Jesus and Mary College, University of Delhi
The rise of the rest or Easternization of the world—that took place in this century, has distinctly turned global attention towards the Eastern Hemisphere. And more so, as the geopolitical and geoeconomic construct of the Indo-Pacific region came in vogue in this Century. When Shinzo Abe, the late Prime Minister of Japan addressed the Indian Parliament in August 2007, he first articulated his idea of Indo-Pacific, as ‘Greater Asia’ conjoining two oceans. Indo-Pacific comprises of nations with differing levels of economic developments and size. ASEAN as a successful regional bloc is considered as central to the Indo Pacific. Rising merchandise trade has helped the growth of countries in this region. It was US President Trump, who despite withdrawing from the Trans Pacific partnership, proposed the Free and Open Indo-Pacific (FOIP) strategy during his Asia tour in 2017 and at the 2017 APEC Summit in Vietnam. The deliberations on the need for the ASEAN to evolve a unified vision and strategy for the Indo-Pacific then commenced. The ASEAN Outlook on the Indo Pacific and India’s Indo Pacific Oceans Initiative were both launched in 2019. Other countries in the region have also articulated their own visions of the Indo Pacific.
This article seeks to elucidate India’s economic multilateralism in the Indo-Pacific viz. through two major economic initiatives; i.e the Regional Comprehensive Economic Partnership (RCEP)[i] which is now comprised of 15 nations and the Indo Pacific Economic Framework, comprising 14 partner countries.
Regional Bonhomie: India emerges as an important stakeholder
India has been viewed as an increasingly reluctant trade partner by not only western nations, but also by countries in Southeast Asia, with whom the reinvigorated format of the 1992 Look East Policy as the Act East Policy in 2014, brought it with hopes for robust trading relations. The parleys and discussions for the negotiation of the RCEP which picked up momentum in the second half of the second decade of this century, concluded in November 2019, with India announcing its exit from this largest multilateral trading agreement. Delhi, which registered trade deficits with 11 RCEP members in 2018-2019, and through the pandemic, has been reluctant to make deep cuts in tariffs for fear of goods flowing in from other countries, especially China with whom it has registered trade deficits of almost USD 70 billion in 2021-22. India has also demanded greater market access for its service professionals, which has yet gone unheeded. Evidently, India’s concerns related to Country of Origin had not been addressed and trade negotiators from India were averse to being caught in the net of rising dependance on Chinese imports routed through ASEAN. Moreover, in the political arena, the Sino-India relationship witnessed difficulties during the two armies clashing in Doklam in 2017, with relations further nose-diving post the June 2020 clashes in the Galwan Valley.
While India had walked out of RCEP, it was not unwilling to continue engagement with Quad countries including Japan, USA and Australia, which came together in 2017. Initially a chrysalis under Japan’s strategic formulation, Quad has unfolded as a global coalition of major strategic players who are committed to making their footprints firmly grounded in the strategic space. Although none of the four original Quad countries position this grouping as being anti-China, the Chinese have continuously alluded to it as being an Asian NATO.
The Quad countries, have also been banding together as the Quad Security Dialogue (QSD), despite China’s continuing belief that the Quad would dissipate as “sea foam.” India with other QSD partner countries have had sufficient raison d’etre for staying together. The Himalayan clashes of 2020, as well as China’s BRI projects in India’s immediate neighborhood continuously challenge its sovereignty. With the China threat escalating, Quad appeared as a promising grouping for India to align with. Trump’s America First campaign led him to challenge China in more ways than one. While the US-China escalating trade war in 2020 and an increasingly (post-pandemic) aggressive China provided reason enough for the USA to sail its aircraft carriers in the South China Sea. Australia has been the target of China’s arm-twisting in both the economic and political arena.
Abe’s successor, Suga fully endorsed his predecessor’s vision for the Quad and the Indo-Pacific reassured allies. Interestingly, India’s Prime Minister Modi and Japanese Prime Minister Yoshihide Suga in their first telephonic conversation on September 25, 2020, decided to take the bilateral special strategic and global partnership to a new level, rearticulating the imperative for a “free and open Indo-Pacific.” This came in the backdrop of both India and Japan being at the receiving end of Chinese aggression with a stand-off with the Chinese Army in Ladakh and muscle-flexing in the Senkaku Islands.
