President Joe Biden just unveiled a plan to form a new alliance between the U.S. and countries in the Asia-Pacific region, offering a counterpoint to China's growing dominance there. But without also improving access to international markets among member countries, the scope--as well as the economic benefits--of the union may be limited.

On Monday, the president announced the new pact, dubbed the Indo-Pacific Economic Framework (IPEF), as a means for helping member countries better coordinate efforts to shore up global supply chains, further digital trade, expand clean energy, and fight corruption. The framework is also expected to influence participating nations' environmental and labor standards.

"We're writing the new rules for the 21st-century economy that are going to help all of our countries' economies grow faster and fairer," said Biden in a speech from Tokyo, where he convened with Japan's prime minister, Fumio Kishida. Along with Japan, a dozen other countries including India, Brunei, Australia, and Singapore are expected to sign on to the pact. Biden noted that other countries could join in the future should they agree to upholding the same standards.

The deal will be markedly different from previous trade pacts. Chiefly, the IPEF is not expected to come with any assurances to remove or reduce tariffs among member nations. And unlike the last pact offering to unite the region--the Trans-Pacific Partnership (TPP), which Barack Obama spearheaded in 2014 and Donald Trump passed on--the IPEF does not require member countries to remove compliance hurdles, trade quotas, or other red tape. 

Instead, according to the framework, member countries can pick and choose which measures they want to sign on to. For instance, coal-rich Australia could agree to harmonize with member nations on ensuring global supply chains but decline to participate in any kind of clean energy initiatives.

For small businesses that trade with Asia, the benefits may be distant, too. "It's a wait and see as to what this turns into or results in," says Raymond J. Keating, the chief economist at the Small Business & Entrepreneurship Council, a nonpartisan advocacy group in Vienna, Virginia. But it is certainly not a trade deal in any kind of traditional sense--and that means the economic impact is questionable, he says. "You're supposed to be lowering tariffs and other trade barriers so you can have economic growth. That's not what's going on here," says Keating, adding that the current agreement wouldn't even need congressional approval to move forward.

That lack of oomph may do little to counteract China's growing prominence in the region. Many of the same countries in contention for the IPEF are also members of the TPP, which does require signatories, including China, to reduce trade barriers. Since Trump pulled the U.S. out of the TPP in 2017, China has become a leading force behind the bloc, so unraveling that influence would take some doing.

So why didn't Biden propose an agreement with more teeth or sign back on to the TPP?

Globalization has become a political hot potato in the wake of Trump's election in 2016, which was largely viewed as a proxy on free trade. During his presidency, and on the election trail, Trump frequently questioned the value of trade deals and their impact on working Americans, and freely imposed tariffs on trading partners, including Canada and the European Union.

The results have certainly been mixed. Take for example the North American Free Trade Agreement (NAFTA), now known as the USMCA, which Trump negotiated in 2019. While regional trade surged over NAFTA's first two decades, to $1.1 trillion in 2016, from roughly $290 billion in 1993, the impact on wages and labor overall have been harder to judge.

Though some have tried. Over the same 20-year period, NAFTA contributed to the loss of approximately four million U.S. jobs, according to Robert E. Scott, director of trade and manufacturing policy research at the Economic Policy Institute, a nonpartisan think tank in Washington, D.C. Seven years after the agreement, in 2001, Scott assessed the job losses at around 766,000; he issued another assessment in 2014, showing job losses totaling 3.2 million between 2001 and 2013.

The business case for globalization is an easier sell--and it goes beyond exporting jobs to lower-cost countries. In 2020, the final year of Trump's presidency, small and midsize enterprises accounted for $413 billion in known export value, down 10 percent from $460 billion in 2019, according to the latest U.S. Census Bureau release from April. In 2020, small to midsize companies imported $651 billion in goods, down about 3 percent from 2019. One can't attribute the diminished results to globalization's disfavor, however. The drop might have been touched off by a variety of factors including chaotic supply-chain shocks that continue to reverberate.

Even so, the appetite for free trade deals isn't what it once was. Thus it's little wonder why Biden may be taking the less controversial route, but make no mistake: The IPEF is not a trade deal and it won't carry the same economic benefits.