Eye on China, US Launches Unconventional Trade Agreement Ahead of Quad Summit; India Among 12 Initia

It is not a “traditional trade deal”, but a “new model of economic arrangement that will set the terms and rules of the road for trade and technology and supply chains for the 21st century”. This is how US National Security Adviser Jake Sullivan described the Indo-Pacific Economic Framework (IPEF).

The IPEF was launched in Tokyo on Monday in the presence of Japanese Prime Minister Fumio Kishida. The launch was also attended by Prime Minister Narendra Modi as India is among 12 initial partners of the IPEF.

The other nations are Australia, Brunei, Indonesia, Japan, South Korea, Malaysia, New Zealand, The Philippines, Singapore, Thailand, and Vietnam. Together, these 12 countries represent 40% of the world GDP.

Foreign Secretary Vinay Mohan Kwatra had said in a briefing last week that India’s participation was under discussion.

“We all do realise that in so far as the Indo-Pacific region is concerned, the economic segment of it is a very important segment, both in terms of harnessing the opportunities of economic partnership that are available in the region, whether they are in various dimensions of economic areas, or they are related to capacity building,” he said.

“It is going to be a wide-ranging and comprehensive set of countries from across the region, a mix of different kinds of economies,” said Jake Sullivan.

The aim is to cover supply chains, the digital economy, clean energy transformation, investments in infrastructure as well as worker standards under this agreement without having a traditional trade deal that may find resistance in the US over public concerns of job losses.

US Trade representative Katherine Tai had referred to trade deals as a very 20th century tool while discussions were underway since last year on IPEF.

The announcement of the unveiling of IPEF hasn’t gone down well with China. Global Times said, “…embedded in a deep political and strategic purpose, the IPEF is a geo-strategic framework rather than an economic framework.” It has also been referred to as a closed club in China.

Jake Sullivan rebutted this when he said, “It’s just flatly untrue to call IPEF closed. It is by design and definition an open platform. And we do expect, in addition to the countries that join for the launch, others will come along in the months and years ahead. That being said, the breadth of participation tomorrow was such that it will very much show that it’s anything but a closed club. It is a very wide-ranging membership.”