Silverado Policy Accelerator Comments on the Indo-Pacific Economic Framework

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Silverado Policy Accelerator has responded to the International Trade Administration's request for comments on the Indo-Pacific Economic Framework and the United States Trade Representative's request for comments on the Proposed Fair and Resilient Trade Pillar of an Indo-Pacific Economic Framework.

According to the Department of Commerce, the goals of the requests are as follows:

On October 27, 2021, President Joseph R. Biden announced that the United States would explore the development of an Indo-Pacific Economic Framework to deepen economic relations in the Indo-Pacific region and coordinate approaches to addressing global economic challenges. The Secretary of Commerce and the United States Trade Representative will co-chair the U.S. team leading the negotiations of the framework. The United States Trade Representative will lead the Framework’s pillar on fair and resilient trade, and the Department of Commerce will lead the Framework’s pillars on: (1) Supply chain resilience; (2) infrastructure, clean energy, and decarbonization; and (3) tax and anti- corruption. Accordingly, the Department of Commerce is seeking public comments on key areas of interest, including: Digital and emerging technologies; supply chain resilience; infrastructure, decarbonization, and clean energy; and tax and anti- corruption. This notice requests comments and information from the public to assist the Secretary of Commerce in developing the U.S. position in these negotiations. To provide comments on the fair and resilient trade pillar on elements unrelated to the digital and emerging technologies, please see the relevant USTR request for comment.

In its comments, Silverado offered several overarching objectives that we believe the IPEF framework should pursue in order to achieve real progress in the area of environmental and climate policy and supply chain resilience. These include:

• Leveraging Other Regional Fora: While it is not yet clear which countries will be part of the IPEF framework, it is instructive to look at the existing agreements and arrangements in the region to see where there is likely to
  be the most overlap with IPEF countries. This exercise can help guide the United States’ efforts to efficiently integrate this effort into existing work streams and to discern where new initiatives might be needed.
• Crafting a robust dispute settlement mechanism: The environmental provisions in U.S. free trade agreements have evolved over time to become more enforceable, and in the most recent agreements, they are on equal footing with all commercial provisions to the extent that non-compliance could result in suspension of tariff benefits. Silverado strongly believes that enforceability is a cornerstone of achieving maximal environmental impact and that incentivizing trading partners to raise their environmental standards and enforcement efforts leads to better environmental outcomes and ensures competitiveness across markets. In the absence of a market access component, Silverado encourages USTR to think creatively about other enforcement mechanisms.
• Prioritizing Public Engagement: Public engagement is a core component of the development of U.S. trade policy but can often be absent in trade policy elsewhere. The well-established APEC national associations and the Pacific Economic Cooperation Council (PECC) system ensures a level of public-private collaboration that has resulted in the success of APEC initiatives.
• Considering Institutional Structure: The IPEF will require resources and expertise to ensure that the initiatives developed have adequate oversight and enforcement to promote good governance, transparency and good regulatory practices. This is essential to effectively enforcing environmental and labor laws, creating jobs, advancing environmental justice and the freedom of expression and promoting broader regional economic integration.  Silverado urges USTR to dedicate resources to the IPEF to ensure continued and robust engagement and progress on the IPEF’s stated goals.

On the decarbonization and climate-related matters, Silverado recommended:

• Creating a framework that invites parties to join an Indo-Pacific Climate and Trade Task Force to address issues such as energy performance standards (EPS), carbon accounting, circular economy, emissions monitoring, and green government procurement.
• Identifying all multilateral environmental agreements in which IPEF partners are parties and use the IPEF as a platform for enhanced cooperation.
• Cooperating on setting procedures for assessing the environmental impact of proposed projects, including to ensure transparency and public participation, along the lines of Article 24.7 of the USMCA.

On supply-chain issues, Silverado recommended:

• Collaborating to develop a roadmap for resource security and efficiency in decarbonizing sectors, starting with the energy sector.
• On semiconductors, creating a forum for IPEF countries to coordinate the various bilateral and regional efforts to leverage national strengths, reduce duplication, and maximize the impact of efforts to stem IP theft and other economic espionage activities that undermine good faith investments in this sector.
• Using the USMCA Environment Chapter as a starting point for advancing ecological and resource conservation.

Silverado's full comment to the Commerce Department's request is available here.

For more details on Silverado's comments or our work on international trade and ecological and environmental security, please contact us at info@silverado.org.