Indo-Pacific Economic Framework for Prosperity (IPEF)

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Overview:

The Indo-Pacific Economic Framework for Prosperity (IPEF) recently signed an agreement to strengthen its supply chain and ensure adherence to labor rules.

About Indo-Pacific Economic Framework for Prosperity (IPEF)

  • It is a regional arrangement to build cooperation and economic integration in the Indo-Pacific region.
  • It was launched by United States President Joe Biden on May 23, 2022.
  • This framework is intended to advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness for member economies.
  • IPEF will seek to complement and build on existing regional architecture and support the global rules-based trading system.
  • It currently includes 14 partner countries: Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, the United States, and Vietnam.
  • The economic framework broadly rests on four pillars:
    • Trade
    • Supply chain resilience
    • Clean Energy, Decarbonization, and Infrastructure
    • Taxes and anti-corruption measures
  • The IPEF is not a Free Trade Agreement (FTA), but allows members to negotiate the parts they want to.
  • Indian and IPEF:
    • India has been actively participating in the IPEF, but not in all pillars.
    • India has decided to opt out of the trade pillar of the IPEF as most issues promoted by the IPEF do not align with India's trade policies.

Q1) What is a Free Trade Agreement (FTA)?

A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.

Source: IPEF inks deal to boost supply chain