Biden administration strategy to replace trade with China with other low-wage areas
Published on Oct. 30, 2023
The United States is attempting to sideline China as the workshop of the world in a proposed trade regime with 13 other nations called the Indo-Pacific Economic Framework (IPEF). The 13 countries include Australia, Brunei, Fiji, India, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
The framework is organized around four “pillars” of trade: supply chains, clean energy, decarbonization, infrastructure, and tax and anti-corruption. Since the IPEF is meant to be flexible, partners are not obligated to adhere to all four pillars. Despite the Biden Administration’s claims that it is a “worker-centered” trade policy effort, in many areas it falls short of this description. Organizations that advocate for workers, the environment, online privacy, and anti-monopoly issues have a variety of concerns about the proposed trade system.
Human rights abuses are considered the biggest issue in the Indo-Pacific area, especially in Malaysia, Indonesia, the Philippines, Thailand, and Vietnam. Forced labor persists in various industries, including commercial fishing, garment production, agriculture, manufacturing, domestic work, and mining. Particularly in Vietnam and Indonesia, forced child labor occurs in labor-intensive sectors like construction, garments, textiles, and agriculture.
Other problems that workers in these sectors experience are low pay and other pay-related concerns, lengthy hours, and unsafe and hazardous working conditions. Migrant workers also have little or no legal protection. Furthermore, most countries in Southeast Asia do not forbid workplace discrimination based on race, religion, national origin, disability, gender identity, age, or sexual orientation.
Even though their labor laws contain minimum protections for workers, such as the minimum wage, health care, maternity leave, severance pay, and legal protections for employment contracts, authorities in these countries, with the exception of Singapore, rarely impose fines on employers who are found to have violated labor laws. Additionally, workers also do not have the freedom to form independent unions to safeguard themselves against employers and the right to organize and bargain collectively, or they are highly constrained in exercising these activities.
Another concern about IPEF is the influence of Big Tech companies on labor rights, privacy, and the environment, as big tech firms like Amazon, Google, and Facebook are widely present in many IPEF member countries. They are involved in drafting the digital chapter of IPEF and could use the arrangement as a covert means of avoiding domestic antitrust enforcement and regulation.
Because Big Techs are U.S.-based companies, they want to utilize IPEF to frame legislation in areas like antitrust that have the impact of preventing abuses by those companies. For workers, proposed regulations governing digital trade may make it impossible to effectively control how digital technology is used at work. Challenges to workers’ protections range from the encouragement of unstable employment arrangements in the gig economy to embedded racial biases in algorithms used for hiring, management, and workplace monitoring.
The section under IPEF’s Pillar I (Trade) on good regulatory processes is another cause for worry. The provision is expected to infringe on the regulatory space of the countries in favor of pro-corporate policies without taking into account the needs of the public, following prior models of neoliberal “good governance” criteria.
With clean energy being one of the pillars, the terminology used by IPEF appears to be supportive of and beneficial for sustainable development. In actuality, the United States will only use this provision to support domestic industrial growth pertaining to the creation of green technology for the energy transition. It is highly improbable that IPEF will attract U.S. capital to Indo-Pacific countries in order to advance their downstream industrial goals. As a result, Indo-Pacific countries are unable to gain from this cooperation. The IPEF will thus contradict their national interests. Most countries in the Indo-Pacific area are developing countries, so they supply cheap and accessible energy to fulfill the demands of their expanding economies, mostly depending on fossil energy. Since the U.S. is in transition to clean energy, it needs to find developing countries in the Indo-Pacific area to get the materials that are produced by readily accessible energy created by sources that have emissions global warming gasses. Therefore, U.S. companies do not invest in clean technologies for Indo-Pacific countries.
The United States is trying to promote IPEF as a reconsideration of the aggressive trade liberalization model it championed for the past forty years since the neoliberal trade consensus appears to be breaking down amid numerous crises. IPEF, however, seems to be primarily a geopolitical instrument for the United States to uphold its hegemony in the Asia-Pacific region. U.S. worries over supply chains appear to be more motivated by regional security concerns than by environmental concerns. Ultimately, Asian workers, women, and communities cannot be assured that the outcomes of the IPEF will live up to its claims of worker-centricity and inclusivity, given the United States’ dismal track record of drafting pro-corporate trade regulations.
We are advocating for worker rights across all five pillars to prevent conflict between them and for labor safeguards to be at least as strong as the U.S.-Mexico-Canada Agreement with a facility-specific Rapid Response Mechanism. This tool allows any of the three nations to petition for reviews of individual factories that they suspect of violating their worker’s rights to free association and local collective bargaining laws. If a factory is found in violation, the petitioning nation has the right to bar imports of the corporation’s products, among other sanctions.
Congress should also be allowed to weigh in on the issue and vote on IPEF. The Biden administration has said that because IPEF does not deal directly with tariffs, it is not a trade agreement that needs to be debated and approved by Congress. We need more transparency in international discussions as the majority of the discussions have taken place in private and in secrecy from the public, which is detrimental rather than beneficial. Without a far more transparent procedure and the participation of labor unions, environmental organizations, and other civil society organizations, IPEF cannot achieve its stated objectives of enhancing workers’ rights and environmental standards.
by Thu Nguyen