A Timely Warning on Avoiding the Indo-Pacific Economic Framework that Deserves Wide Attention | Bharat Dogra

As past experience has repeatedly shown, in the prevailing economic, trade, and investment realities of the world, it is very important from the outset to be very cautious regarding joining any international frameworks and agreements involving the superpowers as the language may be that of cooperation but the reality may be that of people of developing countries having to pay heavily while the big business interests of the superpowers are able to further enhance their prospects and influence. Hence a very timely warning given by several leading civil society organizations, including those with special expertise on trade, investment, health, agriculture, and labor issues, regarding the IPEF in the context of protecting the interests of our country and people should get wide attention. The Indo-Pacific Economic Framework for Prosperity or IPEF is a US-led trade agreement with expansive rules on regulatory issues.

On behalf of the Forum for Trade Justice, a letter has been sent to the Indian Commerce Minister. This letter has been signed by such leading organizations as ASHA Kisan Swaraj, All India Kisan Sabha, Bharatiya Kisan Union, All India Drug Action Network, All India People’s Science Network, Jan Swasthya Abhiyan, National Fishworkers’ Forum and Focus on the Global South ( India) and others, a total of 31 organizations active in diverse but crucial public interest areas. This letter has drawn attention to several dangers inherent in participating in the IPEF and has urged the Commerce Minister to withdraw from the IPEF processes.

This letter sent to the Commerce Ministry has expressed deep concern at the Indian government’s decision to join the United States of America (US) led agreement; the Indo-Pacific Economic Framework (IPEF) for Prosperity. As the letter says, this has happened without due consideration and parliamentary scrutiny in terms of IPEF’s implications for India’s economic and development policy space. Moreover, the signatories say they have been alarmed to read from recent media reports that India may overturn its earlier prudent decision to stay out of the IPEF’s problematic trade pillar and join negotiations on this as well as joining the trade pillar can impact India’s policy space to develop critical economic sectors and support certain constituencies.

This letter notes that while the US has strategically pitched the IPEF as ‘not the usual’ trade agreement (as it does not include market access commitments such as import duty cuts), this should not mislead the Indian government into believing that the IPEF will only involve cooperation and no commitment to open up imports. On the contrary, this letter says, “the IPEF is actually more intrusive than Free Trade Agreements (FTAs) as it targets national policies and regulations across member countries and will therefore make deep inroads into India’s regulatory policy space. Therefore the IPEF is likely to push US interests not through direct market access channels, but through changing regulations and standards, which will then indirectly lead to market access in the second stage.”

Further, the letter suggests that the prevailing belief among some trade officials that the IPEF will not be enforceable and is a “soft” agreement which can be negotiated and finalized quickly as it does not pose any legally binding commitments, may not reflect the actual situation. The letter by prominent civil society organizations including expert bodies says, “From our analysis, the IPEF will include ‘high standard commitments that will be enforceable’ and India will have to comply with any commitments it makes. The IPEF’s four pillars (Trade, Supply Chains, Clean economy, and Fair economy) will include provisions, and therefore create a wide-ranging impact, on multiple sectors including agriculture, fisheries, manufacturing and services, as well as on constituencies such as farmers, fishers, workers and women. In particular, the IPEF will also impact policies related to the digital economy, environment and sustainability, taxation and finance among other issues.”

Further, this letter asserts, “Under the trade pillar, agriculture is a key area. While India will not have to make direct tariff cuts, the IPEF will still extract commitments for facilitating agricultural trade through ‘science-based decision making’ and the adoption of ‘sound, transparent regulatory practices’. Despite sounding innocuous, these provisions will allow the US to ensure a more favorable regulatory regime in IPEF countries for enhancing its exports of genetically modified (GM) seeds and GM food. Not only will this preempt India’s policy options to restrict import and sale of GM products, but in addition any surge in imports of products, such as GM corn and GM soybean, that are major exports of the US, will significantly hurt the livelihoods of Indian farmers. In addition, the so-called “sustainable practices” under IPEF may bring in gradual enforcement of disciplines on subsidies to the agriculture sector. Several provisions will impact regulations related to seeds, pesticides, export restrictions, and investments in productive resources.”

What is more, this letter points out, “the IPEF trade pillar specifically includes provisions related to labor, gender, and environment. The Indian Government has hitherto opposed the inclusion of these issues in trade agreements. While we stand fully committed to high policy and regulatory standards on these issues, trade agreements have always been used by developed countries to set standards and impose conditionalities in a manner that will adversely impact India’s ability to produce food, protect livelihoods, and develop key products and services. These standards are used as a disguised form of market access for developed country products and services. This will, in reality, hurt the interests of our small farmers, fishers, producers and workers across developing countries, not protect them.”

In particular, this important communication has pointed out, “the environmental provisions under IPEF are expected to be expansive. It will include commitments on domestic policies related to environmental conservation; climate change; production of environment friendly products and services including renewable energy; and India’s food systems.”
This letter has also drawn attention to the fact that the digital elements of the IPEF are facing opposition even in the US as means to ensure that Big Tech remains unregulated. Big Tech is one of the biggest supporters of IPEF. The letter says, “Countries like India, which for very good reasons have stayed out of digital trade related negotiations at the WTO and elsewhere, face the prospect of complete digital colonization if it sacrifices its policy space in this key area. India needs its own rapid digital industrialization, and is well posed for it. Signing the digital parts of the IPEF would in the circumstances be suicidal.”

Moreover, the letter points out, “it is important to understand that there are already trade related commitments emanating from the other three pillars. For example, the supply chain pillar may include constraints on export taxes or export restrictions to protect critical raw material & minerals and domestic food security. The supply chain pillar also talks of “promoting more circular economies” which is a way to promote re-manufactured goods thus posing a threat for several industries. Thirdly, the environment pillar suggests rules on ‘sustainable land, water and ocean solutions’ which may bring additional disciplines on fisheries subsidies on the lines of US FTAs or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This will be in addition to the current WTO Fisheries Subsidies Agreement (FSA) that India is expected to ratify soon which already imposes harsh disciplines on subsidies for small fishers in India.”

Finally, this letter asserts, “despite the so-called stakeholder consultations, the IPEF remains a non-transparent and undemocratic trade agreement that is almost unilaterally designed and promoted by the most powerful economy in the world. The IPEF is nothing but a backdoor channel for the US to set global standards and regulations and secure the market interests of US based multinational corporations (MNCs). It is neither in India’s economic interest nor consistent with India’s efforts to achieve the Sustainable Development Goals (SDGs) and protect its development policy space in the interests of its economy and its people. We urge India to not join the trade pillar citing geo-political considerations and without analyzing the full implications of the agreement. India will pay a huge cost by sacrificing its economic and social interests and therefore, the signatories to this letter call upon the Indian Government to begin a process of exiting from the IPEF as it had done prudently in the past with the Regional Comprehensive Economic Partnership (RCEP) in 2019.”

Clearly the issues raised in this letter are very important and should get the attention of the government with a sense of urgency, apart from initiating a democratic debate on these issues in the country.

(Author: Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include Planet in Peril, Man over Machine, Protecting Earth for Children and A Day in 2071)