The IPEF holds promise but there are perils too

News: Recently, the US President Joe Biden has established the Indo-Pacific Economic Framework for Prosperity (IPEF) which is said to be a new version of a “pivot to Asia”.


The US President had first spoken about it in October 2021 during the East Asia Summit, in the presence of all IPEF signatories except Fiji.


To bring together the US allies in the Indo-Pacific region and enhance economic cooperation on the lines of the former U.S. President Barack Obama’s pet project called as the Trans-Pacific Partnership (TPP),

The US can fulfil its twin ambitions, to provide economic leadership and to challenge China’s hegemony in the region.


The IPEF has been proposed as an elaborate framework of rules covering four pillars: (1) fair and resilient trade, (2) supply chain resiliency, (3) clean energy decarbonisation, and (4) tax and anti-corruption.

In the Fair and resilient trade pillar, the IPEF “aims to develop high-standard, worker-centred commitments” covering labour rights, the environment and climate, the digital economy, agriculture etc.


The intellectual property rights (IPRs) have been excluded from the list, which used to be at the heart of the U.S.’ economic engagements with its partner countries. The possible reason could have been it acting as constraining forces in the universal coverage of the COVID-19 vaccine

It has been designed differently from the free trade ideal. It has been proposed as a “fair and resilient trade”, not like a traditional trade agreement. The primary objective is to ensure a high degree of regulatory coherence and market access between the member countries.

What are the associated issues?


The representatives of the pharmaceutical, and electronics sectors could pitch for the inclusion of the IPRs in the IPEF negotiations.

Enforcement of labour rights have often been rejected by the World Trade Organization (WTO) members in the trade deals on several occasions. They argue that “internationally recognized core labour standards” of the International Labour Organization (ILO) should be used to deal with issues pertaining to labour rights. They had also rejected the use of labour standards for protectionist purposes.

The environment and climate change have been duly included in the list of the IPEF. In this connection, the United Nations Framework Convention on Climate Change (UNFCCC) has cautioned that measures taken by the countries to combat climate change should not be used to discriminate or cause disguised restriction on international trade”.

The standards on cross-border data flows, data localisations and data portability has been included. This can have ramifications on the future of the digital economy because there are contrasting views on the control over data, which is the driver of the digital economy.

Although the U.S. wants its manufacturing giants to shift their bases from China to the other countries in the Indo-Pacific. But ensuring the supply chain resilience from new destinations will also remain a challenge.

For India

On this issue of data localisation, based on the inputs from the Draft National E-Commerce Policy, the Government of India aspires for restrictions on cross-border data flows. This goes against “high-standard rules on cross-border data flows and data localization”.

India may also worry about rules on strengthening labour rights in the IPEF. India prefers for a “flexible labour market” unlike the regime that the U.S. is proposing for the IPEF

Source: The post is based on an article “The IPEF holds promise but there are perils too” published in the “The Hindu” on 6th June 2022.

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