Why the US’ Indo-Pacific Economic Framework is really all about India
- If the IPEF seems to offer little to Southeast Asian members, that’s because it was never really meant to
- Instead, the framework is another attempt to bring India into the Western fold while positioning it more strategically in the Indo-Pacific trade network
It was certainly not his “America is back” moment, and if the details of the IPEF are any indicator, nor was it the unrolling of the red carpet for America’s re-entry into the Asian trade architecture.
For starters, the framework sets the standards for cooperation on supply chain issues, the environment, labour and corruption. It is not a free trade deal or a multilateral agreement like the erstwhile US led-Trans-Pacific Partnership (TPP).
The framework may not necessarily bring the US into the Asian trade architecture but it will certainly bring it into the “Indo”-Pacific one.
Despite these overt and other covert measures, India’s relationship with Russia has not significantly changed. While the Indian government is seeking to diversify its defence supplies, this predates the Ukraine conflict and has been a mainstay of the Modi administration’s policy.
Given the perennial challenge of Russia-India relations, Washington has diverted its focus to areas where the US-India relationship can be developed without hiccups. The Indo-Pacific theatre is one in which the two have shared interests, goals and enemies.
These two withdrawals gave their common foe, China, a leg up in the Asian trade arena. One economy’s loss is another’s gain and so China, a signatory to the RCEP, has applied to become part of the CPTPP, expanding its trade partnerships to countries across Southeast Asia and the Pacific.
Over the past decade, it has become abundantly clear that countries run by populists are not too enthusiastic about committing to multilateral free trade agreements. While Biden is no populist like Trump, he can read the room: the American electorate in the rust belt states of Ohio, Pennsylvania and Michigan no longer want their manufacturing jobs to be shipped to China or Southeast Asia.
As The Wall Street Journal noted in its coverage of the US midterm election campaigns, Democrats and Republicans are trying to out-compete each other by spending on ads targeted towards China. There is a bipartisan odious feeling towards free trade agreements that provide unfettered access to American markets and ship jobs overseas, mostly benefiting large corporations. The IPEF is a product of this development.
Quad role helps rising India find its place among global powers
Furthermore, the sector predicted to benefit most from the IPEF is the digital one. As a service-sector-led economy, India stands to gain from digital trade. In a country where e-commerce and software companies are the fastest-growing and among the largest contributors to the exchequer, the IPEF will be well received.
The IPEF could be the West’s last attempt to bring India into its fold and into the Asian trade architecture. It will be prudent for the Modi administration to be receptive to this opportunity. If instead, however, it repeats the RCEP style of negotiating a trade deal until withdrawal, it may not have any powerful economic partners by its side.
Akhil Ramesh is a fellow at the Pacific Forum