Referring to the U.S. as an “Indo-Pacific nation,” a recent fact sheet from the U.S. Department of State provides some key metrics regarding the importance of the Indo-Pacific region as an “essential driver of America’s future security and prosperity,” describing it as:
- The “most dynamic and fastest-growing region on earth”
- Home to “more than half the world’s population”
- Responsible for “60 percent of global GDP” and “two-thirds of global economic growth”
“Trade between the United States and the Indo-Pacific region reached over $2 trillion in 2022, and the United States benefits from $956 billion in foreign direct investment from the Indo-Pacific,” the fact sheet says. “Our people-to-people ties bind us together – over two-thirds of international students in the United States are from the Indo-Pacific.”
In February 2022, the Biden Administration released its Indo-Pacific Strategy as a first step toward advancing “our shared vision for an Indo-Pacific region that is free and open, connected, prosperous, secure, and resilient.”
Launched in May 2022, the Indo-Pacific Economic Framework for Prosperity (IPEF) is one major effort toward achieving that vision.
What is the IPEF?
Although there are a lot of moving parts to the IPEF, this brief overview from the Office of the United States Trade Representative (USTR) provides a nice synopsis of key points:
- In May 2022, the United States launched the IPEF with Australia, Brunei Darussalam, Fiji India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam
- This framework will advance “resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness for our economies”
- Through this initiative, the IPEF partners aim to “contribute to cooperation, stability, prosperity, development, and peace within the region”
- This framework will offer “tangible benefits that fuel economic activity and investment, promote sustainable and inclusive economic growth, and benefit workers and consumers across the region”
According to the USTR, the launch “began discussions of future negotiations” on the following four pillars:
- Trade
- Supply Chains
- Clean Energy, Decarbonization, and Infrastructure
- Tax and Anti-Corruption
“The IPEF is designed to be flexible, meaning that IPEF partners are not required to join all four pillars,” the USTR says and includes links to the IPEF ministerial statements for each:
- Pillar I (Trade)
- Pillar II (Supply Chains)
- Pillar III (Clean Energy, Decarbonization, and Infrastructure)
- Pillar IV (Tax and Anti-Corruption)
What is the IPEF supply chain agreement?
The IPEF supply chain agreement entered into force on Feb. 24, according to an announcement from the U.S. Department of Commerce issued at the end of January.
The Commerce Department describes this as a “critical step in bringing the landmark, first-of-its kind agreement into action and promoting coordination among the IPEF partners on building resilient, efficient, productive, sustainable, transparent, diversified, secure, fair, and inclusive supply chains.”
The 14 IPEF partners – the United States, Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam – negotiated the IPEF Supply Chain Agreement “to establish a framework for deeper collaboration to prevent, mitigate, and prepare for supply chain disruptions, such as those experienced in recent years from the COVID-19 pandemic.”
“I am thrilled to see the continued commitment and enthusiasm of the IPEF partners to make concrete progress and deliver tangible outcomes in record time,” said U.S. Secretary of Commerce Gina Raimondo in the statement. “With the IPEF Supply Chain Agreement shortly entering into force, we will now move forward and work collaboratively through this innovative framework with the goal of strengthening our supply chains and preventing potential disruptions before they arise for the collective benefit of our countries’ workers and businesses.”
The IPEF Supply Chain Agreement was signed in November 2023. Since then, five IPEF partners – Fiji, India, Japan, Singapore and the United States – deposited their instruments of ratification, acceptance, or approval, triggering the Agreement’s entry into force provision.
According to the announcement, the Agreement’s entry into force allows the focus to now shift to achieving “various milestones set out in the Agreement related to establishing three supply chain bodies – the Supply Chain Council, Crisis Response Network, and Labor Rights Advisory Board, including:
- Identifying the representatives to the Agreement’s three supply chain bodies by no later than March 25;
- Selecting the Chair of each of the supply chain bodies by no later than April 24;
- Each body adopting the terms of reference by no later than June 23;
- Identifying and notifying partners of each country’s list of critical sectors and key goods for cooperation under the Agreement by no later than 120 days after the date of the entry into force for each country; and
- Developing the guidelines for the facility-specific reporting mechanism on labor rights inconsistencies in IPEF supply chains by no later than August 22.”
“The IPEF Supply Chain Agreement was negotiated pursuant to the Ministerial Statement on Pillar II (Supply Chains) released during the IPEF Ministerial meeting in September 2022 in Los Angeles, California,” the announcement explained. “Negotiations were substantially concluded in May 2023 after approximately six months of negotiations. The text of the agreement was made public in September 2023. On November 14, 2023, Secretary of Commerce Gina Raimondo and her counterparts formally signed the landmark agreement in San Francisco, California.”
Recent IPEF progress
On March 14, the U.S. Commerce Department issued a release describing recent IPEF progress.
“Today, U.S. Secretary of Commerce Gina Raimondo joined Thai Deputy Prime Minister and Foreign Minister Parnpree Bahiddha-Nukara along with the ministers from the 12 other IPEF partners, in their first ministerial meeting this year,” according to the statement. “During the virtual ministerial meeting on Pillars II-IV, Secretary Raimondo welcomed the significant progress made since the substantial conclusion of the negotiations for the proposed IPEF Clean Economy Agreement, the IPEF Fair Economy Agreement, and Agreement on IPEF in November 2023. The IPEF partners also discussed the ongoing cooperative work ahead across the three proposed agreements.”
Additional meeting details include:
- Raimondo “welcomed the February 24, 2024 entry into force of the IPEF Supply Chain Agreement, and reaffirmed the U.S. commitment to work closely with the IPEF partners to quickly begin operationalizing the agreement”
- The Department of Commerce “today published the text of the proposed Clean Economy Agreement, Fair Economy Agreement, and Agreement on IPEF”
- Next steps were discussed related to delivering “concrete outcomes under the Framework over the next several months,” including “several new lines of effort under the Clean Economy pillar, including the launching of four new Cooperative Work Programs (CWPs), announcing that the inaugural IPEF Clean Economy Investor Forum will be held in Singapore on June 5-6, and providing more details on the IPEF Catalytic Capital Fund”
- The IPEF partners announced that the Ministers will next meet in-person in Singapore on June 6 “to discuss the Supply Chain Agreement, the Clean Economy Agreement, the Fair Economy Agreement, and the Agreement on IPEF”
“I continue to be amazed by the energy and collaborative spirit that each of our IPEF partners brings to the table and by how much we have accomplished together in such a short amount of time,” Raimondo said in the statement. “This framework did not exist less than two years ago. And now, from completing the legal review of the proposed Clean Economy and Fair Economy Agreements and the Agreement on IPEF, to bringing the Supply Chain Agreement into force and launching additional meaningful initiatives, it’s clear that the next phase of IPEF will continue to deliver concrete results for each of our economies.”
For additional details, please see the full release.
