India has signed on to the US initiative of the Indo-Pacific Economic Framework (IPEF) aimed at bolstering US economic presence in a region where China is a major player.
With China’s growing economic clout in Asia and around the world, the US is now keen to meet the Chinese dragon at its doorstep. The idea is to gradually build an alternative system to compete with China. However, this is easily said than done.
The US President Joe Biden launched the new deal with 12 countries coming on board, including India. The announcement was made by Biden in the presence of Prime Minister Narendra Modi and the host Fumio Kishida, the Japanese Prime Minister.
Besides the four Quad members – US, India, Japan, and Australia – others in the initial stage include Brunei, Indonesia, South Korea, Malaysia, New Zealand, the Philippines, Thailand and Vietnam. All the countries, including the US, have massive trade with China.
India was invited and briefed about the agreement, but Foreign Secretary Vinay Kwatra gave no hint of India signing in at the news briefing ahead of Modi’s visit. The details of what this would mean to India or for that matter how it will finally pan out are not yet known. Unlike normal trade agreements, the IPEF does not call for lowering of tariff barriers between signatories.
Biden said as he announced the new partnership, “The Indo-Pacific covers half the population of the world and more than 60 per cent of the global GDP. And the nations represented here today, and those who will join this framework in the future, are signing up to work toward an economic vision that will deliver for all peoples — all our peoples: the vision for an Indo-Pacific that is free and open, connected and prosperous, and secure as well as resilient, where our economic — where economic growth is sustainable and is inclusive.’’
Speaking of the vision for Indo-Pacific, Biden said, “The vision for an Indo-Pacific that is free and open, connected and prosperous, and secure as well as resilient, where our economic — where economic growth is sustainable and is inclusive.”
The new agreement is still a work in progress as the statement clearly states that Tuesday marks the launch of the collective negotiations on trade, supply chain networks, clean energy, promoting fair competition, and enhancing anti-corruption loopholes in the system.
The idea is to create transparency in business to ensure that no company can bribe its way to get a deal. All this is in sharp contrast to China’s opaque way of doing business where leaders are bribed and the public have no clue as to the details of the agreement.
The US and its friends, including India, believe that these Chinese agreements lead to huge debt for host nations. Sri Lanka is a living example of what can happen when the political leadership takes huge loans from China and are unable to pay off their debts.
Much of Sri Lanka’s problems today arise from its inability to pay back massive loans, not just to China but to Japan and several international institutions from where the Rajapaksas borrowed money.