Know about Biden’s new Indo-Pacific Economic Framework & how it will benefit India

US President Joe Biden was caught in a trade quandary in Asia because he couldn't simply rejoin the Trans-Pacific Partnership, which his predecessor had pulled the US out of in 2017. Many linked trade agreements had become politically toxic for US voters, who connected them with job losses, regardless of their content. However, the US President came up with an alternative.

The US announced that will join the new Indo-Pacific Economic Framework during Biden's visit to Tokyo for the QUAD Summit. It is best recognised by its initials, IPEF, in the tradition of trade agreements. Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam are among the 13 members of the framework, which together account for 40% of world GDP.

What is IPEF?

IPEF is focused on furthering Indo-Pacific economic integration, defining norms and rules, particularly in new sectors like the digital economy, and ensuring secure and resilient supply chains, according to White House national security adviser Jake Sullivan. The notion that new global trade regulations are required stems from more than just dissatisfaction among US voters. It's an acknowledgement of how the pandemic impacted the entire supply chain, closing factories, delaying cargo ships, blocking ports, and driving up commodity prices worldwide.

These flaws were highlighted in late February, when Russian President Vladimir Putin authorised the invasion of Ukraine, resulting in dangerously high increases in food and energy prices around the world. The US trade representative and the Commerce Department will work together to negotiate with partner countries around four pillars, or subjects. Talks on the "fair" trade pillar will be handled by the US trade representative.

This would almost certainly include attempts to protect US employees against job losses, as China's entry into the World Trade Organization in 2001 resulted in mass layoffs in the manufacturing sector. These job losses devastated areas of the US, enraged citizens, and aided Donald Trump's political rise, as he pulled the US out of the Trans-Pacific Partnership nearly as soon as he took office in 2017.

Negotiations on the other three pillars - supply chain resiliency, infrastructure and climate change, and tax and anti-corruption - will be overseen by the Commerce Department. Negotiations are projected to last 12 to 18 months once they begin, according to an administration official, which is an aggressive timeframe for a global trade deal. To outline plans, the person requested anonymity and stressed that creating consensus within the United States would be crucial.

How will IPEF benefit India?

Following the revision of the US-led Indo-Pacific Economic Framework (IPEF), Prime Minister Narendra Modi attended the ceremonial launch in Tokyo on May 23 with US President Joe Biden. India joined a group of 13 countries, including Brunei, Japan, Australia, Indonesia, South Korea, Malaysia, New Zealand, Vietnam, Thailand, Singapore, and the Philippines, which together account for about 40% of global GDP.

PM Modi emphasised at the launch that the focus for robust supply chains should be on "Trust, Transparency, and Timeliness", expressing India's commitment to collaborating with all Indo-Pacific countries to create an IPEF that is both inclusive and flexible. The Indian Prime Minister further said at the launch that India has historically been at the centre of trade flows in the Indo-Pacific region, and the IPEF is a proclamation of a collective desire to make the area an engine of world economic growth.

PM Modi urged for imaginative and common solutions to the Indo-Pacific region's economic difficulties, noting that Lothal, Gujarat, is home to the world's oldest commercial port. India is dedicated to a free, open, and inclusive Indo-Pacific region, as well as increased economic engagement among partners, for continuing peace, growth, and prosperity. Moreover, India is eager to work with partner countries under the IPEF to improve regional economic connections, enhance trade and investment, and integrate the area.

While launching the framework, the US President stated that combating inflation is a top economic priority and that this framework will help lower costs by making its supply chains more resilient in the long run. According to President Biden, IPEF will accomplish this by establishing an early warning system, mapping critical mineral supply chains, improving traceability in key sectors, and coordinating diversification efforts.

Aside from that, IPEF is concerned with clean energy, decarbonization, and infrastructure. Regarding India's membership in IPEF, a spokesperson for the US State Department previously stated, “India’s clean energy transition is in the interests of the entire world, and we need to support India in achieving the ambitious clean energy targets that Prime Minister Modi announced at COP-26."

"We are already working with India and other partners to mobilise the necessary financing and technology to achieve these goals," Biden said highlighting that IPEF will stress on clean energy and decarbonization.

(Image: AP)