Davos 2022: US aims to 'friend-shore' industry with Indo-Pacific pact

Commerce Secretary Gina Raimondo says deal stops Russia and China from dominating trade

US President Joe Biden announced a trade deal with Indo-Pacific partners this week. EPA

A new US trade partnership with Indo-Pacific countries is meant to keep critical manufacturing within the western fold and stop Russia and China from setting the rules for 21st-century technology, a senior US government official has said.

Commerce Secretary Gina Raimondo spoke in favour of a “friend-shoring” strategy, an idea similar to onshoring, which means vital economic production should be done within the borders of American allies.

Europe has expressed similar views since the invasion of Ukraine, looking to the US and other partners to supply its energy after its previous reliance on Russia left it exposed when relations with Moscow were blown apart.

Ms Raimondo told the World Economic Forum in Davos that the US wanted to bring some manufacturing into its own territory, including semiconductor production that would otherwise be done in Asia.

But “we can’t make everything in America”, she said. “That isn’t going to happen, it shouldn’t happen. But we need strong partnerships.

“I think friend-shoring recognises that and says we have to work with our like-minded allies who share our values. It can’t be in America because of labour prices and the like, but it ought to be on our allied shores.”

President Joe Biden used a visit to Japan to announce the trade partnership on Monday, which takes in Australia, Brunei, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam.

Ms Raimondo said getting such a partnership right could prevent a repeat of the supply chain chaos that resulted from the coronavirus pandemic, when Covid-19 disruption in Malaysia hampered the US car industry.

She said the trade talks had gone beyond usual agreements by tackling issues such as technology standards, artificial intelligence, digital trade and supply chains, allowing Washington to set the terms for 21st-century technology.

“You don’t typically talk about tech standards in a traditional trade agreement,” she said. “But setting the rules of the road around how we’re going to use artificial intelligence with like-minded countries is so important.

“Because, I’ll tell you – if we don’t, China and Russia will set those rules of the road and we will all suffer because of it.”