Business India

India has decided not to join the trade pillar of the Indo-Pacific Economic Framework (IPEF) due to concerns about binding conditionalities related to issues like the environment and labor. Piyush Goyal, the Union commerce minister, cited reasons such as the development of digital trade laws and potential binding commitments that may affect India’s status as a developing economy. While India will continue to engage with the 14-member forum, a final decision will be made with the national interest in mind.

The IPEF consists of four pillars: trade, supply chains, clean energy-decarbonization-infrastructure, and tax and anti-corruption. Member countries have the flexibility to choose which pillar(s) they want to be part of. Piyush Goyal acknowledged India’s comfort with the outcomes and text related to the three pillars of supply chains, tax and anti-corruption, and clean energy, but highlighted the absence of a broader consensus among nations on trade issues like environmental commitments, labor, and public procurement.

India’s concerns are centered around the linkage of environment and labor to trade and the potential imposition of binding commitments. Goyal emphasized the responsibility of the developed world in addressing these concerns. He also praised the speed at which the IPEF had been established and expressed hope that its outcomes would generate job opportunities and support local businesses through resilient supply chains. He further noted that India is currently working on its digital framework and laws, particularly regarding privacy and data.

US Trade Representative Katherine Tai clarified that India has not opted out of the trade pillar but has chosen not to participate at this time. She indicated that the US would hold bilateral talks with India later this year to discuss the same issues.

US Secretary of Commerce Gina Raimondo expressed satisfaction with the unity and clear roadmap among all 14 IPEF members. She underscored the importance of timely implementation for the mutual benefit of all members.

Ambassador Tai emphasized the flexibility of the IPEF, allowing member countries to select the pillar in which they want to participate. She highlighted the enthusiasm for establishing a resilient supply chain among the member countries and expected increased investments and job creation as a result.

The Indo-Pacific Economic Framework (IPEF) comprises 14 member countries: Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, the United States, and Vietnam. Unlike traditional trade agreements, the objective of this framework is not to enhance market access.