The IPEF seeks to strengthen economic partnerships among participating countries in the Indo-Pacific region to enhance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness. The member countries have to thrash out modalities on how to achieve these goals and strengthen economic cooperation. The IPEF framework has been initiated by the US President, Joe Biden and is perceived as a US bid to balance its security provider role in the region by reclaiming a larger role in the economic sphere. This move is also more significant as it allows the US to regain some credibility following former US president Donald Trump’s sudden decision in early 2017 to pull out of the painstakingly negotiated Trans-Pacific Partnership (TPP).
India along with 12 other countries joined the US-led Indo-Pacific Economic Framework (IPEF) on the 23rd of May 2022 and would endeavour for an open, inclusive, interconnected, and secure Indo-Pacific for sustainable growth of the region. India perceives this framework as vital for continued growth, peace, and prosperity in the Indo-Pacific region and intends to strengthen economic engagement among partners in a free, open, and inclusive manner.
The new framework, which is professed as an economic correlative of the US Indo-Pacific strategy, is not a Free Trade Agreement (FTA), as clarified by the US. Instead, it’s a loose framework that brings together 13 countries to design and derive norms on key focus areas like the digital economy, trusted supply chains, clean economic growth, corporate accountability, and anti-corruption.
IPEF is considered as a move by the US to counter China’s influence
The IPEF’s framework can therefore be considered a move by the US to strengthen its foothold in the region and to counter China’s growing influence. It is too early and devoid of any concrete framework it has given grounds to conjecture about the IPEF being merely geopolitical theatre. Most countries in the IPEF are members of the Asia-Pacific trade treaty – the Regional Comprehensive Economic Partnership (RCEP) – which is designed by China to economically integrate all these countries with Beijing’s policy. They are also part of China’s Belt and Road Initiative (BRI), which seeks to make trade-facilitative infrastructure and regional connectivity investments. So, if the US is not promising a trade treaty or access to its own markets under IPEF, the counter mechanism may end up as a futile exercise.
US Treasury Secretary expressed confidence on India’s joining IPEF will strengthen its objectives
However, US Treasury Secretary Janet Yellen during her visit to India appeared quite optimistic and said – India’s membership in the Indo-Pacific Economic Framework (IPEF) will make supply chains between the Asian country and the United States resilient and help the entire region.
She opined – strong trade and investment and people-to-people ties, make the bilateral economic and financial relationship a critical element to the partnership between the two countries.
“India’s membership in the Indo-Pacific Economic Framework, in efforts to make our supply chains more resilient, through what I call friend-shoring, are tightening those ties,” Dr Yellen added.
With US and India coming together, the two will facilitate a coordinated policy stance on global economic challenges facing the world. But rigorous initiatives are required to build a powerful economic relationship, strengthen business-to-business links, and facilitate a coordinated policy stance to address the pressing global economic challenges.
FM Nirmala Sitharaman and Dr Yellen will participate in a US-India Partnership
Meanwhile, India’s Finance Minister Nirmala Sitharaman and Dr Yellen will participate in a US-India Economic and Financial Partnership dialogue in New Delhi and will discuss India’s leadership agenda for the Group of 20 major economies in 2023.
“The US and India are ‘natural allies, in the words of a former Indian prime minister,” Dr Yellen said, adding that both had waged similar fights for independence to attain freedom and dignity.
“People around the world are looking to us and asking: can democracies meet the economic needs of their citizens? Can they stand up to bullies and cooperate on the most intractable global problems?” she said.
As the two largest democracies, India and the United States could answer the sceptics by taking action over the next year and beyond that could “demonstrate the capacity of our democracies to deliver for our people. I am confident that we will succeed”, she said.
Debt restructuring of poorer countries should be one of the focus area of India’s leadership in G-20
India’s leadership of the G-20 should focus on the shared priorities of boosting investment to fight climate change, breaking a logjam in restructuring debts for poorer countries and improving access to the digital economy. India’s G-20 year is an opportunity to accelerate global coordination on debt restructuring,
The US Treasury Secretary also added that ending the war in Ukraine was a “moral imperative” but that economic challenges from the conflict and from supply chain strains were drawing India and the United States closer together.
The United States is working to strengthen India’s “friend-shoring” role as a trusted, reliable supplier.
At the same time, the United States is looking at India for a more proactive role in shaping, designing and implementing the objectives of IPEF which India shall take as a challenge, provided the Biden administration comes out with overall support to India and the participating countries by giving access to its market.