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IPEF - The so called anti-China trade framework

Niranjan Bhombe

Soham Athavale

31 May 2022

"Seeing the developments, there was a need to counter China on a global forum....."

IPEF (Indo – Pacific Economic Framework) was declared by the President of the United States in the QUAD meeting in Japan recently. The trade framework is to counter China indirectly. But it doesn’t seem so. China has a powerful trade framework in South Asia called RCEP (Regional Comprehensive Economic Partnership). All ten ASEAN (Association of South East Asian Nations) countries are part of it. Bharat was also a part of RCEP but it withdrew in 2019. The clauses in the agreement were against Bharat’s policies.

On the other hand, IPEF does not seem to be appealing enough. US President tried to sell it to the ASEAN nations, but not many are members of it. Generally, in a trade agreement, the countries expect some reduction in taxes, hence their goods are cheaper in the foreign market. Moreover, FDIs are offered as well as accepted. But IPEF does not talk about any concessions or opening US markets for member nations. It does not offer any lurking discounts in import duties. It just talks about partnership and some virtual goals. Moreover, Taiwan is also not seen in the picture. Only 13 nations are member to IPEF excluding arch enemy of China, Taiwan. Bharat is a member of IPEF, but the government gave general statements about its formation. Nothing concrete came from the government of Bharat.

Initially there was an attempt by the United States to form a security group to counter China, AUKUS. But it again excluded major powers of Asia, Bharat and Japan. AUKUS seemed to be made only to share the Nuclear-powered submarine technology. Later few announcements were made that UK aircraft carrier will visit South China Sea and America to increase its military presence there. US also assured to arm Australia with its Tomahawk missiles. But this didn't affect the expansionist movements of China. We witnessed its military drills on Taiwan coast, violation of territorial integrity of Philippines, Palau and other tiny nations.

In past few months Chinese are seen to be upgrading from an economic superpower to a military superpower. The recent deals with Solomon Islands to station Chinese military and the news that China to station its army personnel in Pakistan for the sake of safety of its engineers working with CPEC.

Seeing the developments, there was a need to counter China on a global forum. United States seem to have used Quad summit for the same.

Quad is a cooperative group of four nations United States, Bharat, Australia and Japan. It was formed in 2004 after the Tsunami had hit the South East Asia. So, the base of Quad is collectively countering natural disasters and climate change. On paper Quad is a non-military cooperation. In 2007 Bharat used Quad strategically due to rising Chinese aggression. Bharat invited Quad members (Australia and Japan) to its military exercise Malabar which it used to conduct only with United States.

United States launched a brand-new trade pact instead of elongating Quad because it had to prove that it is taking efforts to counter Chinese economic expansion in South East Asia. It also has to do something which can recover the mess it did in Ukraine. Early in 2021 United States came up with a project during G-7 summit in Cornwall called as Bring Back Better World. It was to counter the Belt and Road initiative of China. But it again excluded the South Asian nations.

The IPEF isn't as lucrative as RCEP. So many ASEAN nations didn't join it. Considering Bharat, yes it joined the framework. But it doesn't affect the trade Bharat conducts in any region. The IPEF considers coordination between the western and south Asian nations. But Bharat already has very impressive trade pacts with each and every member nation of IPEF, thanks to its independent foreign policy. It has trade agreements with US, Australia and Japan. After withdrawing from RCEP Bharat signed free trade agreements with ASEAN nations. So basically, IPEF doesn't affect Bharat largely.

Lastly the people for whom IPEF was made aren't much happy with it. So only time can tell what impact it will make on Chinese trade frameworks in the South Asian region.

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