U.S.-led Indo-Pacific talks produce deal on supply chain early warnings

5/5 © Reuters. U.S. Commerce Secretary Gina Raimondo speaks with delegates during the Indo-Pacific Economic Framework meeting in Detroit, Michigan U.S. May 27, 2023. REUTERS/Rebecca Cook 2/5

By David Lawder

DETROIT (Reuters) - Trade ministers of 14 countries in the U.S.-led Indo-Pacific Economic Framework (IPEF) talks "substantially completed" a deal to make supply chains more resilient and secure, the Commerce Department said on Saturday, marking the first tangible results of the year-long negotiations.

U.S. Commerce Secretary Gina Raimondo told a press conference in Detroit that the "first of its kind" agreement calls for countries to form a council to coordinate supply chain activities and a "Crisis Response Network" to give early warnings to IPEF countries of potential supply disruptions.

The deal provides an emergency communications channel for IPEF countries to seek support during supply chain disruptions, coordinate more closely during a crisis and recover more quickly.

Raimondo cited shortages of semiconductors during the COVID-19 pandemic that shut down American auto production, idling thousands of workers.

"I can tell you I would have loved to have had that Crisis Response Network during COVID. It absolutely would have helped us secure American jobs and keep supply chains moving," she said.

The supply chains agreement, also includes a new labor rights advisory board aimed at raising labor standards in supply chains, consisting of government, worker, and employer representatives.

Commerce led the supply chains negotiations, one of four "pillars" in the IPEF talks, which represents the Biden administration's main economic initiative in Asia, aimed in part at providing countries in the region with an alternative to closer ties with China.

China is not part of the IPEF discussions, but participated in Asia Pacific Economic Cooperation (APEC) trade talks in Detroit, which wrapped up on Friday with a pledge for more inclusive trade but no joint statement.

The other three IPEF pillars -- trade, climate transition, and labor and inclusiveness -- are more complex and expected to take longer to negotiate but U.S. officials are aiming for more results by the time of the APEC leaders summit in San Francisco in November.

TRADE PROGRESS, PUSHBACK

U.S. Trade Representative Katherine Tai told reporters that the ministers "checked in on our progress and identified the areas where we need additional attention."

The trade pillar does not include negotiations over tariff reductions or other market-access aspects of traditional free trade deals, but aims for common rules on agriculture, labor, environmental standards and trade facilitation.

"We have more work to do but I am confident that we will start seeing results under Pillar 1 in the months ahead," Tai said.

Tai and Raimondo pushed back against complaints from U.S. farm and industry groups that IPEF lacks market access improvements, putting it at a disadvantage to other trade deals in the region, including one led by China.

Raimondo said that view reflects a "misunderstanding" of IPEF's goals.

Tai added that IPEF "from the very beginning, is not a traditional trade deal. We're not just trying to maximize efficiencies and liberalization. We're trying to promote sustainability, resilience and inclusiveness."