India Attends First In-Person IPEF Ministerial Conference
As India formally attends the first in-person Ministerial conference of the Indo-Pacific Economic Framework (IPEF) (September 8-9, 2022), speculation is rife as to how the framework will benefit the region’s economy and overall prosperity. While India has clarified that all decisions related to this US-led framework will be governed by its own national interests, it will be interesting to watch how New Delhi balances its equation with major trade partners, China and Russia, who are not a part of the framework.
India’s Commerce Minister Piyush Goyal is currently on a six-day visit to Los Angeles, California to attend the first in-person Indo-Pacific Economic Framework (IPEF) Ministerial conference scheduled to be held on September 8-9, 2022.
The 13 partner countries under the US-led IPEF are India, Japan, South Korea, Philippines, Australia, New Zealand, Fiji, Indonesia, Brunei, Malaysia, Singapore, Thailand, and Vietnam.
Besides, India is also hosting several bilateral ministerial conferences on the sidelines of the IPEF Ministerial conference to discuss trade and investment prospects among the partner countries.
How is India participating in the IPEF?
Of the IPEF’s four pillars, India will be part of the resilient economy (supply chain), clean economy (decarbonization and infrastructure), and fair economy (anti-corruption and tax) components of the framework. India will not be joining the connected economy (trade) pillar of IPEF.
To clarify, the IPEF has established four pillars, which can be chosen by the partner countries. These are:
- Connected Economy – covering fair and resilient trade, including the seven subtopics of agriculture, climate and environment, competition, digital economy, labor, trade facilitation, and transparency and regulatory practices
- Resilient Economy – covering supply chain resilience
- Clean Economy – covering clean energy, decarbonization, and infrastructure
- Fair Economy – covering anti-corruption and tax issues
Kyle Freeman, Partner at Dezan Shira & Associates, is closely tracking the IPEF’s impact on US trade and commerce relations with the Asia-Pacific region. He notes, “Countries can choose to join any number of the four IPEF pillars without being obligated to join other pillars unless they choose to do so. However, once a country has joined a pillar, it is expected to commit to all aspects of that pillar.”
India to soon introduce IPEF in the Parliament
As per reports in the Indian media, the Indian government will present the IPEF framework to Parliament to ensure that various decisions taken around the framework are governed by India’s national interests.
India joined the US-led IPEF on May 23 this year as the Framework sought an open, inclusive, interconnected, and secure Indo-Pacific – necessary for the region’s sustainable growth.
Previous IPEF meetings involving the partner countries were held virtually twice – on May 23 and July 26.
The partner countries aim to develop a high-standard and inclusive economic framework under IPEF that will fuel economic activity and investment, promote sustainable and inclusive economic growth, and benefit workers and consumers across the region.
Everything we know about IPEF so far
Launched in May 2022, the IPEF provides an institutional forum for countries from the Asia Pacific region to engage with the US. Noticeably, China is not a part of this grouping – leading most to assume that the Framework is Washington’s play to balance the security, economic, and strategic dynamics in the Indo-Pacific region. The 14 IPEF countries represent 40 percent of global gross domestic product (GDP). (Read our detailed analysis of IPEF here.)
The IPEF intends to advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in the respective economies of the member countries in the Indo-Pacific region.
Steered by US President Joe Biden, the IPEF framework is touted as a US bid to balance its security provider role in the region by reclaiming a larger role in the economic sphere. This move is also more pertinent as it allows the US to regain some credibility following former US president Donald Trump’s sudden decision in early 2017 to pull out of the painstakingly negotiated Trans-Pacific Partnership (TPP).
IPEF not a traditional trading bloc
It must be noted that IPEF is not synonymous with a free trade agreement (FTA). Unlike traditional trade blocs, the framework will not negotiate tariffs or market access. Instead, it will merely focus on integrating member countries in the following four modules:
- Fair trade: In the field of trade, the member countries will build high-standard, inclusive, free and fair trade commitments and develop creative approaches in trade and technology policy to promote sustainable and inclusive economic growth.
- Supply chain resilience: The nations have resolved to make supply chains more resilient and integrated, with measures to mitigate the impact of disruptions and crisis by improving the transparency, security, and sustainability. In particular, talks will take place on access to semiconductors and critical minerals.
- Infrastructure and decarbonization: The members will accelerate development of clean energy technologies and build resilience to climate impacts. The nations are looking at technology sharing and ways for easy access to finance to meet goals outlined in the Paris Agreement.
- Tax and anti-corruption: The IPEF member countries intend to promote competition by enforcing robust tax, anti-money laundering, and anti-bribery regimes to curb tax evasion and corruption in the Indo-Pacific.
There will be no binding commitments regarding market access characteristic of trade deals like the RCEP or free trade agreements. Instead, IPEF focuses on increasing regulatory coherence between the member nations.
- The Indo-Pacific Economic Framework (IPEF) is Not a Free Trade Agreement, but Will Be Judged on the Same Principles
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