India, the United States, and 12 other members of the Indo-Pacific Economic Framework for Prosperity (IPEF) have successfully concluded negotiations on fair and clean economy agreements. The agreements aim to promote sustainable growth and success for all IPEF partners. The signing ceremony for these agreements marks a significant milestone in the efforts to create a fair and clean economy in the Indo-Pacific region.
The IPEF, launched in 2022 by President Joe Biden, includes countries such as Australia, Japan, South Korea, and Vietnam. The framework focuses on four pillars: supply chains, climate, anti-corruption, and trade. While agreements on supply chains, climate, and anti-corruption have been reached, negotiations on the trade pillar are still ongoing.
The signing ceremony for the supply chain resilience pillar, which aims to reduce dependence on China, was held recently. However, the trade pillar remains a point of contention, and its unresolved status is seen as a setback for the Biden administration's goal of creating a 'free and open Indo-Pacific' and encouraging regional economies to decouple from the Chinese market.
The negotiations took place against the backdrop of a rally by climate activists from Bay Climate Action outside the Indo-Pacific Economic Forum negotiations in San Francisco. The activists called for stronger language on environmental standards in America's trade deals and delivered a petition with over 15,000 signatures to the convention center where the negotiations were being held. Their aim was to emphasize the need for bold climate action, environmental justice, and sustainability.
President Biden is considering making changes to the global trade pact with a dozen Asian countries, known as the Indo-Pacific Economic Framework for Prosperity, just days before its formal introduction. The trade deal aims to strengthen ties between the United States and its allies in the region to counter China's growing influence. However, concerns have been raised by some Democrats that the deal lacks environmental and labor protections. The Biden administration is now weighing whether to add these protections at a later date, reflecting the collision of Biden's goals of countering China and aligning with labor unions.
The trade deal is expected to be announced this week at a summit in San Francisco. The approach of pursuing a trade framework rather than a traditional trade deal reflects the negative sentiment among U.S. voters towards trade deals that are perceived to cause job loss. The IPEF aims to address these concerns while writing new rules for the 21st-century economy.
The successful conclusion of negotiations on fair and clean economy agreements in the Indo-Pacific region is a significant development. It demonstrates the commitment of India, the United States, and other IPEF members to promote sustainable growth and create a fair and clean economy. The ongoing negotiations on the trade pillar highlight the challenges and complexities involved in creating a comprehensive trade framework that addresses labor, environmental standards, and rules for digital companies.
The signing of the fair and clean economy agreements is a step forward in the Biden administration's efforts to counter China's influence and foster closer ties with regional allies. The agreements will play a crucial role in shaping the economic landscape of the Indo-Pacific region and advancing the shared goals of the IPEF members.
India should be cautious while finalizing the clean and fair economy agreements under the Indo-Pacific Economic Framework for Prosperity (IPEF), according to a report by the Global Trade Research Initiative (GTRI) [9217d50c]. The report suggests that India should ensure that new commitments do not overly restrict its policy space or tax revenue generation abilities. It also advises against agreeing to non-derogation clauses, minimum standards on clean energy products/technologies, and restrictions on preferential treatment to domestic suppliers. The report further recommends that India should not allow the import of GM seeds and foods and should protect farmers' rights and the ability to provide subsidies. Additionally, the report cautions against taking new obligations related to anti-corruption and tax policy administration, as they may curtail India's ability to raise tax revenue and affect domestic policy changes. The report also advises against reiterating International Labour Organisation (ILO) conventions, as they would become binding and actionable under the IPEF. India has joined all the pillars of the IPEF except for the trade pillar.
The Philippines and its 13 Indo-Pacific partners have also signed a supply chain agreement and made progress on negotiations for clean and fair economy agreements under the IPEF. President Ferdinand R. Marcos Jr. participated in the 2nd IPEF Leaders’ Meeting in San Francisco, California, where the commitment to implement measures for supply chain resilience, green energy, and combating corruption was made. The agreement aims to promote workers' rights, prevent and respond to supply chain disruptions, transition to clean economies, and improve tax administration efficiency. The 14 IPEF countries also recognized the need for high-standard public and private financing to facilitate investments in supply chain resilience and clean economy transitions. United States President Joe Biden mentioned opportunities for private sector investments in solar power in the Philippines, offshore wind in Thailand and Indonesia, and joint investments in energy storage with India. The Philippines and the US will co-host the 2024 Indo-Pacific Business Forum in Manila in March.
The fourth pillar of the Indo-Pacific Economic Framework for Prosperity (IPEF) aims to create a fair economy and will enhance information-sharing among its 14 members. This will facilitate asset recovery and strengthen cross-border investigations and prosecutions. The IPEF also focuses on trade, supply chains, and clean economy. India has joined three pillars and has an observer status in one. The IPEF seeks to strengthen economic engagement among partner nations in the Indo-Pacific region. The supply chain agreement under Pillar-II aims to establish resilient and competitive supply chains. The agreement will establish a regional supply chain with improved crisis response capabilities. The IPEF partners are eager to put the agreement into formal action. Commerce Minister Piyush Goyal emphasized the need for collaboration in research and development for climate-friendly technologies under Pillar-III. He also highlighted the importance of anti-corruption and tax measures to boost commerce, trade, and investment under Pillar-IV. [f0d99ffa]