EDEN IAS

IPEF VERSUS RCEP

UPSC CURRENT AFFAIRS | IPEF VERSUS RCEP | 30TH JULY | BUSINESS STANDARD

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.

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

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