- The Indian Prime Minister along with the U.S. President, Japanese Prime Minister, and leaders of 10 other countries, participated virtually in the launch of the Indo-Pacific Economic Framework for Prosperity (IPEF) in Tokyo.
- The IPEF grouping includes seven out of 10 members of the Association of Southeast Asian Nations (ASEAN). It does not include Myanmar, Cambodia and Laos.
- All the four Quad countries – India, U.S., Japan and Australia along with New Zealand are members of the IPEF.
- The four main pillars of the proposed framework include trade, supply chain resiliency, clean energy and decarbonisation, and taxes and anti-corruption measures.
- Notably, the IPEF’s contours are still to be formally agreed upon and negotiations for the same are to begin.
Significance of the new framework:
- The new framework with its focus on trade could help strengthen economic ties between the member countries. This gains more significance given the fact that the member nations represent about 40% of global GDP.
- The measures focussing on supply chain resiliency would help build a more inclusive and flexible economic framework in the region. More resilient supply chains would also help counter inflation pressures.
- The focus on clean energy and decarbonisation would contribute to the global climate action efforts.
- India has signalled its readiness to be part of the new economic initiative and would be actively taking part in the proposed negotiations.
- There have been repeated clarifications from the U.S. officials stressing that the IPEF won’t be a free trade deal nor are countries expected to discuss reducing tariffs or increasing market access. This gains significance in the backdrop of India’s decision to walk out of the 15-nation RCEP (Regional Comprehensive Economic Partnership).
- One of the focus areas of IPEF would be to set and follow standards for the digital economy and cross-border data flows and data localisation. Notably, India has had strong differences with the U.S. and its partners on this issue.