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India Raises Doubts Amid Widespread Skepticism Over Benefits in Southeast Asia

Published: November 24, 2023

The fate of the Indo-Pacific Economic Framework for Prosperity (IPEF) trade pillar remains uncertain as Indian officials raise concerns over the lack of significant benefits. Southeast Asian countries have not been convinced by the trade-off proposed by the United States, further complicating the negotiations. The recent IPEF ministerial meeting in San Francisco saw progress in discussions on the clean and fair economy pillars and the signing of a pact on supply-chain resilience. However, the trade pillar discussions could have been more conclusive, and we have scheduled no new negotiating round.

Indian officials have expressed doubts about the tangible benefits of the trade pillar. While there is potential for supply chain integration and harmonization of standards, evidence of clear advantages still needs to be provided. India has chosen to remain an observer, giving the flexibility to join the trade pillar after evaluating the final text.

The 12 other member nations besides the US also find committing to the trade pillar challenging without clear, tangible benefits. Some Southeast Asian nations have reservations about binding commitments relating to labor standards and environmental norms proposed by the US.

India’s decision to stay out of the trade pillar aligns with its strategy of retaining regulatory autonomy. The trade pillar aims to develop new approaches to trade and technology policies but does not provide market access opportunities through lower tariffs. Instead, it promotes economic activities that generate investments and benefit workers and consumers. However, the need for clarity regarding commitments and concerns about the proposed standards have caused delays.

According to the Global Trade Research Initiative, India should resist pressure to join the trade pillar and maintain regulatory autonomy. The alignment of the standards under discussion poses a challenge for India, as most are already applied in OECD economies. India must establish domestic rules and standards quickly or risk being pushed into negotiations with the EU and the UK.

Apart from India and the US, the IPEF includes 12 other member nations: Australia, Brunei, Fiji, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam.

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