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Indo-Pacific Economic Framework


Recently speaking at a press conference after the Indo-Pacific Economic Framework (IPEF) Ministerial meeting in Los Angeles in the US, Minister of Commerce & Industry said , India has agreed to three pillars relating to supply chains: tax, anti-corruption and clean energy, but the fourth pillar on data and privacy is yet to be completely agreed upon.


GS II: International Relations

Dimensions of the Article:

  1. About IPEF
  2. Reasons for creation of IPEF
  3. What are some of the concerns?

About IPEF

  • The alliance, which includes seven out of ten ASEAN nations, all four Quad countries, and New Zealand, accounts for around 40% of world GDP.
  • Trade, supply chain resiliency, sustainable energy and decarbonisation, and taxes and anti-corruption measures are expected to be at the forefront of the IPEF negotiations.
  • Currently, India and 13 countries located in the Pacific ocean are its members: Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, United States, and Vietnam.
  • Countries would have to sign up to all of the components within a module, but do not have to participate in all modules.
  • The US Trade Representative will lead the “fair and resilient trade” module, which will cover digital, labour, and environmental issues as well as some contractual obligations.
  • The IPEF aims to strengthen economic cooperation among member countries in order to improve the Indo-Pacific region’s resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness.
Other details of IPEF
  • US officials made it clear that the IPEF would not be a “free trade agreement”, nor are countries expected to discuss reducing tariffs or increasing market access.
  • The IPEF will not include market access commitments such as lowering tariff barriers,
  • In that sense, the IPEF would not seek to replace the 11-nation CPTPP (Trans-Pacific Partnership) that the US quit in 2017, or the RCEP, which China, and all of the other IPEF countries (minus the US) are a part of.
  • Three ASEAN countries considered closer to China — Myanmar, Cambodia and Laos — are not members of the IPEF.

Reasons for creation of IPEF

  • The IPEF is also considered as a way for the US to reclaim its regional credibility following former President Donald Trump’s withdrawal from the Trans Pacific Partnership (TPP). Since then, there has been worry about the United States’ lack of a realistic economic and trade plan to offset China’s economic influence in the region.
  • China is a key member of the Trans-Pacific Partnership and has applied to join its successor pact, the Comprehensive and Progressive Agreement on Trans-Pacific Partnership.
  • It is also a member of the Regional Comprehensive Economic Partnership, which has 14 members but does not include the United States (India withdrew from RCEP).
  • IPEF is the new US vehicle for re-engagement with East Asia and South East Asia, according to the Biden Administration.

What are some of the concerns?

  • The US has earlier expressed concerns about the possibility of the Indian side demanding data localisation or the storage and processing of Indian users’ data in servers located in India and not the US, even in the case of data of US-based companies.
  • In the US’s National Trade Estimate Report on Foreign Trade Barriers, it said India’s policy “will serve as significant barriers to digital trade” and act as “market access barriers, especially for smaller firms”.

-Source: Indian Express

December 2023