US needs to bring in trade liberalisation as part of IPEF: Arvind Panagariya

India’s reservation is that it doesn’t have any room for negotiation of trade liberalisation in the future

Shweta Punj

Delhi / June 26, 2023 / 14:33 IST

It’s early for India to become a part of non-trade issues, says Arvind Panagariya.

One of the key areas of discussion during what has been termed a historic visit by Prime Minister Narendra Modi to the United States has been India joining the trade pillar of the 14-nation bloc, the Indo-Pacific Economic Framework (IPEF). The US wants to conclude negotiations on all pillars by the end of 2023. However, India has been reluctant to join the trade pillar. India has joined the other three pillars of supply chains, clean economy, and fair economy. The US launched the IPEF in 2022.

"On the trade pillar, India’s reservation is that it doesn’t have any room for negotiation of liberalisation on the trade front. What currently exists in the trade pillar are labour standards and IPR — all non-trade issues. It’s early for India to become a part of non-trade issues. For India to join, trade liberalisation has to be an important component of agreements…," Arvind Panagariya, Professor at Columbia University, told Moneycontrol.

The United States has kept trade negotiations out of the trade pillar. The Indian side is concerned about protecting its local industry and agriculture.

"Without trade liberalisation, for us to go join, where we will be giving concessions and not receiving, is an issue," Panagariya added.

The IPEF is a non-traditional trade agreement in which trade, supply chains, clean trade, tax, and anti-corruption issues are being negotiated. The participating countries are not required to join all four pillars, and pillar negotiations are independent of each other. The 14-country arrangement has been driven by the urgency to counter Chinese economic influence in the region.