Finance & Economy | News & Insights

India considers joining the IPEF trade pillar but wants improved market access.

Published: July 15, 2023
Author: TEXTILE VALUE CHAIN

According to officials, India reportedly requested improved market access in order to join the trade component of the 14-nation Indo-Pacific Economic Framework for Prosperity (IPEF), a trading bloc. There are reportedly new discussions taking place within the Union Commerce Ministry about whether New Delhi should first commit to joining even if specific benefits are unclear or join now instead because 13 countries are reportedly already negotiating the finer points and if India were to accede later, it might be at a disadvantage for missing out on the negotiations.

According to the official, market access for India, which is considered to be a prerequisite for joining the trade pillar (Pillar-I), has not yet been agreed upon. India is a party to the trade pillar negotiations with observer status.

The developments follow the second ministerial summit, held in May in the US, where text-based talks under the supply chain pillar (Pillar-II) were mostly wrapped up. India is included in the IPEF’s additional three pillars. The second pillar of supply chains, which we have completed, is crucial. We demand improved market access for the trade pillar. The senior government official said to The Indian Express, “We are also looking at how we can negotiate it better.

The IPEF was established in May of last year in Tokyo and currently counts 14 partner nations among its members, including Australia, Brunei, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam, and the US. Its goal is to increase economic cooperation among its member nations in order to promote regional growth, peace, and prosperity.

The IPEF framework is divided into four sections: Pillar I deals with trade; Pillar II with supply chains; Pillar III with the clean economy; and Pillar IV with the fair economy. India has joined IPEF Pillars II to IV, however it has just an observer status in Pillar I after choosing to leave in September of last year.

“Under the IPEF trade pillar, they have not given market access yet. They are asking India to sign the trade pillar, but it is still not fully clear about what all we will get if we sign it. Earlier also India felt that we are not getting much out of it and environmental and labour laws conditions have been stringent. Some of the other countries are also finding these conditions as stringent and they are also negotiating it,” the official said.

The 14-nation IPEF group, which is viewed as a trade and economic strategy supported by the US to offset China’s economic power in the area, accounts for around 40% of global GDP and 28% of global commerce in products and services. In the past, India had been hesitant to join Pillar-I because to concerns about protecting its domestic agricultural, labour, and digital industries and an uncertainty about the effects of entering the IPEF.

From July 9 to 15, Korea is hosting the fourth IPEF for all pillars negotiation round in Busan. The first round of negotiations took place in Australia in December 2022, and then a special round on Pillars II–IV took place in India in February 2023. The second round of negotiations took place in Indonesia in March 2023, and the third round took place in Singapore in May 2023. The IPEF partners gathered for a ministerial conference in Detroit, Michigan, on May 27.

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