A first-of-its-kind multinational agreement involving the US, Japan, and Indo-Pacific countries took place on Saturday, February 24 according to the Kyodo News. It will focus on countries helping each other with critical items during natural disasters and through other international crises such as the pandemic.
The deal includes countries such as Fiji, India, and Singapore among others. It has been negotiated under the US-led Indo-Pacific Economic Framework (IPEF) launched in May 2022 by President Biden. According to the US Department of Commerce, the IPEF covers trade; supply chains; clean economy; and fair economy.
Notably, China is not one of the member countries, which is part of the agreement.
On February 1, US Commerce Secretary Gina Raimondo said the pact will facilitate a collaborative approach to strengthen supply chains.
“This is a critical step in bringing the landmark, first-of-its kind agreement into action and promoting coordination among the IPEF partners on building resilient, efficient, productive, sustainable, transparent, diversified, secure, fair, and inclusive supply chains,” she said.
The IPEF Supply Chain Agreement, was signed by the 14 IPEF partners in May 2023, according to a US Department of Commerce press release. In the release, it stated that the “conclusion of the negotiations had resulted in the IPEF Clean Economy Agreement, IPEF Fair Economy Agreement, and the Agreement on the Indo-Pacific Economic Framework for Prosperity.”
The supply chain agreement under the IPEF Fair Economy agreement is the first of the agreements to come into place.
The agreement is significant because, according to US statistics, the member countries comprise about 40 percent of global gross domestic product and 28 percent of global goods and services trade. India, in particular, has undergone a decade of economic transformation.
The US Department of Commerce stated that “foreign direct investment in the region totaled more than $969 billion in 2020 and has nearly doubled in the last decade. Trade with the Indo-Pacific supports more than three million American jobs and is the source of nearly $900 billion in foreign direct investment into the United States.”
China reaction to the IPEF could be seen in an article in the Global Times in May 2023. It quoted China’s Commerce Minister Wang Wentao who had told the paper after a meeting with Raimondo.
“China-US candid trade talks offered a start to address the core issues in ties. However, Raimondo’s move to skip China and get other countries to take action against China is not a way to solve the core issues,” he said.
