India signs IPEF's clean,fair economy agreements

• India on Sunday signed the US-led 14-member Indo-Pacific Economic Framework for Prosperity (IPEF) bloc’s agreements on a clean and fair economy.

Highlights:

• India has signed key agreements under the Indo-Pacific Economic Framework for Prosperity (IPEF), focusing on a clean and fair economy.
• These agreements, signed during Prime Minister Narendra Modi’s visit to the U.S. for the Quad Summit, aim to strengthen economic cooperation among the 14 IPEF member nations, with a focus on promoting clean energy, tackling climate change, and enhancing transparency in governance and taxation.

Key Features of the Agreements:

Clean Economy Pillar:

• The agreements aim to accelerate efforts towards energy security, reduce greenhouse gas (GHG) emissions, and promote the development and deployment of clean energy technologies.
• IPEF partners will work to reduce dependence on fossil fuels through technological cooperation, innovative solutions, and concessional financing.

Fair Economy Pillar:

• The agreements emphasize creating a transparent and predictable business environment, facilitating cross-border investigations, asset recovery, and anti-corruption measures.
• By fostering information sharing and enhancing regulatory frameworks, member countries aim to boost trade and investment, leading to economic growth in the region.

IPEF Catalytic Capital Fund:

• This fund, with an initial grant of $33 million from Australia, Japan, Korea, and the U.S., is designed to catalyze private investment in the clean economy space, with a target of mobilizing $3.3 billion.
• Additionally, the PGI Investment Accelerator under IPEF has received $300 million from the U.S. International Development Finance Corporation to boost projects that align with clean and fair economic goals.

Concerns and Challenges:

• While India’s participation in IPEF marks a significant step towards regional cooperation, concerns have been raised by experts like Ajay Srivastava, a former Indian Trade Service officer, over the secrecy of negotiations.
• He cautions that India must avoid agreeing to rigid international commitments that could hinder the country's flexibility in pursuing infrastructure projects of national importance, such as adhering to non-derogation clauses that might limit regulatory easing.
• Srivastava also notes that many of the standards and regulations discussed within the IPEF are already in place in OECD and U.S. economies.
• India must carefully evaluate its domestic preparedness to avoid being disadvantaged in future trade deals with other global players, like the EU and UK.

Strategic Implications:

• India's engagement in IPEF reflects its commitment to building regional economic partnerships with key Indo-Pacific nations, including the U.S., Japan, and Australia.
• The IPEF members collectively represent 40% of the global economy and 28% of world trade, making this framework an essential platform for shaping the future of economic and sustainable development in the region.

Prelims Takeaways:

• Global Trade Research Initiative (GTRI)
• Organisation for Economic Co-operation and Development (OECD)