In One Sentence

• The United States hosted the seventh in-person negotiating round for the Indo-Pacific Economic Framework (IPEF) from November 5-12 in San Francisco, California. 
• IPEF members thereafter held a ministerial meeting on November 13-14, directly after the negotiating round.
• The Asia-Pacific Economic Cooperation (APEC) held its final 2023 meetings from November 11-17, with a ministerial meeting held on November 14 and the leaders’ plenary session on November 16-17.
• APEC leaders capped their meeting by endorsing the Golden Gate Declaration which memorializes the efforts of member state economies’ on their sustainability and inclusion objectives. 
• IPEF member states released their own leaders’ statement which noted that negotiations on the clean economy and fair economy pillars had been substantially concluded.  
• U.S. trade officials stressed that IPEF and APEC are “two distinct initiatives” although some countries “have chosen to take advantage” of the fact that a number of officials who work on both APEC and IPEF are simultaneously in San Francisco.
• Meanwhile, a number of U.S. lawmakers, agencies and businesses continued to express concerns about the “change” of the “U.S. stance on digital policy,” following USTR’s earlier move to revoke support for data and source code provisions at the World Trade Organization’s e-commerce talks.

Mark the Essentials

• The APEC leaders’ Golden Gate Declaration keeps alive the commitment to advance economic integration through “the work on the Free Trade Area of the Asia-Pacific [FTAAP] agenda”, although few believe the U.S. has much interest any longer in that FTAAP agenda. 
• IPEF ministers failed to close out negotiations on the trade pillar in San Francisco and the outlook on this front is uncertain. However a ministerial-level IPEF Council was established and is set to meet annually starting in 2024, with leaders’ meetings—presuming President Biden secures reelection—slated to be held every two years.
• In a public statement, the co-chairs of the House Digital Trade Caucus—a bipartisan pair—criticized USTR’s “unilateral” decision to “abandon important, longstanding, and bipartisan U.S. digital trade priorities at the WTO.” The statement adds to earlier criticism by the Senate Finance Committee. 
• Meanwhile, more than 40 major business groups have jointly signed an open letter to the Biden administration to express their “profound concern and disappointment” and urged the Biden administration to reverse USTR’s “harmful decision” to withdraw support for certain proposed data provisions at the WTO. 
• Shortly after USTR’s decision at the WTO, trade ministers from the G7 countries reaffirmed “the importance of facilitating Data Free Flow with Trust” and reiterated support for “open digital markets” and “opposition to digital protectionism.” The ministers also affirmed “the need to establish a set of high-standard rules to govern global digital trade.”

Keeping an Eye On…

• When the Biden administration jumped the queue and won the right to chair the 21-member APEC framework in 2023—twelve years after the Obama Administration had done so in 2011—it expected to glide into the presidential election campaign year with a trade policy victory to tout. Instead, the administration has ended the APEC presidency with some egg on its face. The hosting of APEC in 2023 was never meant to be about APEC; rather, the APEC platform was sought to be commandeered to push through the Indo-Pacific Economic Framework (IPEF) agreement which excluded China—much like the Obama Administration had sought to push forward the Trans-Pacific Partnership (TPP) negotiations at the time. The TPP negotiations did in fact make important progress during the United States’ 2011 APEC hosting year. By contrast, the trade pillar of the IPEF negotiations—the only materially significant pillar of IPEF’s four pillars—has descended into a farce, with little expected by way of useful results in 2024. From the get-go, the trade pillar of IPEF was a shambles. It made no aspiration to achieve the fundamental premise of a trade agreement (i.e., market liberalization based on reciprocal market access). Yet, USTR Katherine Tai somehow appears to have thought that other IPEF member states would sign on to U.S.-dictated enforceable labor standard provisions for nothing in exchange. The administration chose to disregard Congress’ prerogative “to regulate commerce with foreign nations” by using the ‘sole executive agreement’ mechanism to finalize IPEF, and in the process let it effectively be known to participating members that it was shooting for a low-quality product that would not be accountable to Congress’ more demanding ratification-related standards. And despite an initial haste to preempt domestic rulemaking on digital policy, the administration ended up having to submit to the immense regulatory churn underway in the sector and pull its digital trade text from the broader negotiations. From anti-monopoly protections to privacy and data protections, fintech-related financial stability risk management, review of liability protection for intermediary service providers, to the development of rules regarding the structure, use, and impacts of AI applications and their underlying algorithms, digital policy regulation domestically and rules to regulate its orderly flow internationally remains a work in progress. In the event, no forward movement was made on market liberalization, little progress was made on labor standards in the trade text, and there is nothing to show on the digital trade front. San Francisco was the venue where delegates from 50 countries had drafted the Charter of the United Nations over fifty-one days of debate and negotiation in 1945. Fast-forward to APEC/IPEF 2023, San Francisco unfortunately may yet come to be remembered as the place where the United States, after a year of flailing and failing, ceded its trade policy leadership at a pivotal moment in the history of the Asia-Pacific’s international economic diplomacy.

Expanded Reading

• 2023 APEC Leaders’ Golden Gate Declaration, The White House, November 17, 2023
• U.S. 2023 APEC Outcomes, U.S. Department of State, November 17, 2023
• Leaders’ Statement on Indo-Pacific Economic Framework for Prosperity, The White House, November 16, 2023
• APEC Summit 2023: Here’s What to Know, U.S. Chamber of Commerce, November 15, 2023
• Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Week Kicks-Off in San Francisco, U.S. Department of State, November 13, 2023
• USCIB Co-Signs Letter Condemning Administration Decision to Withdraw Support for Cross-Border Data Flow Proposals at WTO, United States Council for International Business, November 13, 2023
• G7 Trade Ministers’ Meeting in OSAKA-SAKAI, Ministry of Foreign Affairs of Japan, last updated November 9, 2023
• U.S. Chamber and Other Associations Letter to NSC/NEC on Digital Trade, U.S. Chamber of Commerce, November 7, 2023
• 2023 Asia-Pacific Economic Cooperation (APEC) Leaders’ Week (FPC Briefing), U.S. Department of State, November 6, 2023
• LaHood, DelBene Statement on USTR Decision to Abandon Digital Trade Leadership at the WTO, Office of Rep. Darin LaHood, October 26, 2023