Recently, the US President Joe Biden has established the Indo-Pacific Economic Framework for Prosperity (IPEF) which is said to be a new version of a “pivot to Asia”.
- Touted as a substantial step by the U.S. as part of its decade-old “pivot to Asia”, the framework is a declaration of a collective desire to make the Indo-Pacific region an engine of global economic growth.
- The IPEF was joined by India, Japan and Australia, and going beyond the Quad, also by 10 ASEAN countries countries, South Korea and New Zealand.
- The IPEF framework has four pillars:
- Countering China: China not being a member gives the group a distinct geopolitical flavour since all its members share worries about China’s muscular nationalism and expansionist ambitions.
- Economic Cooperation & Integration: It will produce many immediate benefits on the economic front in terms of cooperation in investment and technology development for clean energy.
- Opportunity for India: India’s joining of IPEF is a strong statement of commitment to Indo-Pacific goals, and to broadening regional economic cooperation, particularly after it walked out of the 15-nation RCEP.
- Enforcement of labour rights have often been rejected by the World Trade Organization (WTO) members in the trade deals on several occasions. They argue that “internationally recognized core labour standards” of the International Labour Organization (ILO) should be used to deal with issues pertaining to labour rights.
- The environment and climate change have been duly included in the list of the IPEF. In this connection, the United Nations Framework Convention on Climate Change (UNFCCC) has cautioned that measures taken by the countries to combat climate change should not be used to discriminate or cause disguised restriction on international trade”
- S. officials have made it clear that IPEF is not a Free Trade Agreement; nor will it discuss tariff reductions or increasing market access, raising questions about its utility.
- Tax provisions are another element of the IPEF that could pose problems. There is a tendency to take taxation as a sovereign function and therefore not subject it to negotiation.
- On this issue of data localisation, based on the inputs from the Draft National E-Commerce Policy, the Government of India aspires for restrictions on cross-border data flows. This goes against “high-standard rules on cross-border data flows and data localization”.
- The standards on cross-border data flows, data localisations and data portability has been included. This can have ramifications on the future of the digital economy because there are contrasting views on the control over data, which is the driver of the digital economy.
- Considering the complex trade negotiation process, there is a need for an empowered trade negotiator to consult with concerned ministries and report to the Prime Minister and key ministers with an assessment of pros and cons.
- The NITI Aayog should be mobilised to conduct broad consultations and elicit the opinions of stakeholders, including state governments.
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