SYLLABUS SECTION: GS II (INTERNATIONAL RELATIONS)
WHY IN NEWS IPEF VERSUS RCEP?
Earlier this month, US had suggested an Indo-Pacific Economic Framework IPEF VERSUS RCEP grouping of countries, and the US President announced the formation of a 14-nation IPEF.
- The Indo-Pacific Economic Framework (IPEF) was launched by United States (US) President Biden in Tokyo on May 23, 2022.
- Four pillars: Trade; supply chains; clean energy, decarbonization and infrastructure; tax and anti-corruption.
- Member Countries: South Korea, New Zealand, Fiji and seven out of the 10 members of the Association of South-East Asian Nations (ASEAN)
REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)
- The Regional Comprehensive Economic Partnership (RCEP) is a proposed agreement between the member states of the Association of Southeast Asian Nations (ASEAN) and its free trade agreement (FTA) partners.
- Member states of Asian and their FTA partners are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, India, South Korea, Australia and New Zealand.
- India participated in multiple rounds of RCEP discussions but chose to opt-out of this grouping.
ISSUES WITH THE IPEF:
- ASEAN economies may continue to maintain close economic ties with China while simultaneously establishing ties with the US.
- ASEAN economies may be averse to the IPEF because it can dilute the centrality in South-East Asia.
- Obtaining a common taxation framework may be an issue.
- As IPEF is not a Free Trade Agreement; nor will it discuss tariff reductions or increasing market access, raising questions about its utility. Also, the four pillars are somewhat confusing.
OPTIONS FOR INDIA:
- Like Japan India too should become member of RCEP.
- Streamline Taxation Issue between different countries: This would add to India’s attractiveness as a trading partner and as a destination for investment, especially in new supply chains.
Read more: UPSC CURRENT AFFAIRS
SOURCE: BUSINESS STANDARD