India has joined the US-led economic initiative Indo-Pacific Economic Framework, which is part of US efforts to put some economic heft into its Indo-Pacific presence that has been on the decline after its decision to quit the Trans Pacific Free Trade Agreement in 2017.
The IPEF seeks to formulate a common set of rules and standards for member countries around the four pillars of connectivity and digital trade; resilient supply chains; clean energy; and corruption-free fairtrade. India agreed to be amongst the first 13 members of the grouping, which also includes Australia, Brunei, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
It comes five years after the US withdrew from the Trans-Pacific Partnership, a trade deal signed by 12 countries in Asia-Pacific, North America and South America.
Since then the US has been largely absent in the region and is engaged in a trade war with China. The IPEF is seen as a means to counter China in the region.
It is not a free trade agreement. No market access or tariff reductions have been outlined, although it can pave the way to trade deals. It's a forum for participating countries to solidify their relationships and engage in crucial economic and trade matters that concern the region, such as building resilient supply chains battered by the pandemic.
Among the four main tenets of the framework, the Connected economy includes higher standards and rules for digital trade, such as cross-border data flows while a resilient economy aims for resilient supply chains that will withstand unexpected disruptions like the pandemic.
Clean economy would target green energy commitments and projects while a fair economy bats for implementing fair trade, including rules targeting corruption and effective taxation.
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