Weeks later on October 6, 2020, Japan hosted the second Australia-India-Japan-U.S. “Quad” foreign ministers’ meeting in Tokyo, affirming the importance of an aligned vision for the Indo-Pacific region. With Quad in mind, in April 2021, the Japanese Prime Minister visited the United States after Mr. Biden assumed the President’s office. Even as Joe Biden continued his predecessor’s trade policy towards China, he decided to reassert the position of the United States through the Indo-Pacific Economic Framework or IPEF, which has been formed jointly by the US and partner countries of the Indo-Pacific region on the sidelines of the Quad Summit in Tokyo on the 23rd May, 2022. The IPEF, evidently, is an important plank of US President Joe Biden’s strategy to counter growing Chinese clout in the Asian economic sphere. Los Angeles, in USA was the chosen site for the first in-person ministerial meeting of the 14-nation bloc in early September, 2022, demonstrating the significance of the Pacific Ocean.
It was jointly declared that the IPEF would focus on four pillars, viz. Connected Economy, which covers fair and resilient trade topics including the seven subtopics of labor, environment and climate, digital economy, agriculture, transparency and good regulatory practices, competition policy, and trade facilitation (led by the U.S. Trade Representative, or USTR);Resilient Economy, which covers supply chain resilience topics ; Clean Economy, which covers infrastructure, clean energy, and decarbonization topics; and Fair Economy, which covers tax and anti-corruption topics. Even as countries could choose to join any of the four pillars, they would be required to commit to all aspects of every pillar they joined. [ii]
While the joint declaration was on the expected lines and other member nations joined all the four pillars, India decided to join only three pillars of the IPEF. India has opted out of the trade pillar for now. This has prompted several experts to reiterate India’s unwillingness to join regional trade groupings, despite its seeking global stature as the fifth largest economy of the world and a growing market.
The responses by India’s Commerce and Industry Minister Piyush Goyal included a lack of clarity on issues as environment, digital trade, labour and public procurement. Moreover, India needed to understand the benefits that would accrue to countries. The minister also pointed out that India was in the process of firming up its digital framework and laws, especially on privacy and data.
When India opted out of RCEP, ASEAN countries as well as Japan and Australia were disappointed. They had viewed India as a balancer to China in the mega trade deal. However, three years later, when India has yet again exited from the trade pillar of the IPEF, the reactions are muted. India’s partner countries understand that India is not adequately prepared to handle negotiations on labour, environment standards and digital trade. The fact that India has joined the other three pillars of resilient, clean and fair economy make India an important partner of the IPEF. India has also reiterated that despite its focus on self-reliance, the nation has signed comprehensive partnership agreements with UAE as well as Australia and is negotiating trade deals with the UK, Canada and EU. It has also agreed to including chapters regarding new-generation trade issues.
Japan had earlier stated that without India, RCEP will not serve much purpose. All other 13 nations would also prefer that India joins the trade pillar. The United States Trade Representative or USTR, which will be responsible for this pillar of connected economy must provide an in depth understanding of several visible and invisible issues including trade facilitation and competition among others for bringing India on board with the holistic vision of the IPEF. Given the war in Ukraine, supply chain disruptions and economic uncertainties, it is anyone’s guess when and if India would join IPEF’s trade pillar!
India’s Indo-Pacific vision exemplifies its ambition of being a “leading power” and it must be engaged as the author of the new order in the Indo-Pacific. Even so, it is merely the beginning of a decadal journey, which will see India shoulder the expectations that befit the world’s largest democratic economy. To do this, Delhi must constantly reassess the dimensions of change underway, visualize the possibilities that are on offer, anticipate the attendant risks and author the new order arising out of Asia.
[i] Regional Comprehensive Economic Partnership (RCEP), includes ASEAN countries, India, China, Japan, South Korea, Australia and New Zealand.
[ii] Apart from India and the US, the 12 other members of the IPEF are Australia, Brunei, Fiji, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. All the other member nations have joined IPEF’s four pillars. The IPEF partner countries represent over 40 per cent of the global economy.
Expert article 3298
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