- 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).
INSIGHTS ON THE ISSUE
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
- domestic regulation
- 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.
- 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.
QUESTION FOR PRACTICE
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)