India to be standby on trade pillar in IPEF
The IPEF was launched on May 23, 2022 jointly by US and other countries of Indo Pacific region. It was initially composed of 14 founding member nations. Fiji was the first South Pacific Island nation to join the group. The invitation to other countries to join the framework has also been extended. It was launched to create a framework that would help participants develop their economies in the 21st century. It would make them grow faster and more fairly. The objective of the IPEF is to create a framework that would facilitate future negotiations regarding trade. It does not include a uniform reduction of tariffs.
China's Foreign Minister called the initiative an attempt to further isolate China, stating that it would not be able to achieve its goals and would lead to a failure. The US' Indo-Pacific strategy also contributed to the divisions within the group. Many analysts criticized the lack of Taiwan's inclusion in the group. They claimed that it was excluded to appease certain countries, such as Indonesia, which are worried about China. Analysts also believed that many countries recognize it as not an economic grouping, but a political one.
IPEF's focus is to enhance the economic partnership of participating countries. It aims to promote sustainable development and enhance the competitiveness of the region. The 14 founding members of the IPEF are: Australia, Brunei, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand, the US, and New Zealand. The framework is composed of four pillars: trade, supply chains, fair economy, and clean economy.
First-in-person Ministerial Meeting
India has joined the framework's supply chain, infrastructure, and decarbonization and transparency pillars. It also participated in the first in-person ministerial of the IPEF. Through consensual statements, the participating countries were able to reach an agreement on each of the three pillars. The statements of the members of the IPEF outline an ambitious agenda that aims to improve the efficiency and effectiveness of their supply chains. These include identifying critical sectors and goods, developing a rules-based trading system, and collaboration on green technology.
The participating countries of the IPEF agreed to improve the transparency, diversity, and resilience of their supply chains. They also committed to make them more resilient and well-integrated. Countries noted the importance of establishing and maintaining a rules-based trading system that is transparent and fair. They also noted the need for public institutions to evolve to address the issue of supply chains.
The countries also agreed to establish a framework for identifying and prioritizing goods and sectors that are critical to their national security and economic resilience. This will help them develop a process that will identify the various factors that affect their supply chains. They accepted to enhance the resilience and investment in their critical sectors by identifying choke points in their supply chains and supporting industries. This process will help them develop effective strategies and procedures.
The consent to establish a crisis response mechanism that will allow them to share information and develop effective strategies to respond to emergencies has also been into vision. This will be facilitated through a framework that will allow government to coordinate with the private sector. The participating countries will also improve their supply chain logistics. The third pillar of the IPEF is the clean economy. Through this agreement, the participating countries will accelerate their efforts in pursuit of climate mitigation and elimination, energy security, and climate resilience. They will also work together on various initiatives that promote the sharing of best practices in the field of clean energy technology. The participating countries acquiesce to reduce their emissions across various priority sectors. They have also recognized the importance of sustainable water solutions and land use. The IPEF will also pursue policies and programs that support the development of innovative technologies that can help remove greenhouse gases from the atmosphere. Finally, the new economic framework will provide incentives to encourage the clean energy transition.
Countries have also acknowledged the importance of ensuring that the rule of law, transparency, and accountability are at the core of their efforts to improve the investment climate. They will work together to implement and accelerate the progress on various initiatives that are aimed at combating corruption. They want to establish a framework for exchanging information related to tax matters. They will support regional and global efforts to improve the efficiency of tax administration.
India not part of IPEF's trade pillar
India has not yet agreed to the framework's trade pillar's commitments. It is still not ready to participate in the discussions on the implementation of the trade measures.
Although India has joined the framework's supply chain, infrastructure, and decarbonization and transparency pillars, it is not yet clear if it will be part of the trade pillar's binding commitments. However, India is open to participating in the discussion on the establishment of high standards for export trade. It has stood up to its own interests and is not afraid to be pushed around.
India will continue to take decisions on its own regarding the various aspects of the IPEF taking into the consideration of national interest. The other member countries will also focus on the implementation of the framework's goals. The forum is currently focused on the implementation of the policies and rules that are related to the investment climate. The discussions that are happening at the official level will be traced by India.
Conclusion
Several controversies have taken place during the foundation of IPEF, with regard to exclusion of china and Taiwan. According to many, the exclusion means that china was being isolating with the formation of this political group. However, in the group, the 14 member countries have the flexibility to select the pillar that they want to be part of. For instance, India has decided not to join the trade pillar. However, it may be that the country has concerns about certain aspects of the trade agreement that go beyond the obligations of the World Trade Organization. The 14 member countries have the flexibility to select the pillar that they want to be part of. For instance, India has decided not to join the trade pillar. However, it may be that the country has concerns about certain aspects of the trade agreement that go beyond the obligations of the World Trade Organization. All members of the IPEF have agreed on the various issues related to the trade agreement. They have a clear roadmap that will help them reach their goals. The implementation of the trade agreement is expected to be fast. The IPEF is designed to be flexible. Member countries can choose to participate in any of the trade agreement's pillars. It will help boost the economic activities of the 14 nations. The members have also agreed to ensure that their supply chains are resilient. members have also assisted to establish a robust framework in order to address the various issues related to the trade agreement. One of the main issues that the members have agreed to address is the overdependence on one country for their supply chains. The positive climate for the trade relations between India and the US is expected to continue. It will also encourage more investments by American companies in the country. India is a major contributor to the IT services industry in the US. Due to the availability of skilled workers in the country, it has been reported that the hiring plans of Indian companies are on the rise. We will also participate in the next trade policy engagement between the two countries. During the meeting with Vietnam and Japan, the countries discussed various areas of mutual interest. These will contribute to the creation of more jobs in India.
Pic Courtsey-Iam taylor at unsplash.com
(The views expressed are of the author and do not represent views of CESCUBE.)
