Indo-Pacific Economic Framework for Prosperity (IPEF)

Context: India needs to be cautious and have clarity on the U.S.-led Indo-Pacific Economic Framework for Prosperity

• Recently in Quad Summit, United States announced the establishment of Indo-Pacific Economic Framework for Prosperity (IPEF) with other partner countries
• Within days of its launch, IPEF expanded its membership to the Pacific Island states, with Fiji joining the initiative.
• At its launch, the IPEF was proposed as an elaborate framework of rules covering four pillars, namely, fair and resilient trade, supply chain resiliency, clean energy decarbonisation, and tax and anti-corruption.

Areas of Concern

On IPRs

• Under the “fair and resilient trade” pillar, the initiative aims to develop high-standard, worker-centered commitments covering labour rights, the environment and climate etc
• Notable exclusion from this list is intellectual property rights (IPRs) that have generally been at the heart of the U.S.’ economic engagements with its partner countries.

Import tariffs

• The primary objective of the IPEF is to ensure a high degree of regulatory coherence and to make market access contingent upon realisation of regulatory standards.
• The standards and regulations in most developed countries often create discriminatory barriers to trade and overcoming these barriers is usually beyond the capacities, both institutional and otherwise, of lesser developed countries.

Labour rights and the environment and climate change

• Labour rights and the environment and climate change are included in IPEF
• WTO members had arrived at a consensus that the internationally recognized core labour standards of the ILO should be used to deal with issues pertaining to labour rights.
• The UNFCCC had cautioned that measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.
• The IPEF could threaten abrogation of these decisions at the WTO and the UNFCCC.

Data portability

• Control over data, the driver of the digital economy, will increasingly determine the dynamics of economies, and hence the issue of data portability assumes critical importance

For India to watch

• On this issue of data localisation, the Government of India has not yet taken a clear position.
• In 2019 in the Draft National e-Commerce Policy, wherein it had backed restrictions on cross-border data flows. The key challenge for India is to sustain this diametrically opposite view to an uncompromising position of the U.S. on data localisation.
• India should also be wary of emphasis that is being given to strengthening labour rights in the on-going discussions on the IPEF

Way Forward

• Establishing Common Standards: Such standards will cover labour rights, environmental standards, protection of intellectual property rights.
• Addressing Tech-related Issues: Clear framework on Data flow
• Balancing Self-Reliance and Globalisation: India has always expressed its desire to attract foreign investment and become part of global supply chains, it is time to utilize the opportunities provided under IPEF with carefully framed policies.

Source: The Hindu