The Indo-Pacific Economic Framework (IPEF) has made remarkable progress with its supply chain pillar. On May 27, 2023, fourteen IPEF partners, including the United States, India, Japan, Australia, and others, announced the successful conclusion of negotiations. This groundbreaking international agreement aims to enhance supply chain resilience, efficiency, transparency, and diversification. It also addresses workforce development, crisis response, and investment promotion.
Key Highlights of the Agreement:
- Lasting Cooperation: The partners commit to establishing a framework for ongoing collaboration on crucial areas such as workforce development and supply chain monitoring. They aim to promote investment and ensure efficient crisis response.
- Supply Chain Council: An IPEF Supply Chain Council will be established to develop sector-specific action plans, bolstering resilience and competitiveness in critical sectors.
- Crisis Response Network: The agreement includes the creation of an IPEF Supply Chain Crisis Response Network, serving as an emergency communication channel during supply chain crises.
- Labour Rights Advisory Board: A tripartite IPEF Labour Rights Advisory Board will help identify labor rights concerns that may impact the resilience and competitiveness of supply chains.
US Commitments and Benefits:
The United States has pledged various technical and capacity building programs to support the agreement’s objectives. These include training camps, best practice sharing for incident response planning, digital shipping pilot projects, and the expansion of the U.S. Customs Trade Partnership Against Terrorism program. The implementation of the agreement will bring benefits such as increased investments in manufacturing hubs, enhanced regional trade, and the development of skilled workers in critical industries.
Challenges and the Way Forward:
While the agreement lacks a legally binding clause, its success depends on the willingness of participating countries to take follow-up action. Incentives and public promotion of the agreement are crucial for its sustained interest. Efforts must be made to ensure equal importance and benefits for all partners to avoid any perception of favoritism. By incorporating the interests of all stakeholders and countering potential criticism, the agreement can thrive.
India has joined three of the four pillars, carefully observing the developments before making a final decision. The country is supportive of the supply chain pillar and aims to actively engage with partners for effective implementation. India’s commitment to resilient supply chains and a fair economy underlines its dedication to fostering growth in the region.