Current Affairs

Issue

US President Joe Biden is expected to launch Indo-Pacific Economic Framework (IPEF) in Tokyo.

 

Background

IPEF is the much awaited policy of the Biden administration. He will launch the policy during the East-Asia trip.

 

Details

• The policy was first announced by President Biden in October 2021 East Asia Summit, where he expressed intention of working with like-minded partners.

• The IPEF will contain various modules and countries have to sign up to all of the components within a module, but do not have to participate in all modules.

• There will be no market access commitments such as lowering tariff barrier, which is usually needed for trade agreements.

 

Modules of IPEF

• Trade facilitation

• Standards for the digital economy and technology

• Supply chain resiliency

• Decarbonization and clean energy

• Infrastructure

• Worker standards

 

Significance

• The IPEF will help US regain credibility in the region after it pulled out of the Trans Pacific Partnership (TPP). 

• The move would help US counter aggressive trade commitments made by China under TPP and RCEP groupings.

 

Concerns for India

• The aspects of the policy directly conflict with India’s stated position, especially regarding cross-border data flow.

• There is a prohibition on the levying of customs duties on digital products distributed electronically.