Secrecy in IPEF talks raises concerns on protection of key interests: GTRI

The Indo-Pacific Economic Framework for Prosperity (IPEF) negotiations have mostly been conducted in secrecy with limited public input and it raises concerns whether the member countries, including India, were able to protect their key interests, think tank GTRI said on Sunday.

The 14-member IPEF bloc was launched jointly by the US and other partner countries of the Indo-Pacific region on May 23, 2022, in Tokyo. Together, they account for 40 per cent of the world's economic output and 28 per cent of trade.

The framework is structured around four pillars relating to trade, supply chains, clean economy and fair economy. India has joined all the pillars except the trade.

 

Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the US, and Vietnam are members of the bloc.

The countries have signed pacts on supply chains, clean economy, and fair economy so far. India signed the clean and fair economy pacts on Sunday.

"The IPEF negotiations have mostly been conducted in secrecy with limited public input, raising concerns about whether member countries, including India, were able to protect their key interests," the Global Trade Research Initiative (GTRI) said.

It said in the supply chain pillar, a major issue is whether the agreement might restrict members from trading critical materials, particularly with China as this could pose challenges for ASEAN (Association of SouthEast Asian Nations) countries, whose largest trading partner is China.

"It is hoped that India has negotiated enough flexibility to avoid strict clauses, such as the not to use export restrictions. These are critical during emergencies, as no country can be expected to supply essential goods when facing its own crisis," GTRI Founder Ajay Srivastava said.

Similarly, he said in the clean economy pillar, the hope is that India has not agreed to a "non-derogation clause", which would prevent the government from easing domestic regulations for projects of national importance.

"Such flexibility is essential for India to pursue key infrastructure projects without being hindered by rigid international commitments," he said, adding, "additionally, there is concern that India might have committed to minimum standards for clean energy technologies in the domestic market, which could force reliance on imports and negatively impact local producers".

India needs to ensure it can support its own industries during the clean energy transition, it said.

The think tank added that India's preferential treatment for domestic suppliers in government procurement is a key policy tool for supporting local businesses.

"Hope India has not agreed to drop this preference as it could severely disadvantage local manufacturers in favour of foreign competition, potentially harming domestic economic growth," Srivastava said.

On the fair economy pillar, it said India already implements anti-corruption measures, but new obligations could lead to international scrutiny and make domestic actions legally enforceable.

"This could complicate governance, so it's important that India has carefully examined these commitments to avoid unnecessary legal and administrative burdens," he said.

Similarly, he added that the commitments related to the effective administration of tax policy might curtail the ability to raise tax revenue.

He also said as India formalises its commitments under the IPEF, it is crucial that the government provides detailed briefings to industry stakeholders about the agreements signed.

"Sharing the legal text alone will not be enough, as businesses require clear insights into how these commitments will impact sectors, compliance needs, and long-term policy goals," Srivastava said.

A proactive dialogue between the government and industry will be vital to maximising the benefits of the agreements and mitigating any potential risks, the GTRI said.