CHALLENGES OF INDO PACIFIC ECONOMIC FRAMEWORK

 Across the globe we find that there is proliferation of regional cooperation and free trade agreements,  substantially higher than the number of nations that exist today. Amongst them the  idea of Indo Pacific Economic Framework (IPEF)has been mooted by  US president Biden in October 2021 which took shape in the the QUAD meeting held in Tokyo in 2022.Certainly IPEF is an attempt by USA to address it's shrinking economic activities and clout in East Asia where the economic influence of China has been increasing rapidly. It may be noted here that US is not a part of the Mega regional trade Agreements in Asia  like 1.Regional Comprehensive Economic Partnership (RCEP) and 2.The Comprehensive and Progressive Trans Pacific Economic Partnership (CPTPP ).The launch of IPEF with the help some like minded countries other than China comprised of Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand,Philippines, Singapore, Thailand, USA and  Vietnam. Interestingly some of them were  already  members of either RCEP or CPTPP.India became a prominent member of the thirteen nation economic initiative IPEF to strengthen the economic partnership, enhance resilience, sustainability, inclusiveness economic  growth, fairness and competitiveness in the Indo Pacific region.IPEF member countries together account for approximately 40% of world GDP and 28% of global trade in goods and services. 

  Unlike other traditional Free Trade Agreement (FTA) IPEF would not negotiate market access or tariff, instead it focused fundamentally on four pillars namely 1.Rapid Increase in trade particularly Digital trade. It Intended  to build high standards of inclusive,free and fair trade commitment and create new approaches to trade and  technology policy. 2.Resilient Supply Chains- to ensure transparency, diversity,security and  sustainability to make them more resilient and well coordinated.And also to mitigate disruptions and improve logistical efficiency and support to ensure access to key raw materials and clean energy. 3Adopting Clean Energy In tune with the Paris Agreement goals and efforts to support the livelihood of people and workers along with decarbonisation, infrastructure and job creation.IPEF plans to accelerate development and implementation of clean  energy technologies to decarbonise economies and build resilience to combat impact of climate change. This  involves deepening cooperation on technologies, mobilising resources including concessional finance etc. 4. Fighting Corruption. IPEF is committed to promote fair competition by enhancing and enforcing effective and robust tax regime,anti money laundering , elimination of both corporate corruption and  criminalization of bribery regime along with promoting exchange of tax information.

How far the US led IPEF grouping could strengthen economic partnership to enhance resilience, growth,sustainability , inclusiveness and fairness in the Indo Pacific region? It attempt to strike a balance between ambition and inclusivity in response to the views of allies and parties in the IPEF region. That continues to remain as a great challenge.Although India had theoretically agreed to all other 3 pillars except the trade pillar, she is also keenly observing  whether any conditionalities may be imposed with regards to environment, digital governance, cyber security etc. According to the study conducted by Global Trade Research Initiative (GTRI) Three areas on which the 14 members had arrived at a substantial understanding related to environment, labour standards and trade restrictions . Supply Chain Resilience matters are being simultaneously negotiated by IPEF. It goes beyond the focus on tariffs and market access.Supply Chain Resilience Agreement (SCRA)envisages formation of Supply chain Council and Supply Chain Council Networks through diversification of sources, infrastructure, enhanced logistics, connectivity ,workforce development, Research and development and trade facilitation. Labour Rights Advisory Board (LRAB) comprising of Government, workers, and employer representatives is expected to enhance supply chain resilience. However  traditionally Indian Government was opposed to make any commitment on non trade issues like environment and labour standards.Quiet  Surprisingly  India  and USA recently agreed to negotiate labour Rights as they found that there is no harm in the dialogue.In any case India must ensure that  new commitments do not restrict its policy space or ability to generate tax revenues. Similarly India's decision to stay out of the trade pillar can be justified especially in times of scarcity and price rise of essential commodities like food grains or onions. India is also envisaging a comprehensive legal framework to regulate the overall internet ecosystem, cyber security etc. Unfortunately US expressed concerns about the possibility of India demanding data localisation or the storage and processing of Indian data in servers located in India and not in USA. 

IPEF arrangement in a way is superior because unlike other free trade agreements (FTA)it is not a take it or  leave out arrangement as in  multilateral trade agreement. Interestingly India's trade in the Asia Pacific region has been increasing rapidly.Comprehensive economic partnership with Japan,South Korea, Singapore, Thailand and FTA with ASEAN countries were mainly responsible for enabling such outcomes .India  coupled with its strategic Quad partners and like  minded countries in the  Indo Pacific region aims at achieving a rule based multipolar regional order and prevent emergence of any single power in  the region or water ways.Moreover the IPEF group  insists on restricting members from trading in critical materials or technology to China.This will be a really challenging task especially when members of ASEAN countries, have large share of their trade with China.  Moreover while countries of South China sea and India are having direct territorial disputes with China and others are having dispute in economic interests as well.However IPEF group have got well defined charter which emphasises and enables collaborative patronizing growth among members making it sustainable in the long run. IPEF,QUAD and AUKUS collectively could make some headway in achieving relatively free and fair Indo Pacific region with more meaningful check on Chinese undesirable clout in the Indo Pacific.Moreover USA should be vigilant enough to make appropriate corrective changes in their policy mix to counter not only the declining dominance of their economy and currency but also  to address emerging challenges unfolding in the Geo political, economic, digital and financial sectors of the world today.