Industry News

Indo-Pacific Economic Framework for Prosperity Implemented

Feb. 13, 2024
By: Chaney A. Finn

The Indo-Pacific Economic Framework for Prosperity (IPEF) is a United States-led initiative intended to strengthen ties in the Indo-Pacific and unify countries against non-market influences and aggressive trade policies exhibited by the largest economy in the region, China. This initiative is facilitated by four policy pillars consisting of connected economy focused on labor, environment, and competition; resilient economy covering supply chain resilience; clean economy for infrastructure and decarbonization; and fair economy to address tax and anti-corruption topics. Interestingly, it is not a “free trade agreement” in that there is no market access provision.  

Participating members consisting of the United States, Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam participated virtually in the first meeting In May 2023 and signed an IPEF agreement in November 2023. Recently, the U.S. Department of Commerce announced the IPEF will officially take effect on February 24, 2024. Observers may recognize that the IPEF encompasses many of the same countries as the Trans-Pacific Partnership (TPP) free trade agreement negotiated by the Obama Administration and rejected by the Trump Administration. The IPEF is seeking some of the benefits of TPP without the free trade provisions.

Once in effect, three supply chain bodies will be established under Pillar II (resilient economy covering supply chain resilience) to form the Supply Chain Council, Crisis Response Network, and Labor Rights Advisory Board. The announcement outlined the following deadlines:

  • March 25 - Identify the representatives to the Agreement’s three supply chain bodies;
  • April 24 - Select the Chair of each of the supply chain bodies;
  • June 23 - Adopt terms of reference for each body;
  • June 23 - Identify and notify partners of each country’s list of critical sectors and key goods for cooperation under the Agreement for each country; and
  • August 22 – Develop guidelines for the facility-specific reporting mechanism on labor rights inconsistencies in IPEF supply chains.

The framework is intended to strengthen U.S. economic ties in the region, as well as help build resiliency into supply chains that faltered under the pressure of the pandemic. Nevertheless, the IPEF has been criticized for not containing free trade/market access provisions. It should be noted that these provisions were the heart of the rejected TPP, which the remaining TPP countries implemented under a slightly different name without the United States. It is not clear whether the IPEF countries would have been willing to negotiate another free trade agreement with the United States in an election year.

This framework has also come under fire, as has similar recent agreements, that the USTR lacks the Constitutional authority to enter the U.S. into trade agreements without Congressional approval. Similar agreements were notably to secure critical mineral and semiconductor supply chains that pose significant economic and national security implications.

If you have any questions about global trade developments, trade in the Indo-Pacific region, or utilizing trade agreements do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP.