Implications, challenges of the IPEF

Ever since May 2023, when the-14 member Indo-Pacific Economic Framework (IPEF) reached an agreement on strengthening the resilience of supply chains, a crucial aspect of the framework's second pillar, an intense debate has been ignited within academia and media regarding its feasibility and implications.

For obvious reasons, scholars and commentators have delved into the potential ramifications and explored various perspectives on the matter. Some have scrutinised the practicality of implementing the agreement, while others have examined the potential economic and geopolitical implications it may entail.

While the final text of the IPEF Supply Chain Agreement is yet to be unveiled to the media, initial indications have partially revealed its main features, suggesting the creation of broad-spectrum regulations and institutional mechanisms. The success of this agreement hinges on its implementation, with a particular focus on delineating tangible measures and possibly establishing specialised projects to propel further advancements.

Launched by US President Joe Biden in May 2022 during a Quad Summit in Tokyo, the Indo-Pacific Economic Framework (IPEF) is a coalition of India, Australia, Brunei, Fiji, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. The official declared IPEF objective is to establish a shared framework based on four key pillars: connectivity and digital trade, resilient supply chains, clean energy, and corruption-free fair trade. But the IPEF is generally viewed as the United States' strategic response to its perceived retreat from the Asia-Pacific region during the Trump era, symbolised by the withdrawal from the ambitious Trans-Pacific Partnership (TPP), now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Apparently, the IPEF is a move by the Biden administration to counter China's increasing sway in the Indo-Pacific region. With the IPEF, the United States aims to expand its economic leadership in the region while advancing its foreign policy and economic interests. Through strategic partnerships with member countries, the US seeks to enhance the development of supply chains and promote regional connectivity in both physical and digital realms.

The global response from the business community, trade experts, and civil society has been a mixed bag. While some hailed this agreement as a comprehensive accord aimed at tackling supply chain vulnerabilities, critics were quick to highlight its lack of substantial action and enforceable commitments.

Instead of concrete measures, the agreement appears to prioritise a process-driven framework, raising doubts about its effectiveness in delivering tangible results. This disparity in reactions underscores the scepticism surrounding the IPEF's approach. Septics argue that a focus on building frameworks and institutions without substantive actions may fall short in addressing the pressing challenges faced by global supply chains. The absence of binding commitments raises concerns about the agreement's ability to bring about meaningful change and protect labour rights in an increasingly interconnected and vulnerable economic landscape.

Ironically, the current structure of the framework falls short in providing substantive specifics. This has lent weight to the prevailing belief among Washington insiders and regional power centres that the Biden Administration faces challenges in fleshing out the substantive components of the IPEF. The IPEF agreement on supply chain faces its most pressing challenge in its inability to offer tangible market access advantages to regional nations. Southeast Asian and South Asian developing countries eagerly anticipate exporting their agricultural and manufactured goods to the United States. Under the pressure of the United States, the IPEF has deliberately omitted any discussion of market access, a matter of critical importance to the ASEAN countries.