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EDITORIAL ANALYSIS : This strategic-economic bloc will only tighten the leash


Source: The Hindu


  • Prelims: Current events of international importance(ASEAN, RCEP, IPEF etc)
  • Mains GS Paper II: Bilateral, regional and global grouping involving India, Significance of Indo-Pacific for India etc



  • In November 2019, India walked out from the Regional Comprehensive Economic Partnership (RCEP) involving China, Japan, South Korea, Australia, New Zealand and the ASEAN
    • India along with many of the same countries is getting into the S.-driven Indo-Pacific Economic Framework for Prosperity (IPEF).




Indo-Pacific Economic Framework (IPEF)

  • It was announced in 2021 to set regional standards for cooperation, and includes the Association of Southeast Asian Nations (ASEAN) member states.
  • IPEF is created to encourage regional economies to “decouple” from the Chinese market by leading them to alternative supply chains.
  • The IPEF will not include market access commitments such as lowering tariff barriers, as the agreement is “more of an Administrative arrangement”.
  • Viewed as the US’ ambitions to expand ties with key Indo-Pacific economies by building a supply chain that excludes China.
  • It has four “pillars” of work:
    • Fair and resilient trade.
    • Supply chain resilience.
    • Infrastructure, clean energy, and decarbonization.
    • Tax and anti-corruption.

How is trade deal with the US beneficial over China:

  • Cheap Chinese goods flooding Indian markets.
  • The economic issues with the U.S. have been no less problematic, e.g. about agriculture, intellectual property, labor and environment standards, and the digital economy.


Common Issues in trade deals:

  • Trade deals used to be mostly about tariffs.
  • Intellectual property
  • services
  • investment
  • domestic regulation
  • digital
  • labor
  • environmental standards


Benefits of IPEF:

  • It completely removes the tariff element of typical trade deals, and is entirely about all other areas.
  • The U.S. has also found a tariffs-free trade deal, presented as a new kind of win-win economic partnership.
    • It is a good way to get around the resistance of many countries, including India, to free trade agreements.


Issues with IPEF:

  • It knits vaguely-worded webs that are not obvious in their actual economic impact, other than to U.S. strategists who created the proposals.
  • Early assessment by many experts shows that the IPEF would result in a complete stranglehold over the economic systems of the participating countries.
    • It is to the complete advantage of the U.S.
  • The IPEF is about developing a strategic-economic bloc — an integrated economic system centered on the U.S., and, as importantly, excluding China.
  • The systemic integration caused by the IPEF will leave little leeway for domestic policies to help a country’s own industrialisation.
    • For example; Through tight supply chain integration that many elements of the IPEF contribute to).


IPEF and its impact On India:

  • India has joined the other three pillars but not trade.
  • IPEF contributes to developing hard new economic architectures and structures that are not tariff-based.
  • It could have an even stronger effect on economic and trade flows than tariffs.


Way Forward

  • Developing a strategic partnership with the U.S. is India’s top foreign policy priority.
    • But a strategic partnership with the U.S. need not come at the cost of economic dependency on it.
  • In the digital arena it is said that ‘code is law, and architecture is policy’.
  • In an increasingly digitalising world, hard-wiring supply chains and giving up policy spaces in key areas such as digital, labor and environment, and export constraints.
    • It would take the form of a gilded techno-legal cage of irreversible economic dependency.
  • The IPEF and implications in agriculture, in terms of:
    • genetically modified seeds and food
    • surrendering policy space for regulating Big Tech
    • compromising a comparative advantage in manufacturing because of unfair labour and environment standards.
  • It will also seriously affect India’s ability to create a vibrant domestic ecosystem in emerging areas such as a digital economy and green products.



Indian Diaspora has an important role to play in South East Asian countries economy and society.Appraise the role of Indian Diaspora in South-East Asia in this context.(UPSC 2017) (200 WORDS, 10 MARKS)