United States Trade Leadership in the Indo-Pacific Act

The United States is an Indo-Pacific power.

The Indo-Pacific region, spanning from our Pacific Coastline to the Indian Ocean, is home to over half the world’s people, including nearly 60 percent of youth, and is at the center of the 21st-century global economy, accounting for 60 percent of global gross domestic product and two-thirds of the world’s economic growth in 2022.

The Indo-Pacific region also includes some of America’s closest military allies and partners, several of the world’s largest militaries, and 5 nations allied with the United States through mutual defense treaties. The region also contains strategic rivals with growing military capabilities, in particular the People’s Republic of China (PRC). Our partners are critical for responding to potential threats in the region, maintaining credible deterrence, and for fostering peace.

There is broad bipartisan agreement that the United States must have a strong and durable economic strategy in the Indo-Pacific to advance our commercial, geostrategic, and national security interests and support our allies and partners in the region.

This is especially true and increasingly urgent in the face of heightened aggression and pressure from the PRC, which seeks to expand its influence by actively pursuing trade agreements with key partners in the Indo-Pacific that establish preferential treatment for goods and services, deepen supply chain integration, and establish rules based on the PRC’s state-led authoritarian economic model that undercut America’s workers, businesses, and economic security.

For decades, the United States has sought to persuade the PRC to eliminate harmful trade practices and act responsibly within the global rules-based trading system. Unfortunately, the PRC has not substantially changed its behavior and has instead used forced labor, subsidies and overproduction, intellectual property theft and the forced transfer of technology, authoritarian digital governance policies, economic coercion, and other unfair practices to advance an economic model that undermines human rights, American industries and workers, and market-based economies around the world.

The PRC is now actively seeking to increase trade ties in the Indo-Pacific region as a means to increase its economic influence and increase supply chain dependency on the PRC. One of the most prominent examples of the PRC’s growing economic influence in the Indo-Pacific region is the Regional Comprehensive Economic Partnership (RCEP), which entered into force in January 2022. RCEP is now the largest trade agreement in the world, encompassing 15 countries that account for 30 percent of the global economy. This agreement will increasingly put the United States at a competitive disadvantage as the economies of the PRC, Australia, Brunei, Cambodia, Indonesia, Japan, Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam grow more integrated.

The PRC is also actively negotiating numerous other regional and bilateral trade agreements throughout the region and is attempting to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as well as the Digital Economic Partnership Agreement (DEPA).

The PRC’s aggressive assertion of its economic interests in the Indo-Pacific through the use of trade agreements underscores the need for the United States to provide a meaningful and credible alternative to achieve our economic and national security goals.

American workers and businesses also face competitive pressures as other countries in the region pursue regional rules and preferential trade agreements without the participation of the United States. There are now more than 200 preferential trade agreements in force with at least one party from the region and over 100 more are under negotiation or pending ratification.

To inform future policymaking, Congress should work with the administration in a bipartisan manner to examine current United States economic policy toward the Indo-Pacific, the impacts of regional trade agreements on American competitiveness, and policies to advance United States objectives in the region.

Through a more comprehensive trade and economic strategy toward the Indo-Pacific region, the United States could exert greater leverage to improve labor rights and help level the playing field for American workers, enhance environmental standards, counter non-market economies and authoritarianism, construct more resilient supply chains, better meet the needs of our allies and partners, and grow our economy by addressing barriers to trade for American products.

how preferential market access provisions, including tariffs, quotas, and services commitments, in existing Indo-Pacific regional trade agreements, including the Regional Comprehensive Economic Partnership (RCEP) Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), affect United States exports and growth opportunities in the Indo-Pacific region;

how existing non-tariff barriers, including regulatory practices, relatively lower labor and environmental standards, different rules for sectors ranging from agriculture and the digital economy, and standard-setting in these areas as part of existing Indo-Pacific regional and bilateral trade agreements, impact the competitiveness of American workers and businesses;

the impact of existing Indo-Pacific regional trade agreements on United States supply chain resiliency and connectivity, and in particular its impact on the People’s Republic of China’s role in key global supply chains; and

differences between the United States-Mexico-Canada Agreement (USMCA) and CPTPP, RCEP, or other regional trade agreements in the Indo-Pacific that would likely have a substantial impact on United States businesses and workers.