The 14 IPEF partners represent 40 per cent of global GDP and 28 per cent of global goods and services trade

India did well to host the second negotiating round of Indo-Pacific Economic Framework (IPEF) in New Delhi last week, right at the beginning of the new year. The IPEF is an economic negotiating platform launched mid last year with 14 participating countries, including India, the US and several other countries in Asia and one from South Pacific.

The initiative by US President Joe Biden to advance the American influence in the strategic Indo-Pacific region intends to define “the coming decades for technological innovation and the global economy”. The press statement released immediately after the launch stated: “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.

The 14 IPEF partners represent 40 per cent of global GDP and 28 per cent of global goods and services trade. “Immediately afterwards each country appointed their key negotiators who, in turn, narrowed down the scope for future negotiations to four pillars — Trade, Clean Economy, Supply chains and Tax and anti-corruption. The IPEF represents a new age economic framework which promises to allow each participating member to pick and choose the pillars of negotiations based on its own domestic political sensitivities.

The economic clout of the IPEF, with a huge combined GDP to flout, along with an aggressive counter wave of a muscular China, trying to bully almost all countries, makes IPEF an eco-strategic framework to watch out for in the near future. China has been taking aggressive stances, including threatening sovereign spaces and rights of many of the IPEF partner countries the US, India and Japan. China also managed to create one of the largest trading blocs through Regional Comprehensive Economic Partnership (RCEP), which is a free trade agreement (FTA) between 10 members states of the Association of Southeast Asian nations (ASEAN) and five of their FTA partners, which includes Australia, China, Republic of Korea, Japan and New Zealand.

China already has a disproportionate influence over many of its Asian neighbours (many of whom are now more closely tied with RCEP), through its opaque infrastructure funding exercise, called the Belt and Road Initiative (BRI). The BRI has in many cases forced many of the beneficiary nations to get into a vicious economic southwards spiral, pushing them closer to bankruptcy, and forcing them to hand over strategic infrastructure projects such as ports, to China.

India had stayed out of the RCEP, quoting some of the severe arm-twisting tactics adopted by China and, in hindsight, it may have been good in the national interest of the country. China’s main concern is to restrict India’s influence in Asia and stave off any ambition of New Delhi becoming a global power with huge influence in multi nation concerns.

The changed geopolitical world order, after a once in a century pandemic, followed closely by a war in the heart of Europe, has forced the US and Europe to start looking at alternative strategic allies, such as a rising India, as trusted partners in the Indo Pacific region. The US and EU have in their Indo-Pacific outlooks stated the urgent need for an open, transparent, rules-based Indo Pacific region where India plays a key role. China has also developed a “friendship beyond any barriers” with Russia, which is emerging as one of the biggest fallen superpowers.

However, the Russian-Chinese intimacy has huge implications for India and the western allies including the US and could eventually lead to the setting up of an alternative technology, strategic and economic framework, running in opposite direction to what is being proposed by the democratic bunch of countries.

It is against this backdrop that India should carefully calibrate its position in the IPEF negotiations. India is the only country which has so far not joined the trade pillar of IPEF negotiations which is likely to focus on digital trade standards, labour laws and environmental financing issues, fearing huge domestic backlash on sensitive issues. The year 2023 is a politically crucial year, given general elections are scheduled for 2024. The government would like to bag some early harvest deals through IPEF.

However, taking a call on joining the trade pillar (no matter how relevant it may be) could be more of a political decision.

(The author is a foreign affairs commentator)