New Delhi: India, the US and 12 other members of the Indo-Pacific Economic Framework (IPEF) have signed a supply chain resilience agreement that is aimed at helping reduce dependence on China, and shifting production of critical sectors and key goods to member countries.
IPEF has 14 members, including India, Australia, the US, Japan, Fiji, South Korea, New Zealand, Singapore and Thailand, representing 40% of the global gross domestic product and 28% of the global trade in goods and services.
The agreement was signed on Wednesday in San Francisco, where commerce and industry minister Piyush Goyal is attending the IPEF ministerial meeting.
"India joins US and 12 other Indo-Pacific Economic Framework for Prosperity partners to ink the #IPEF Supply Chain Resilience Agreement, a first-of-its-kind international agreement that will fortify and strengthen global supply chains, foster adaptability, stability and sustainability," Goyal said in a post on social networking platform X.
More Investment, Integrated Supply Chain
Members of the bloc concluded negotiations on this agreement, one of the four pillars of the IPEF, on May 27.
"The agreement is expected to make IPEF supply chains more resilient, robust and well-integrated, and contribute towards economic development and progress of the region as a whole," the commerce and industry ministry said in a release.
The pact will come into force after implementation of the agreement by any five member countries.
Goyal emphasised enhanced collaboration to realise the collective aims of IPEF, particularly on the need for mobilising affordable financing for clean economy transition and enhancing technology cooperation.
Goyal "also urged early implementation of the envisaged cooperative work under IPEF, including on (the) biofuels alliance suggested by India," the ministry said.
The other benefits of the pact include supply chain diversification, mobilisation of investments, deeper integration of India in global value chains, support to micro, small and medium enterprises (MSMEs) and creation of a seamless regional trade ecosystem, which would facilitate the flow of Indian products.
IPEF is structured around four pillars relating to trade, supply chains, clean economy and fair economy (related to issues such as tax and anti-corruption). India has joined all pillars except that on trade.
The supply chain agreement contemplates the establishment of three new IPEF supply chain bodies to facilitate cooperation among the partners.
These are the supply chain council, the supply chain crisis response network and the IPEF labour rights advisory board.
The proposed advisory board - comprising government, worker and employer representatives, and a subcommittee composed of government representatives - would support IPEF partners' promotion of labour rights in their supply chains, promotion of sustainable trade and investment, and facilitation of opportunities for investment in businesses that "respect labour rights."
Officials said the clauses related to labour would not be subject to dispute settlement and are meant as a cooperative mechanism.
The trade pillar of IPEF is taking more time to conclude. Members are expected to announce the end of talks for fair economy and clean economy pillars during the week.