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Indo-Pacific Economic Framework

  • Published
    21st May, 2022
Context

The Biden Administration is projecting Indo-Pacific Economic Framework (IPEF) as the new US vehicle for re-engagement with East Asia and South East Asia.

About

Indo-pacific economic framework (IPEF):

  • The Indo-Pacific Economic Framework (IPEF) is designed as a tool to bolster U.S. cooperation with its Asian partners.
  • The new partnership aims to
    • promote and facilitate high-standards trade
    • govern the digital economy
    • improve supply-chain resiliency and security
    • catalyze investment in transparent
    • high-standards infrastructure
    • build digital connectivity
    • decarbonization
  • The arrangement also includes measures to establish sustainable food systems and science-based agricultural regulation, as well as good regulatory practices and trade facilitation.
  • The United States will pursue five objectives in the indo-pacific each in concert with our allies and partners, as well as with regional institutions.
  • advance a free and open indo-pacific
  • build connections within and beyond the region
  • drive regional prosperity
  • bolster indo-pacific security
  • build regional resilience to transnational threats
  • The IPEF will not include market access commitments such as lowering tariff barriers, as the agreement is “more of an administrative arrangement”, and congressional approval, which is a must for trade agreements, is not mandatory for this.

What is the need?

  • During the American absence, china has gained ground in terms of regional economic integration.
  • Last year it applied to join the comprehensive and progressive agreement for trans-pacific partnership (CPTPP), the current 11-member version of the TPP.
  • China is also a member of the world's largest trade bloc, the 15-member regional comprehensive economic partnership (RCEP).

How is the IPEF different from CPTPP and RCEP?

  • Unlike the CPTPP and RCEP, the two biggest trade blocs in Asia, the new framework will not lower tariffs.
  • Instead, the U.S. is seeking cooperation on strategic pillars, such as supply chain resilience and the digital economy.
  • The IPEF is a more tailor-made mechanism that seeks the benefits of trade partnerships while insulating Americans from the downsides of trade liberalization.
  • The establishment of the IPEF is also likely to look different from traditional free trade agreements, which often take years of negotiation and require ratification by participating countries.
  • Members:
  • Eleven countries belong to the CPTPP: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
  • RCEP encompasses the 10 countries of ASEAN, China, Japan, South Korea, Australia and New Zealand.
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