29th May 2023,Mumbai: In a significant development, 14 nations participating in the Indo-Pacific Economic Framework (IPEF) have successfully reached an agreement aimed at enhancing supply chain resilience and diversification. The agreement focuses on information-sharing and coordinated crisis response, with the objective of reducing dependence on China and preparing for future supply chain disruptions.During the second ministerial meeting held in Detroit, the participating nations, including the United States and India, established key components such as the IPEF supply chain council, supply chain crisis response network, and labor rights advisory network. These initiatives aim to address supply chain challenges and ensure effective crisis management. Additionally, discussions were held on the trade, clean economy, and fair economy pillars of the framework.
Notably, the clean economy framework gained momentum as interested IPEF members decided to launch a regional hydrogen project. This project aligns with the goal of promoting sustainable and clean energy technologies in the region.While India actively participates in three of the four pillars of IPEF, it currently observes the commerce pillar. Piyush Goyal, the minister of industry and commerce, represented India virtually at the min’sterial meeting, emphasizing India’s commitment to building resilient supply chains and fostering a clean and fair economy for regional growth.
Gina Raimondo, the US Commerce Secretary, expressed satisfaction with the progress made by IPEF, announcing that discussions on a groundbreaking supply chain agreement were nearing completion. This agreement, bringing together 14 partners from the Indo-Pacific region, marks a significant milestone in international supply chain collaboration.
However, before implementation, the agreement must undergo internal approval procedures within each participating nation. In addition to the United States and India, other IPEF members include Australia, Brunei, Fiji, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam.
The IPEF members aim to enhance the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity of their supply chains through cooperative efforts and individual actions. The agreement encourages the collective understanding of supply chain risks while focusing on critical sectors and key goods within each nation.
Furthermore, the agreement seeks to improve crisis coordination and response to supply chain disruptions, facilitating the timely delivery of essential items. It emphasizes cooperation, mobilization of investments, and regulatory transparency in areas critical to national security, public health and safety, and prevention of economic disruptions. The agreement also emphasizes the promotion and respect of labor rights in supply chains and the identification of opportunities for technical assistance.
To achieve these goals, the IPEF members have decided to establish three institutions. The IPEF supply chain council will enable collaborative efforts on sector-specific action plans, including diversification of sources, infrastructure and workforce development, logistics connectivity, research and development, and trade facilitation. The IPEF Supply Chain Crisis Response Network will serve as an emergency communication channel for members during disruptions, enabling information sharing and assistance requests. Additionally, the IPEF labor rights advisory board, as a consultative body, aims to support the promotion of labor rights, sustainable trade and investment, and labor-friendly enterprises.
In the clean economy pillar, IPEF members are exploring avenues to achieve their climate change objectives. They plan to collaborate on research, development, commercialization, availability, accessibility, and deployment of clean energy and climate-friendly technologies. Establishing regulations and standards to connect markets, ensuring sustainable, resilient, reliable, and affordable energy, and promoting low- and zero-emission goods and services are among the stated objectives.
As part of their commitment to the fair economy pillar, IPEF members applauded progress in implementing anti-corruption measures and tax initiatives. They also pledged to develop high-standard, inclusive, free, fair, and open trade commitments, building upon the rules-based multilateral trading system.-
Article by Kashvi Gala