On September 21, 2024, during Prime Minister Narendra Modi's visit to the United States, India made a significant shift in its stance regarding trade-labour linkages as part of the Indo-Pacific Economic Framework (IPEF). This change was highlighted by India's acceptance of international law that allows for the review of its labor law compliance, a notable departure from its previous opposition to such linkages. The agreements signed during this visit included the 'Fair Economy Agreement,' which aims to enhance governance and transparency in trade practices, and the 'Clean Economy Agreement,' focusing on energy transition and clean technologies. [ecb44145]
The IPEF, launched in 2022, includes 14 member nations, such as the US, Australia, and Japan. While India initially opted out of the trade pillar, it has now engaged with the supply chains, fair economy, and clean economy pillars. The Fair Economy Agreement specifically promotes respect for International Labour Organization (ILO) standards, which aligns with India's ratification of 6 out of 10 ILO conventions. [ecb44145]
This shift in policy may have broader implications for India's position in future Free Trade Agreement (FTA) negotiations, particularly with the UK and EU, where labor rights provisions are often contentious. The agreements reached under the IPEF signal India's commitment to improving labor rights in exchange for enhanced trade relations, which could reshape its economic landscape. [ecb44145]
The agreements were finalized during a pivotal meeting at the Quad Summit, where Modi and US President Joe Biden also discussed synthetic drug trafficking and public health initiatives. This meeting underscored the importance of health cooperation and economic collaboration between the two nations, which together account for about 40% of global GDP. [af961011]
In addition to the labor rights provisions, the IPEF agreements include commitments to enhance energy security and reduce reliance on fossil fuels, reflecting a comprehensive approach to economic resilience and sustainability in the Indo-Pacific region. [c6e8f83f]