IPEF’S TRADE PILLAR

TAG: GS 2: INTERNATIONAL RELATIONS

THE CONTEXT:  Indian officials are certain that the benefits of participating in the trade negotiations in IPEF are insignificant, as there are no clarity regarding the tangible benefits vis a vis the Trade Pillar.

 EXPLANATION:

• IPEF was launched jointly by the US and other partner countries of the Indo-Pacific region on May 23, 2022, in Tokyo and is structured around four key negotiating subjects or pillars.
  1. Relating to trade,
  2. supply chains,
  3. clean economy and
  4. fair economy (issues like tax and anti-corruption).
• IPEF does not deal with market access.
• The trade pillar is one of the most crucial parts of IPEF that seeks commitment on sensitive areas as agriculture, digital trade and labour and could require changes in domestic regulation.
• However, in a setback to the Washington-driven IPEF that seeks to counter China’s dominance in the region, an agreement on the trade pillar was not reached in the last round in San Francisco.
• On pillar 2,3,4(supply chains, clean economy, fair economy), there was a positive intent from all member countries because supply chain resilience and green energy transition is a common endeavor.

Benefits are not clear:

• There are questions on the trade pillar. Benefits are not clear and that is probably why the trade pillar has not been closed. Because members are finding it difficult to take commitments without any clear tangible benefit.
• The official said, seven rounds were scheduled to take place to complete talks on all four pillars.
• Trade pillar is a significant and aspiration pillar and has as many as 10 chapters.
• There has been progress, but members could not announce the closure of the trade pillar.

ABOUT IPEF AGREEMENT:

• This framework will advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness for our economies.
• Through this initiative, the IPEF partners aim to contribute to cooperation, stability, prosperity, development, and peace within the region.
• This framework will offer tangible benefits that fuel economic activity and investment, promote sustainable and inclusive economic growth, and benefit workers and consumers across the region.
• The 14 IPEF partners represent 40 percent of global GDP and 28 percent of global goods and services trade.
  • Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, the US and Vietnam are members of the IPEF .
• The IPEF agreement refers to avoiding restrictions on food and agriculture imports or exports.

India: India has been extensively using such restrictions to arrest food prices.

• • India has banned wheat exports, imposed restrictions on rice and sugar exports in the run up to the general elections next year.
  • For instance, phase down of coal power. It was something that developed countries wanted but it is a sensitivity for India, and it was finally dropped.
  • Co-founder global trade research initiative (GTRI), said that India’s decision to stay out of the Trade pillar, which focuses on digital trade, labor, and other sectors, aligns with its broader strategy of retaining regulatory autonomy.
  • The standards under discussion, primarily aligned with Organisation for Economic Co-operation and Development (OECD) economies, pose a challenge for India in terms of domestic rule alignment.

Source: Benefits of joining IPEF’s trade pillar unclear: Official | Business News – The Indian Express