The United States, Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam have joined together in shared interest to create The Indo-Pacific Economic Framework (IPEF). The goal is to cement relationships cross-culturally and advance regional economic connectivity. The framework, unveiled by the Biden administration on May 23, 2022, serves to reinvigorate interest in the Indo-Pacific region with increased commerce, trade, and investment between countries and emphasizes shared values.
The White House “acknowledge[s] the richness and the diversity of our vibrant regional economy. We share a commitment to a free, open, fair, inclusive, interconnected, resilient, secure, and prosperous Indo-Pacific region that has the potential to achieve sustainable and inclusive economic growth.” They go on to highlight the importance of resiliency in securing supply chains and stimulating job growth, all of which were amplified by the global pandemic.
The IPEF’s key features include the broad topics of digital economies, supply chain resiliency, clean energy, and anti-corruption. Although wide-ranging, the framework represents the shared values and a way to start reconnecting with the Indo-Pacific region, which consists of 40% of the world’s GDP. The framework includes these themes:
Connectivity and Cohesion: The framework hopes to achieve benefits in trade for free and fair trade commitments. They will adopt cross-border standards for the digital economy, e-commerce, and data integrity and utilization. Careful attention will be paid to small and medium-sized businesses to avoid being left out of the digital economy. Workers’ rights will also be scrutinized to impose higher environmental standards and corporate accountability.
Resiliency: A variety of commitments are being sought to prevent future disruptions in supply chains and support stability and resiliency. This notion is hoped to level price spikes by integrating technology mapping supply chains, traceability, and coordinated diversification. It is also set to ensure access to key raw and processed materials, semiconductors, critical minerals, and clean energy technology.
Increasing Clean Energy: Aligning with the Paris Agreement, a targeted approach to tackle the climate crisis will include renewable energy, carbon removal, increased energy efficiency standards, and methods to remove methane emissions.
Fair Economic Practices: Increasing access and removing the barriers to unfair tax and money laundering provisions will be adopted. The IPEF participants hope to exchange information on taxes, have strict regulations on bribery, and an overall crackdown on corruption to level the playing field.
As this agreement solidifies, it is important to remember a few key points.
The IPEF is not a free trade agreement (FTA). Currently, no tariff reductions or market access regulations are outlined, but if talks like this continue, experts say an FTA may be more likely in the future.
It serves to solidify relationships in the Indo-Pacific region. Just a few years ago, the US pulled out of the Trans-Pacific Partnership (TPP) and has not yet come back to the table for the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) that carried on after the US withdrawal. The IPEF is a cooperative framework that serves as a stepping stone to continue communication and solidifies interest in the Indo-Pacific region. The framework is based on shared values and a unified look toward the future. More to come as the IPEF progresses.
Resources:
CNBC: The Indo-Pacific Economic Framework: What it is — and why it matters
International Institute for Strategic Studies: The Political Significance of the New Indo-Pacific Economic Framework for Prosperity
The Hindu: Explained | What is the Indo-Pacific Economic Framework for Prosperity?
The White House: FACT SHEET: In Asia, President Biden and a Dozen Indo-Pacific Partners Launch the Indo-Pacific Economic Framework for Prosperity
The White House: Statement on Indo-Pacific Economic Framework for Prosperity