In November 2019, India decided to withdraw from the Regional Comprehensive Economic Partnership (RCEP), a trade pact involving China, Japan, South Korea, Australia, New Zealand, and the 10-state Association of Southeast Asian Nations (ASEAN). However, in 2023, India has joined the U.S.-driven Indo-Pacific Economic Framework for Prosperity (IPEF), along with several RCEP countries, replacing China with the United States. This essay explores the implications and concerns surrounding India’s decision to participate in the IPEF, while abstaining from the trade aspect.
The Indo-Pacific Economic Framework for Prosperity (IPEF):
The IPEF, launched by the United States in May 2022, includes Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Its objective is to foster cooperation, stability, prosperity, development, and peace within the Indo-Pacific region. The 14 IPEF partners collectively represent 40 percent of global GDP and 28 percent of global goods and services trade. The framework focuses on four pillars: Trade, Supply Chains, Clean Energy, Decarbonization, and Infrastructure, as well as Tax and Anti-Corruption measures.
Implications of India joining the IPEF:
- The Contrast between RCEP and IPEF: By shifting from the RCEP to the IPEF, India demonstrates a clear departure from China-centric agreements toward a closer alignment with the United States. This shift reflects India’s foreign policy priority of developing a strategic partnership with the U.S. However, it is important for India to ensure that this partnership does not lead to economic dependency on the United States.
- Economic Concerns: India faces potential economic challenges within the IPEF due to issues such as agriculture, intellectual property, labor and environmental standards, and the digital economy. Disagreements in these areas could create future difficulties for India, jeopardizing its economic interests and policy autonomy.
- Agricultural Implications: The IPEF already shows implications in agriculture, particularly regarding genetically modified seeds and food. India must be cautious to protect its agricultural sector and the livelihoods of farmers, ensuring that any agreements do not compromise food security or local agricultural practices.
- Threats to Policy Space and Comparative Advantage: Participating in the IPEF may require India to surrender policy space for regulating Big Tech companies. This could potentially undermine India’s ability to protect consumer rights, data privacy, and market competition. Additionally, unfair labor and environmental standards may affect India’s comparative advantage in manufacturing, potentially impeding its domestic manufacturing capabilities.
- Impact on Emerging Sectors: India’s ability to foster a vibrant domestic ecosystem in emerging areas, such as the digital economy and green products, may be hampered within the IPEF. Overreliance on the United States could limit India’s autonomy in shaping policies, standards, and regulations in these domains, hindering its potential for growth and innovation.
- Stranglehold on Economic Systems: While the IPEF aims to strengthen the India-US partnership, there is a concern that the framework, driven by the United States, could result in a stranglehold over the economic systems of participating countries, including India. This potential dependency raises questions about the long-term economic and strategic implications for India and other nations involved.
Important Points:
- India’s shift from RCEP to IPEF: 🔄
- IPEF’s objective: cooperation, stability, prosperity, development, and peace within the Indo-Pacific region: 🤝
- IPEF partners represent 40% of global GDP and 28% of global goods and services trade: 💼
- Four pillars of the IPEF:
- Trade: 🌍
- Supply Chains: 🚚
- Clean Energy, Decarbonization, and Infrastructure: ⚡
- Tax and Anti-Corruption: 💰
- India’s fear of a possible trap and decision to join the other three pillars but not trade: ❗
- Developing a strategic partnership with the U.S. as India’s top foreign policy priority: 🇮🇳🤝🇺🇸
- Economic concerns with the U.S.: agriculture, intellectual property, labor and environmental standards, digital economy: 🌾
- Implications in agriculture, genetically modified seeds, and food: 🌾
- Surrendering policy space for regulating Big Tech companies: 📱
- Compromising comparative advantage in manufacturing due to unfair standards: 🏭
- Impact on India’s ability to create a vibrant domestic ecosystem in digital economy and green products: 💻
- Concerns of a stranglehold over economic systems of participating countries, including India: 🔐
Why In News
In November 2019, India withdrew from the Regional Comprehensive Economic Partnership (RCEP), a trade pact involving China, Japan, South Korea, Australia, New Zealand, and the Association of Southeast Asian Nations (ASEAN). However, in 2023, India, along with several RCEP countries (with China replaced by the United States), is embracing the U.S.-driven Indo-Pacific Economic Framework for Prosperity (IPEF).
MCQs about India’s Shift from RCEP to IPEF
-
India withdrew from which trade pact in November 2019?
A. RCEP (Regional Comprehensive Economic Partnership)
B. NAFTA (North American Free Trade Agreement)
C. TPP (Trans-Pacific Partnership)
D. EU (European Union)
-
Which country replaced China in the U.S.-driven Indo-Pacific Economic Framework for Prosperity (IPEF)?
A. Japan
B. South Korea
C. Australia
D. United States
-
What is the primary objective of the Indo-Pacific Economic Framework for Prosperity (IPEF)?
A. Enhancing military cooperation within the Indo-Pacific region
B. Promoting cultural exchanges and tourism
C. Fostering cooperation, stability, prosperity, development, and peace
D. Establishing a unified currency among the participating countries
-
Why did India decide to abstain from the trade pillar of the IPEF?
A. India already has well-established trade agreements with the United States
B. India is concerned about potential economic dependency on the United States
C. India’s trade policies are more aligned with China than the United States
D. India believes that the trade pillar lacks comprehensive provisions
Boost up your confidence by appearing our Weekly Current Affairs Multiple Choice Questions
