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India accepts three out of four pillars of US-led IPEF, so why has it stopped short of a total agreement?

12/09/2022    69

So far, India has agreed to three pillars relating to supply chains: tax, anti-corruption and clean energy, but the fourth pillar on data and privacy is yet to be completely agreed upon.

Speaking at a press conference after the Indo-Pacific Economic Framework (IPEF) Ministerial meeting in Los Angeles in the US, Minister of Commerce & Industry Piyush Goyal said India had agreed to three out of four pillars of trade relating to supply chains: tax, anti-corruption and clean energy. “India was comfortable with the outcome and text and have joined the declaration”, said the minister.

An important US-led trade agreement that has been in the works for a while now and according to a September 10 press release, the Indian government said it is waiting for “contours to emerge” on one pillar, which deals primarily with trade and commitments to the environment, labour, digital trade and public procurement.

The minister said India will be watching “what benefits member countries will derive and whether any conditionalities on aspects like environment may discriminate against developing countries”.

How did the IPEF come about?

Given the emergence of multi-country trade agreements such as the China-led Regional Comprehensive Economic Partnership (RCEP) among east Asian countries and the Trans-Pacific Partnership (TTP) from which former US President Donald Trump walked out of, the US has been looking to have a setup of its own.

US President Joe Biden first discussed the IPEF in the East Asia Summit on October 2021, saying “United States 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, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest”.

US officials had said IPEF is not a free trade agreement, and not the “same old, same old” kind of trade agreement, but allows members to negotiate the parts they want to. The negotiations will be along four main “pillars”.

Currently, India and 13 countries located in the Pacific ocean are its members: Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, United States, and Vietnam.

What is India’s position on the IPEF?

While some countries had expressed interest in joining negotiations, India did not declare a definitive position for some time. In ‘Deciphering the IPEF’, a research paper from March 2022, Prabir De of the Research and Information System for Developing Countries, a think tank of the MEA, wrote India “may also be uncomfortable with the US high standards, and would like to avoid risks”.

He further added, “Some areas proposed in the IPEF do not appear to serve India’s interests. For example, the IPEF talks about digital governance but the IPEF formulation contains issues that directly conflict with India’s stated position.” Piyush Goyal also said at the press conference that India was in the process of firming up its own digital framework and laws, particularly regarding privacy and data, and it would wait for more information. In the meantime, officials will be participating in the discussions “with an open mind”.

In August this year, the Indian government withdrew the Personal Data Protection Bill from Parliament, saying it would consider “comprehensive legal framework” to regulate the online space, laws on data privacy, and data localisation, the overall Internet ecosystem, cybersecurity, etc.

What are some of the concerns?

The US has earlier expressed concerns about the possibility of the Indian side demanding data localisation or the storage and processing of Indian users’ data in servers located in India and not the US, even in the case of data of US-based companies.

In the US’s National Trade Estimate Report on Foreign Trade Barriers, it said India’s policy “will serve as significant barriers to digital trade” and act as “market access barriers, especially for smaller firms”.

Source: The Indian Express