Indo-Pacific Economic Framework (IPEF)— Significance and Implications in the Region

USA president, Joe Biden, announced the idea of IPEF at the EAS summit in October 2021. Biden also mentioned IPEF to the ASEAN leaders at the US-ASEAN summit in May 2022 but he didn’t launch it there. On 23rd May 2022 Biden launched IPEF in Tokyo, Japan with 12 initial partners including 

Significance of IPEF — US Economy

The economy of a country is decided by the GDP which is the income generated by the country through various sources like big technologies, healthcare and pharmaceuticals like TriRx, businesses and others. A very large source of a country’s boosted economy is exporting services and goods. By 2020, US investment in the Indo-pacific region reached 969 billion dollars which in turn supports three million jobs in the USA and generates revenue for 900 billion dollar investment on American shores. The launch of an unconventional economical framework in the form of IPEF is another addition to the growing American interest in the region. IPEF will help America in gaining credibility in the region after it pulled out of its Trans-Pacific Partnership (TPP). Another concern for the USA is the growing Chinese trade in the region. Through IPEF, America can counter the aggressive Chinese commitments made under TPP and RCEP groups. 

Implications of IPEF—The Four Pillars

The growing importance of E-commerce and the digital economy has made it critical to form unconventional frameworks to ameliorate growing threats to the supply chain. The four major pillars of IPEF include

The countries bound by IPEF have committed to increasing their trade with each other under high standard rules to improve regional connectivity. Since technology is the future of the economy, the digital economy has been given a deep thought in the framework. IPEF will ensure the implementation of consensus-based rules in data flow and localization across the border. Measures will be taken to safeguard the misuse of artificial intelligence and online privacy. 

Fair Economy:

The members will pledge to bring about a fair economy with fair taxes, demolition of money laundering, and anti-bribery economic relations. The anti-bribery and tax exchange will be in accordance with the UN standards. IPEF will crack down on corruption with beneficial ownership recommendations to prevent shell companies and shadowy business transactions. 

A first-of-its-kind initiative in the form of decolonization, infrastructure and clean energy. The increasing climate crisis needs to be tackled by renewable energy sources, carbon removal and energy efficiency standards. Climate finance will be provided to the members of IPEF to increase connectivity in achieving the green economy aim. 

Supply chain disruption due to the increasingly digital economy and e-commerce is a major challenge that faces the US economy. Biden had added the idea of supply chain resilience to anticipate and prevent future disruptions. It will help in navigating the overall trading and supply chains efficiently. US has proposed an early alarm system and mapping of mineral supply chains in the IPEF to stay updated. 


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