NEW YORK - BY AMERICA INSIDER - Apr 13,2024

In May 2023, the 14-member Indo-Pacific Economic Framework (IPEF) reached an agreement aimed at bolstering the resilience of supply chains, sparking a vigorous debate within academia and the media about its feasibility and implications. While the final text of the IPEF Supply Chain Agreement is yet to be disclosed, preliminary indications suggest the creation of regulations and institutional mechanisms. The success of this agreement depends on its implementation, with a focus on concrete measures and specialized projects.

 

The IPEF was launched in May 2022 by US President Joe Biden during a Quad Summit in Tokyo, and it includes 14 member countries. It aims to establish a shared framework based on four pillars, with a particular emphasis on countering China's influence in the Indo-Pacific region and advancing US economic interests.

The proposed agreement includes the establishment of bodies such as a Supply Chain Council and a Supply Chain Crisis Response Network, as well as initiatives like digital shipping pilot projects and an IPEF STEM Exchange Program.

 

The response to the agreement has been mixed, with some praising its comprehensive approach, while others question its lack of enforceable commitments. Critics argue that the focus on process-driven frameworks may not address the pressing challenges faced by global supply chains effectively.

Additionally, concerns arise over the agreement's failure to offer tangible market access advantages to regional nations and its disconnection from labor rights and environmental regulations.

 

The IPEF's attempt to detach regional economies from China's economic orbit faces challenges as China plays a pivotal role in Asian industrial and supply chains and has strengthened economic ties with Indo-Pacific countries. Without sufficient incentives for partner countries, the IPEF may struggle to divert value networks away from China or counter its geoeconomic influence effectively.

 

To address these issues, the Biden administration could prioritize negotiations for a crucial minerals pact within the framework of the IPEF, encouraging global companies to invest in critical minerals within resource-abundant IPEF nations. This concept of "friendshoring" would benefit both the US electric vehicle and battery industry and US security interests.

 

The IPEF's proposed agreement has triggered discussions on its practicality and potential outcomes. Its ability to address supply chain vulnerabilities effectively remains to be seen as stakeholders grapple with its potential ramifications.