Lack of clarity on the nature as well as potential benefits of binding commitments, especially in digital trade, labour and environment, and fears of hasty pledges undermining its still-evolving policies in areas like data privacy have prompted India to opt out of the sensitive “trade pillar” of a US-led initiative for now.
Nevertheless, India has endorsed the underlying objective of the Indo-Pacific Economic Forum for Prosperity (IPEF) initiative to foster “high-standard, inclusive, free and fair trade”, according to a joint statement issued after a two-day ministerial of the 14-member IPEF here on Friday.
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Moreover, New Delhi has joined the three other critical pillars of the IPEF, such as supply chain, clean economy (clean energy, decarbonisation, and infrastructure) and fair economy (anti-corruption, anti-money laundering and tax). The IPEF is being viewed by analysts as a mechanism to counter the aggressive and non-transparent trade and economic policies of China.
Commerce and industry minister Piyush Goyal stated that a broader consensus on certain aspects of the trade track has yet to emerge among all the 14 members of the IPEF.
New Delhi will continue to engage other members and wait for final contours of the IPEF framework on this pillar to emerge so that it can take a final decision, he said.
The trade pillar requires a country to make commitments on several sensitive issues, including digital economy, data flow, labour, environment and public procurement. India is in the process of firming up its own rules and regulations on some of these areas, especially in the digital economy and data privacy. Recently, the government withdrew its own Personal Data Protection Bill from Parliament to introduce a more “comprehensive legal framework”. So, it would have been hard for New Delhi to take on any binding commitments at the IPEF forum on these issues, especially when details of any such framework remains sketchy.
Explaining the reason behind India’s decision, Goyal said: “We have yet to see what benefits member countries will derive (from various aspects of the trade pillar) and whether any conditionalities (will be imposed) on, for example, environment.” The country will also be sensitive to any potential discrimination in the IPEF framework against developing countries, “who have the imperative to provide low cost and affordable energy to meet the needs of a growing economy”. “We are also in the process of firming up our own digital framework and laws, particularly regarding data privacy,” he said.
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The IPEF is a grouping of 14 countries in the Indo-Pacific region, which make up over 40% of the global GDP. The 14 members are Australia, Brunei, Fiji, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam and the US. The others have joined all the pillars of this initiative.
Addressing reporters here on Friday, US trade representative Katherine Tai said: “India is not now in the ‘trade pillar’. However, minister (Piyush) Goyal and I have been talking and we have our bilateral and trade policy forum. I should be meeting him by the end of this year. We would cover the same issues in that bilateral channel.”
Asked why India opted out, Tai said: “I wouldn’t characterise it as opting out, India is not in the trade pillar right now.” It means doors remain open for New Delhi to join the ‘trade’ pillar later should it change its mind.
(The reporters is in the US at the invitation of industry body CII)
