India has joined the three other QUAD nations - Australia, Japan, and the United States in launching an economic partnership with eight other economies in the Indo-Pacific region that aim to keep supply chains free of disruptions and frame trade rules, including for data localization, e-commerce, and labour standards.
The launch of the Indo-Pacific Economic Framework for Prosperity (IPEF) was attended by Prime Minister Narendra Modi, US President Joe Biden, and Japanese Prime Minister Kishida Fumio on Monday at the ongoing second Quadrilateral Security Dialogue also known as QUAD summit in Japan. It adds for the first time an economic angle to the dialogue, which has till now focussed on strategic cooperation.
A statement from the White House suggests the move is aimed at removing the Chinese stronghold on the regional economy through an alternative trade framework. However, the areas of ambition suggested by the US include trade standards and the digital economy, where India has clashed with developed economies on policy.
The Ministry of External Affairs said the IPEF seeks to strengthen economic partnership amongst participating countries with the objective of enhancing resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in the Indo-Pacific region. At the launch, Modi said the IPEF is a declaration of a collective desire to make the Indo-Pacific region an engine of global economic growth.
Apart from the four QUAD partners, the eight-other nations include Brunei, Indonesia, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together, the 12-nations represent 40 percent of global GDP.
Lofty plans
A statement issued by the White House has however shed more light on the declaration. It points out that the IPEF will enable the United States and its allies 'to decide on rules of the road that ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific'. It has also stressed that the framework will help lower costs by making supply chains more resilient in the long term, protecting the partner nations against costly disruptions that lead to higher prices for consumers.
To prevent supply chain disruptions, the IPEF plans to guard against price spikes that raise inflation. "We intend to do this by establishing an early warning system, mapping critical mineral supply chains, improving traceability in key sectors, and coordinating on diversification efforts," the White House said.
On trade, the partnership will aim for high-standard rules in digital economy, including standards on cross-border data flows and data localization. Case in point, India has clashed with the US on these issues over the past few years over its decision to mandate local data centers and its decision to tax e-commerce transactions.
In order to ensure small businesses can benefit from the region’s rapidly growing e-commerce sector, the Partnership aims to address issues such as online privacy, as well as a discriminatory and unethical use of Artificial Intelligence.
Also on the cards is strong labor and environment standards and corporate accountability provisions that 'promote a race to the top for workers through trade', the White House said. It will also accelerate efforts to tackle the climate crisis, including in the areas of renewable energy, carbon removal, energy efficiency standards, and new measures to combat methane emissions.
Finally, the Partnership is slated to seek commitments to enact and enforce the effective tax, anti-money laundering, and anti-bribery regimes that are in line with existing multilateral obligations to promote a fair economy. "These will include provisions on the exchange of tax information, criminalization of bribery in accordance with UN standards, and effective implementation of beneficial ownership recommendations to strengthen our efforts to crack down on corruption," the White House said.
Quad summit
The Tokyo summit is the fourth interaction of Quad Leaders since their first virtual meeting in March 2021, in-person Summit in Washington DC in September 2021 and virtual meeting in March 2022.
The first-ever in-person Quadrilateral Security Dialogue also known as QUAD summit in Washington DC had not-so-veiled references to China throughout. The QUAD nations had repeatedly called for a 'free open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific'.
During the two-day visit, PM Modi is scheduled to hold bilateral meetings with Biden, Kishida and Australia's newly elected PM Anthony Albanese on the sidelines of the event.
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