Yellen told a news conference there has been "very substantial progress" on three of the four areas under discussion by the 14 IPEF member countries, but there are "remaining issues" on trade.

A centerpiece of the Biden administration's efforts to deepen economic ties with Asian nations and counter China's rising dominance in the Pacific, the IPEF is a forum for multilateral talks aimed at forging agreements in a range of areas, including trade.

She said there had been "significant progress" on the trade pillar, "but it looks not to be complete, like something that is likely to require further work."

"My understanding is that very substantial progress has been made on three of the four pillars," she said, referring to talks on supply chains, the climate transition, and anti-corruption.

Yellen's comments were in line with those of people familiar with the talks, who told Reuters that talks on improving labor and environmental standards, and ways to enforcement compliance have run into resistance from some member countries.

The Biden administration had hoped to announce some outcomes on the trade pillar this week as leaders of Asia Pacific Economic Cooperation (APEC) countries gather in San Francisco.

U.S. President Joe Biden is eager to portray IPEF as producing meaningful outcomes to member countries, which are mostly APEC members, as he seeks to offer Asia a U.S.-led alternative to deeper economic ties to China.

The IPEF negotiations were never aimed at reducing tariffs or improving market access for members, many of who were signatories to the Trans-Pacific Partnership trade deal that former President Donald Trump abandoned in 2017.

People familiar with the talks said that an announcement of outcomes is more likely on clean energy cooperation and anti-corruption pillars of the IPEF.

Only one of the four IPEF "pillars," on strengthening supply chains, has a completed text, with deals reached in May on an early warning system for potential supply disruptions like those experienced after the pandemic, as well as a council to consult on supply chain issues such as those involving national security or critical economic sectors.

CHINA INVESTMENT CONCERNS

Yellen said she was concerned about China's excess industrial capacity that could lead to global markets being flooded with goods as Beijing seeks avenues to boost flagging economic growth, issues that she said were discussed with Chinese Vice Premier He Lifeng last week in San Francisco.

"We did talk about issues of oversupply that have arisen and could arise in the future in industries that China is investing in very heavily. And I do consider that a risk," Yellen said.

Both agreed that the U.S. and China should seek fair trade relations and a level playing field on which their companies can compete, Yellen added.

China targeted industries such as advanced semiconductors, aircraft, electric vehicles, farm equipment and other sectors in its recent industrial plans and has more recently sought to become self sufficient in technology sectors.