Biden announces Indo-Pacific trade initiative, negotiations will begin soon
The Prime Minister of India reaffirmed India’s readiness to participate in the United States’ new initiative for the region, joining U.S. Vice President Joe Biden and Japanese Prime Minister Fumio Kishida in Tokyo on May 23 to unveil the Indo-Pacific Economic Framework for Prosperity (IPEF). Trade, supply chain resiliency, clean energy and decarbonization, as well as taxes and anti-corruption measures, are expected to be at the centre of IPEF talks, which begin on May 24. Around 40% of global GDP comes from this group, which includes seven out of ten ASEAN members, all four Quad countries, and New Zealand.
“Indo-Pacific Economic Framework will be created in collaboration with [other IPEF countries], Mr. Modi said during the launch of the initiative, which comes three years after India decided to walk away from 15-nation RCEP (Regional Comprehensive Economic Partnership).
“Trust, transparency, and timeliness are the three pillars that underpin resilient supply chains, and I am sure that this framework will strengthen these pillars and bring prosperity, peace, and prosperity to the Indo-Pacific region,” added Mr. Modi.
IPEF will not be a free trade agreement nor should countries expect to reduce tariffs or increase market access, according to U.S. officials. Therefore, the IPEF would not seek to replace the 11-nation CPTPP (Trans-Pacific Partnership) that the U.S. left, nor the RCEP, of which China and all other IPEF countries (minus the U.S.) are members. Myanmar, Cambodia, and Laos are not members of the IPEF, despite their close ties to China.
In a briefing to the press, U.S. Trade Representative Gina Raimondo said that the U.S. will work to attract businesses investing in China to IPEF. Especially as companies are increasingly looking for alternatives to China, I believe the Indo-Pacific partners will prove to be more reliable for U.S. businesses.