INDO-PACIFIC ECONOMIC FRAMEWORK

India Joins IPEF Led By US To Counter China

    India along with 12 countries joins a new economic initiative so called Indo-Pacific Economic Framework (IPEF) led by the USA in Tokyo, Japan. The framework seeks an open, inclusive, interconnected and secure Indo-Pacific and aims to counter China's expansion in the region. The countries include all those falling in the Indo Pacific Region including Indonesia, Australia, Brunei, Malaysia, Thailand, Japan, Republic of Korea, New Zealand, the Philippines, Singapore and Vietnam. The IPEF was rolled out a day ahead of the Quad summit. 

    The grouping, which includes seven out of 10 members of the Association of South East Asian Nations (ASEAN), all four Quad countries, and New Zealand, represents about 40% of global GDP. The negotiations for the IPEF are expected to center around four main pillars, including trade, supply chain resiliency, clean energy and decarbonisation, and taxes and anti-corruption measures. The IPEF seeks to frame rules and standards in digital economy, supply chain management, clean energy and fair economy to deepen economic engagement in the region. The IPEF seeks to strengthen economic partnership amongst participating countries with the objective of enhancing resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in the Indo-Pacific region besides cooperating on anti-corruption efforts. The IPEF intends to offer partner countries an opportunity to counter China’s rising commercial presence in the Asia-Pacific region. China criticised the framework, calling it an attempt to “create a closed club”. But US National Security Advisor Jake Sullivan said the framework is “by design and definition an open platform”.

    For India, which is not part of any region-wide trade agreement, the IPEF opens the door for economic reengagement with Asia. IPEF offers a very different setting than the Regional Comprehensive Economic Partnership (RCEP) that binds 15 Asian nations in a trade liberalisation agreement. India had walked out of the RCEP, just before it was finalised in November 2019, citing the economic threat from China as the main reason. While India might have reservations, Delhi has been right in deciding to join the consultations on IPEF. 

    The IPEF is also seen as a means by which the US is trying to regain credibility in the region after former President Donald Trump pulled out of the Trans Pacific Partnership TPP). Since then, there has been concern over the absence of a credible US economic and trade strategy to counter China’s economic influence in the region. China is an influential member of the TPP, and has sought membership of its successor agreement Comprehensive and Progressive Agreement on Trans Pacific Partnership. The Biden Administration is projecting IPEF as the new US vehicle for re-engagement with East Asia and South East Asia. The political calculation of the United States government would certainly include the fact that it would be easier to sell the IPEF to members of the US Congress due to bipartisan concern over strategic competition from China. The Biden administration had already faced criticism from lawmakers and business chambers for not being sufficiently ambitious in carving out new trade agreements.

    One of the main objectives of Biden’s visit is to demonstrate that the US can simultaneously handle the Russian aggression in Europe and the Chinese challenge in Asia. While the Russian invasion of Ukraine is an urgent priority, the Biden Administration is insisting that China remains the more demanding and longer-term challenge for the US. In a counter-intuitive turn, the Ukraine crisis has improved US prospects in the Indo-Pacific. Xi Jinping’s all-out support for Vladimir Putin has not panned out well and has helped Washington rustle up support for its Indo-Pacific initiatives.

    IPEF is continuing to identify additional areas of cooperation based on consultations among partners to further shared interests, with a view to advancing regional economic connectivity and integration. It looks forward to jointly creating conducive environments to boost flows of commerce, trade, and investments amongst economies, and to enhancing standards and access to opportunities workers, companies, and peoples in combined markets. 

    If the IPEF is about recasting the techno-economic relations of Asia and the AUKUS is a techno-military alliance, the Quad has become the vehicle to shape the techno-politics of the Indo-Pacific. The Tokyo summit will review the range of decisions taken at last year’s Washington conclave on advancing technological collaboration in a wide range of areas. These include vaccine production, clean energy, biotechnology, cybersecurity, and outer space to name a few. While the ambition is impressive, the Quad needs to demonstrate effective implementation and tangible benefits to the Indo-Pacific states. IPEF will strengthen ties in this critical region to define the coming decades for technological innovation and the global economy. Framework will create a stronger, fairer, more resilient economy for families, workers, and businesses in the Indo-Pacific region.