Hindu Editorial Analysis : 5-November-2024
The Indo-Pacific Economic Framework for Prosperity (IPEF) is a multilateral initiative aimed at strengthening economic cooperation and ensuring sustainable growth in the Indo-Pacific region. Recently, India and other IPEF nations have welcomed the upcoming agreements under this framework, such as the Clean Economy Agreement, Fair Economy Agreement, and the Overarching Agreement on IPEF. These agreements offer significant opportunities to deepen economic ties and deliver tangible benefits to member countries.
About IPEF
Launched in 2022 in Tokyo, Japan, the IPEF includes 14 member nations: Australia, Brunei, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Vietnam, and the USA. Collectively, these countries represent 40% of global GDP and 28% of global trade. The goal of IPEF is to foster economic growth, stability, and prosperity in the region through enhanced cooperation among its members.
Key Pillars of IPEF
- Trade (Pillar I)
- Focuses on improving trade relations and reducing barriers.
- Aims to create a fair and inclusive trade environment.
- Supply Chains (Pillar II)
- Strengthens supply chain resilience and reduces dependencies on single sources.
- Ensures secure and sustainable supply networks, especially after global disruptions.
- Clean Economy (Pillar III)
- Promotes clean energy and sustainable development.
- Aligns with global efforts to tackle climate change and move toward a greener economy.
- Fair Economy (Pillar IV)
- Emphasizes fair economic practices, including anti-corruption measures and promoting labor rights.
Strategic Importance of IPEF
- Counterbalancing China’s Influence: IPEF serves as a strategic counterweight to China’s growing influence in the Indo-Pacific. By strengthening economic ties and promoting fair trade practices, it aims to create a more balanced and inclusive economic environment.
- Strengthening Economic Ties: The framework fosters closer integration among major Indo-Pacific economies, benefiting the region’s economic growth.
- Alternative to Traditional Trade Blocs: Unlike traditional agreements like the RCEP, IPEF offers a more flexible and non-traditional economic framework.
- Addressing Economic Challenges: Agreements under IPEF, such as the Clean Economy and Fair Economy agreements, tackle critical issues such as sustainable growth, fair trade, and economic governance.
- Technological and Infrastructure Cooperation: IPEF focuses on promoting digital trade, clean energy, and infrastructure development, encouraging innovation and sustainability in the region.
India’s Role in IPEF
India plays a central role in IPEF, contributing to various pillars of the framework. Here are some key ways India adds value:
- Economic Integration: India’s merchandise exports to the U.S. have grown significantly, indicating a strong potential for further economic cooperation under IPEF.
- Balancing Regional Influence: India’s participation strengthens the framework’s capacity to counter China’s dominance, offering a stable and reliable partner for smaller economies in the region.
- Supply Chain Resilience: India’s manufacturing capabilities, including initiatives like “Make in India” and “Production Linked Incentive (PLI)”, contribute to building resilient supply chains.
- Leadership in Clean Energy: India’s leadership in renewable energy, particularly solar power, supports IPEF’s Clean Economy pillar.
- Promoting Digital Collaboration: India’s booming digital economy and expertise in IT help foster technological cooperation across the region.
- Strengthening Strategic Alliances: India’s role in IPEF deepens ties with key regional players such as ASEAN, the U.S., Japan, and Australia.
Challenges in Implementing IPEF
Despite its potential, the IPEF faces several challenges in its implementation:
- Diverse Economic Interests: The member countries have varying economic priorities, which makes aligning common goals difficult.
- Lack of Market Access Commitments: Unlike traditional trade agreements, IPEF does not include market access commitments, limiting its scope for reducing trade barriers.
- Political and Legislative Hurdles: In the U.S., Congress has raised concerns about the framework’s enforceability, as the administration’s approach to foreign commerce may face legal challenges.
- Implementation and Enforcement: The framework lacks binding dispute resolution mechanisms, making it difficult to enforce agreements like the Clean Economy and Fair Economy agreements.
- Data Localization and Privacy: Issues related to data privacy, localization, and transparency complicate negotiations and may slow progress on digital trade.
- Geopolitical Tensions: IPEF’s focus on countering China’s influence adds a geopolitical dimension that could complicate negotiations, as countries may have competing regional interests.
Why In News
Recently, India, along with other IPEF nations, welcomed the upcoming entry into force of the Clean Economy Agreement, Fair Economy Agreement, and the Overarching Agreement on IPEF. These agreements are expected to provide significant opportunities for deeper economic cooperation and the delivery of concrete benefits through continued collaboration. This collective commitment underscores the shared vision among member countries to create a more sustainable, fair, and prosperous economic environment in the Indo-Pacific region.
MCQs about The Indo-Pacific Economic Framework for Prosperity (IPEF)
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What was the primary goal of launching the Indo-Pacific Economic Framework for Prosperity (IPEF) in 2022?
A. To promote military cooperation in the Indo-Pacific region
B. To reduce the influence of China in the Indo-Pacific region
C. To strengthen economic engagement and cooperation among member countries
D. To replace the Regional Comprehensive Economic Partnership (RCEP)
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Which of the following is NOT one of the four key pillars of the Indo-Pacific Economic Framework for Prosperity (IPEF)?
A. Trade
B. Supply Chains
C. Clean Economy
D. Military Cooperation
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How does India contribute to the IPEF’s Clean Economy pillar?
A. By promoting fossil fuel usage to boost economic growth
B. Through its leadership in renewable energy, especially solar power
C. By investing heavily in coal energy projects
D. By encouraging deforestation to create space for urbanization
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What is one of the challenges facing the implementation of the Indo-Pacific Economic Framework for Prosperity (IPEF)?
A. Overabundance of market access commitments
B. The lack of binding dispute resolution mechanisms
C. Complete alignment of economic goals among member countries
D. Excessive involvement of military powers
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