantial benefits through IPEF not only jeopardizes its standing, but also cedes influence to China.

Jomo Kwame Sundaram

As a Biden White House initiative without Congressional support, IPEF is dismissed in some circles – especially in the US – as part of Biden’s re-election strategy. It will most certainly be dropped if he does not secure a second term.

The irony is palpable: while there is bipartisan agreement to ‘contain’ China, US politics is so mired in partisan squabbles that it fails to act, even when interests are aligned. This lack of political will is not just a domestic failing; as a result, the international community sees the US as unreliable.

No more trade liberalization?
Despite decades of ‘free trade’ rhetoric from the US, its NATO allies, the Bretton Woods institutions and others, US commitment to trade liberalization has long not been taken seriously, especially since the Trump administration.

Before that, the Obama White House had blocked appointments to the World Trade Organization’s dispute settlement panel, effectively rendering the WTO’s most important component dysfunctional.

IPEF’s modest content is largely due to increasingly hostile US public sentiment on trade liberalization. By 2016, most presidential candidates seeking to succeed Obama – from both major parties – opposed the TPP.

While most US voters know nothing about IPEF, ‘outsourcing’ manufactured imports is widely seen as behind the decline of US manufacturing, as well as related ‘good’ jobs and incomes.

While many initially expected a more Obama-like approach from the Biden administration, policy developments so far suggest Trump’s ‘America first’ rhetoric and policies are here to stay.

Unsurprisingly, the White House has promised IPEF would “ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific”. US domestic re-industrialization efforts have already triggered more blatant protectionism since Trump.

Biden’s Inflation Reduction Act denies Hyundai, the Korean industrial conglomerate, as well as other foreign automotive brands, the significant tax credits available to domestic electric vehicle manufacturers.

Outdoing Trump, the Biden administration has broadened technology bans and restrictions, e.g., in its ‘microchip war’ with China. US allies – notably the Netherlands and South Korea – have largely agreed to restrict chip technology exports to Chinese companies.

Ceding regional hegemony
While initially welcomed despite qualms, IPEF has not been attractive to the region, especially to developing countries, including India. It does not even offer US market access, a staple of earlier free trade agreements. Instead, it mainly seeks to impose new standards associated with the new US protectionism.

IPEF’s lack of tangible benefits is unlikely to be of much interest to member governments and prospective members, let alone their publics. Worse for the US, IPEF’s modest offer may unwittingly strengthen longer term concerns about US hegemony and leadership, instead of restoring confidence in it.

The largely cool and ambivalent reception to IPEF reflects a divide. On one side, the US and its allies seek to strengthen their hegemony in the region. On the other are the mixed interests and ambivalent attitudes of others, mainly developing countries, coping with US-China rivalry.

IPEF’s fate is compounded by domestic political constraints on US foreign policy, which have reduced its room for manoeuvre. To be attractive to the region, IPEF needs to offer more tangible benefits to current and prospective members, especially developing countries.

Thus far, it has appealed to fears of Chinese expansionism and its alleged ‘debt traps’. For all but the staunchest US allies, however, concerns about privacy, surveillance or sovereignty are secondary to the need for finance and economic development.

China understands this, often sweetening its infrastructure deals, and making them more attractive to developing countries. Without a more generous response, it will be difficult to overcome IPEF’s current reputation as a low-cost means to enhance US dominance of the region.

Currently, the US is imposing itself on, rather than trying to be supportive of the region. Hence, the IPS and IPEF run the risk of simply being the latest in a series of US hegemonic initiatives from the first Cold War’s Southeast Asian Treaty Organization (SEATO) in the 1950s to Obama’s TPP.

Ong Kar Jin is an independent researcher and writer focusing on the socio-political dimensions of technology.

IPS UN Bureau

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