Benefits of joining IPEF's trade pillar unclear: Official

Contact Counsellor

Benefits of joining IPEF's trade pillar unclear: Official

  • India remains sceptical about joining the trade pillar of the Indo-Pacific Economic Framework for Prosperity (IPEF), citing a lack of "tangible benefits."
  • The trade pillar is crucial, covering sensitive areas like agriculture, digital trade and labour.
  • However, an agreement was not reached in the last round of negotiations in San Francisco.

Indo-Pacific Economic Framework for Prosperity (IPEF)

  • IPEF was launched jointly by the US and other partner countries of the Indo-Pacific region in 2022 in Tokyo.
  • Members: Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, the US and Vietnam.
  • Together, they represent 40% of the world's economic output and 28% of global trade.

Four Pillars of the Agreement

  • The framework is structured around four pillars relating to
    • Trade
    • Supply chains
    • Clean economy
    • Fair economy (issues such as tax and anti-corruption).
  • India has joined all the pillars except the trade one.
  • Unlike traditional trade deals, IPEF does not primarily address market access but aims to counter China's dominance in the region.

Challenges in Trade Pillar

  • Lack of clarity on tangible benefits has hindered progress in the trade pillar.
  • Questions around commitments without clear benefits have led to scepticism among member countries.

Contentious Issues

  • Sensitivity around export restrictions, particularly on food and agriculture, poses challenges.
  • Despite agreements on three pillars, consensus on commitments related to export restrictions is unlikely.

Indian Perspective

  • India's decision to stay out of the trade pillar aligns with its strategy of retaining regulatory autonomy.
  • Concerns about aligning with standards primarily applied in OECD economies pose a challenge for India in terms of domestic rule alignment.

Prelims Takeaway

  • Indo-Pacific Economic Framework for Prosperity (IPEF)
  • OECD Economies
  • Indo-Pacific