New Indo-Pacific Bloc

The Indo-Pacific Economic Framework, launched by United States, is answer to the Trans Pacific Partnership (TTP).

• India has participated in the inaugural meeting of IPEF despite concerns over certain areas.

• The Indo-Pacific covers half the population of the world and more than 60% of the global GDPand the nations who will join this framework in the future, are signing up to work toward an economic vision that will deliver for all people.
• The Indian Ocean region and the Pacific Ocean region account for 60% of world trade via this region.
• On the strategic front to have a ‘Free, Open and Inclusive Indo-Pacific’ USA, India, Australia and Japan has initiated QUAD and jointly collaborating in military exercises like, ‘Malabar Exercise’.
• Post COVID has experienced disruption in supply chain that has emerged the importance of diversifying the supply chain.
• Inclusive growth for all in the region requires the initiation of new investment routes and trade facilitations.
• Climate action and marine pollution are the major concern which requires multilateral and regional cooperation.
• Indo-Pacific Economic Framework is a declaration of a collective desire to make the Indo-Pacific region an engine of global economic growth.

What is Indo-Pacific Economic Framework?

• Indo-Pacific Economic Partnership is a US led initiative that aims to strengthen economic partnership among participating countries to enhance resilience, sustainability, inclusiveness, economic growth, competitiveness and fairness in the Indo-Pacific region.
• IPEF was launched with a dozen initial partners, constituting 40% of the world’s GDP.
• Member countries are- India, USA, Japan, Australia, Brunei, Indonesia, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam.

Major objectives of the bloc:

• Four Pillars of the IPEF:
• Trade: Involves digital economy and emerging technologies, labour commitments, environment, trade facilitation, transparency and good regulatory practices, and corporate accountability, cross-border data flows and data localization.
• Supply chain resilience: To develop ‘a first-of-its-kind supply chain agreement’ that would anticipate and prevent disruptions.
• Clean energy and de carbonisation: Including agreements on ‘high ambition commitments’ such as renewable energy targets, energy efficiency standards and curbing methane emissions.
• Tax and anti-corruption: Committing towards ‘effective tax, anti-money laundering, Anti-bribery schemes’.
  

• India’s trade volume in this region is gaining a strategic significance with overseas investments being directed towards the East, i.e., Comprehensive Economic Partnership Agreements with Japan, South Korea and Singapore and Free Trade Agreements with ASEAN.
• India has been an active player in championing a ‘Free and Open Indo-Pacific’
• India with the view, that deepening economic engagement among partners is crucial for continued growth, peace, and prosperity.
• India is keen to collaborate with partner countries under the IPEF and work towards advancing regional economic connectivity, integration and boosting trade and investment within the region.

• Opportunity for Indo-Pacific Region:
  • It is a declaration of a collective desire to make the Indo-Pacific region an engine of global economic growth.
• An Economic Vision:
  • The Indo-Pacific covers half the population of the world and more than 60% of the global GDP and the nations who will join this framework in the future, are signing up to work toward an economic vision that will deliver for all people.
• Focus Areas: Unlike traditional trade blocs, IPEF won’t negotiate tariffs or market access, and the framework will focus on integrating partner countries in four areas which include trade, supply chains, co-ordinate in crisis response measures and focus on Infrastructure.
• Tax and Anti-Corruption: It is committed to promoting fair competition by enacting and enforcing effective and robust tax, anti-money laundering, and anti-bribery regimes in line with existing multilateral obligations, standards, and agreements to curb tax evasion and corruption in the Indo-Pacific region.
• This involves sharing expertise and seeking ways to support the capacity building necessary to advance accountable and transparent systems.

• Question on its utility: S has mentioned that IPEF is neither a free trade agreement nor any tariff reduction will be done for member countries.
• Then the question arises, the purpose of the initiative is doubtful in terms of economic benefits.
• Different economic arrangements of the member countries: All the 13 countries have different economic arrangements hence situation is not clear about its outputs.
• USA’s protectionist policies: US has led emphasis on the American workers, so there is negotiators needs to move with both caution and clarity before making any promises under the initiative.

The new economic bloc for the Indo-pacific region will provide a platform to cater various potential and contemporary issues in the region from new investments routes to climate action and marine pollution to diversification of supply chains. Despite such opportunity there are certain concerns in the grouping which can have a potential threat over India’s foreign policy stances which needs to be negotiated and catered.