This strategic-economic bloc will only tighten the leash

Context:

India is getting into the U.S.-driven Indo-Pacific Economic Framework for Prosperity (IPEF). Hence, the questions are rising with its comparison to the Regional Comprehensive Economic Partnership (RCEP), from which in November 2019, India walked out.

About Indo-Pacific Economic Framework for Prosperity (IPEF):

• It is the U.S.-led economic grouping representing 40 percent of the global GDP, proposes to advance resilience, economic growth, competitiveness and fairness in member countries. 
  • However, some analysts view it as a move to counter China’s growing influence in the region. 
• Partner Countries: Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Vietnam and the United States. 
  • Within days of its launch, IPEF expanded its membership to the Pacific Island states, with Fiji joining the initiative. 

• Pillars:

• • The IPEF has four pillars: trade, supply chains, clean economy, and fair economy.
  • India has joined the other three pillars but not trade. 

Challenges:

• Economic dependency on the US: India needs to ensure that its strategic partnership with the US does not result in complete economic dependency. 
  • The IPEF is about developing an integrated economic system centred on the US, and excluding China. 
• Impact on manufacturing sector: The fear of any trade deal’s impact on India’s manufacturing sector remains a concern. 
  • With the IPEF, there is a risk of unfair labour and environment standards compromising India’s comparative advantage in manufacturing.
• Limited policy space: India joining the IPEF could lead to a compromise on its ability to create a vibrant domestic ecosystem in emerging areas such as the digital economy and green products. 
  • Joining the IPEF could mean surrendering policy space for regulating Big Tech and digital policy-making.
• Impact on agriculture: The IPEF could have deep implications in agriculture, especially in terms of genetically modified seeds and food. 
• Rushed negotiations: The IPEF is proposed to be concluded by November 2023, and real engagements only began late last year. 
  • The rush to conclude negotiations could mean that India misses out on addressing key concerns and issues.

Conclusion: 

• India needs to carefully evaluate the potential economic impacts and negotiate for favorable terms that align with India’s interests. 
• India should focus on the other pillars of the IPEF that do not compromise its economic interests, such as the supply chains, clean economy, and fair economy pillars.                                                                                                                

News Source: The Hindu