Indo-Pacific Economic Framework for Prosperity: A snapshot of the initiative

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    24 May 2022

     

    By UOB Global Economics & Markets Research


    Key takeaways

    • The IPEF aims to strengthen economic partnership between the US and its Asian partners through a non-traditional trade agreement; rather than negotiate on tariffs and market access, it integrates partners through agreed standards on selected pillars.
    • The framework covers four main pillars: the digital economy, supply chain resilience, anti-corruption measures and clean energy infrastructure.

     

    During the East Asia Summit in October 2021, US President Joe Biden announced that the US “will explore with partners the development of an Indo-Pacific economic framework that will define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonisation and clean energy, infrastructure, worker standards, and other areas of shared interest.”

    On 23 May 2022, President Biden formally launched the Indo-Pacific Economic Framework for Prosperity (IPEF) during his five-day visit to South Korea and Japan. This is his first trip to Asia as US President.

     

    What is in IPEF?

    Unlike traditional trade agreements, the IPEF does not negotiate on tariffs and market access. The programme foresees integrating partners through agreed standards in four main pillars:

     

    What is in IPEF

     

    Who are the members?

    The pact is led by the US, with an initial list of 12 Indo-Pacific countries:

     

    Members

     

    Major Trade Blocs In Asia
    CPTPP: Comprehensive and Progressive Agreement for Trans-Pacific Partnership
    RCEP: Regional Comprehensive Economic Partnership

     

    What’s next for IPEF?

    Following the announcement, the 13 IPEF members will start negotiations on each pillar. The framework descriptions so far have been largely broad-based. There are few details as of now to judge how IPEF will eventually compare to other trade blocs like CPTPP or RCEP. The key will be when the members hold negotiation on the terms encompassing the pact – which will be one of the determining factors for the prospect of IPEF.

    Originally published as an infographic here.

    Source: White House Statement, media reports, UOB Global Economics & Markets Research

     

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