It is a US-led initiative aimed at strengthening economic partnerships among participating nations in the Indo-Pacific region in order to improve resilience, sustainability, inclusivity, economic development, fairness, and competitiveness.
The IPEF began with a group of a dozen original partners that collectively account for 40% of global GDP.
- Geographically, all of its members (the United States, India, Japan, Australia, South Korea, and eight other East Asian nations) are concerned about China’s assertive nationalism and expansionist ambitions. As a result, the group has a particular geopolitical flavour.
- On the economic front, the group has the potential to lay the groundwork for longer-term economic union among like-minded nations. It would result in sustainable energy investment and technological development collaboration.
- The immediate focus is on shared standards in the fields of labour rights, environmental standards, intellectual property protection, and digital economy laws.
- It is a proclamation of a shared ambition to make the Indo-Pacific a worldwide economic development engine.
- An Economic Perspective: The Indo-Pacific region has half of the world’s population and more than 60% of global GDP, and the nations who will join this framework in the future are pledging to work toward an economic vision that benefits everyone.
- Trade: It aims to develop high-standard, inclusive, free, and fair-trade commitments, as well as new and innovative approaches to trade and technology policy, in order to achieve a broad set of goals that boost economic activity and investment, promote sustainable and inclusive growth, and benefit workers and consumers.
- Clean Energy, Decarbonization, and Infrastructure: It plans to accelerate the development and deployment of clean energy technologies to decarbonize our economies and build resilience to climate impacts, in line with the Paris Agreement goals and efforts to support the livelihood of people and workers. Deepening collaboration on technologies, mobilising funding, particularly concessional finance, and identifying methods to promote competitiveness and connectivity through supporting the development of long-term infrastructure and giving technical assistance are all part of this.
- Tax and Anti-Corruption: It is dedicated to encouraging fair competition in the Indo-Pacific region by implementing and enforcing effective and strong tax, anti-money laundering, and anti-bribery regimes in accordance with existing multilateral commitments, standards, and agreements. Sharing expertise and looking for methods to help the capacity building required to progress accountable and transparent systems are two examples.
- IPEF is dedicated to increasing supply chain transparency, diversity, security, and sustainability in order to make them more robust and well-integrated. Improve logistical efficiency and support, and ensure access to key raw and processed materials, semiconductors, critical minerals, and clean energy technology by coordinating crisis response measures, expanding cooperation to better prepare for and mitigate the effects of disruptions, and improving logistical efficiency and support.
- India’s main concern is on the issue of data localisation, on which it has locked horns with the US over the last two or three years.
- Trade integration must eventually mirror economic integration. However, the IPEF is not a typical free trade agreement (FTA).
- Progress in several of the IPEF’s priority areas may be hampered by India’s opposition. It will take a number of steps away from its conventional stance.
- The new arrangements will not necessitate agreement. IPEF is not a global trade discussion in which any country can stymie progress by refusing to accept. If India refuses to accept the terms, it may be shut out entirely.
- In the past, India has fought such standards alignment behind the border since it limits our policy options.
- There should be a list of areas where the discussions need deviating from previous practise. In view of changing circumstances, India should examine whether these deviations are in the national interest. For example, because it was in our national interest, India embraced what advanced countries demanded, such as the freedom for employees to organise trade unions.
- If India decides to pursue IPEF, it should avoid the lengthy discussions that plagued the RCEP.
- Self-reliance, or ‘atmanirbharta,’ does not imply isolation or protectionism. It entails securing foreign investment and joining global supply networks. As a result, India should join IPEF, as establishing stable supply chains is a priority for the country.
- Exceptions might be made for very sensitive locations. To comply with these criteria, India might build in a reasonable adjustment period.
- India should conduct an internal audit of its tax administration with the participation of specialists rather than merely the Department of Revenue.
- The Indian business community should rally behind the new integration. Indian enterprises that have the capacity to compete worldwide are frequently ignored.
- Finally, different ministries are involved in the negotiations. As a result, inter-ministerial consultations should be held. We need an empowered trade negotiator who will meet with relevant ministries and present a pros and cons analysis to the Prime Minister and key ministers.
How to structure
- Give a brief intro about Indo Pacific Economic framework
- Briefly mention the rationale behind its formation
- Discuss the features
- Explain the significance of its formation
- Mention challenges and write way forward