IPEF: What Does it Mean for U.S. Agriculture?

Indo-Pacific Economic Framework: What Does it Mean for U.S. Agriculture?

On May 23, 2022, the United States and a dozen other partners from the Indo-Pacific region launched a new negotiating forum formally known as the Indo-Pacific Economic Framework for Prosperity (IPEF).  Considering that this region already accounts for a major share of existing U.S. agricultural exports and contains many markets that have considerable future growth potential, the IPEF initiative appears to be a positive development for American agricultural producers and exporters.  However, the initial IPEF priorities—trade, supply chains, clean energy and tax/anti-corruption—are very broad areas that lack specificity at this stage.  Perhaps most concerning for agricultural trade interests is that the U.S. Administration has so far ruled out traditional market access negotiations to reduce and eliminate tariff barriers present in many IPEF partner markets.

U.S. Agricultural Exports to IPEF Partners – a Snapshot

The Indo-Pacific region includes some of the largest and most dynamic export markets for U.S. agricultural producers.  In 2021, IPEF partner countries represented nearly 22 percent ($41.5 billion) of U.S. agricultural exports to all destinations.  Five IPEF countries are found among the top ten export markets for the United States.

Top IPEF Markets for U.S. Agricultural Products

With tariffs off the table, what can IPEF accomplish?

The IPEF partners have identified trade as a topic for “collective discussions toward future negotiations” and that they seek to “build high-standard, inclusive, free, and fair trade commitments.”  A number of non-tariff barriers currently block or constrain U.S. agricultural product exports to IPEF markets, including politically motivated restrictions on agricultural biotechnology, pesticide use, and animal health products. To the extent that the IPEF discussions can be used as a forum to remove or resolve these barriers more expeditiously, U.S. agricultural producers and exporters would benefit. 

Can IPEF serve as a bridge to traditional bilateral trade agreements?

In the past, USTR used trade and investment framework agreements with partner countries as a mechanism to prepare for full-fledged negotiations on a free trade agreement (FTA).  For IPEF partner countries with which the United States does not have an FTA, the initiative could potentially serve this purpose.  However, the current U.S. Administration has shown no such inclination to use IPEF as a bridge to a future bilateral FTA negotiation.  Some IPEF partners have indicated that this is the direction they would like to head.  For example, the governments of both New Zealand and Japan have pushed publicly for the United States to rejoin the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

What’s next?

USTR will lead U.S. participation in discussions under the trade pillar of IPEF, including on topics related to agriculture.  Perhaps the initiative may achieve some improvements in access for U.S. agricultural products through the resolution of certain non-tariff issues, but these gains are likely to be marginal, at best.  It appears U.S. agricultural producers and exporters hoping to pry open lucrative Indo-Pacific markets through the reduction and elimination of tariffs will have to push for a more ambitious and confident U.S. trade policy agenda.