ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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An Ex Ante Evaluation of Indo-Pacific Economic Framework

A General Equilibrium Analysis

A general equilibrium framework (GTAP 10) and an environment energy variant of the general equilibrium model like the GTAP-E is used to analyse and read the possible economy-wide impacts of introducing the current administrative arrangement among the countries and also the future adoption of deeper integration policies among the 14 Indo-Pacifi c alliance members, namely the Indo-Pacifi c Economic Framework for Prosperity. The deeper integration policies go beyond the tariff and non-tariff liberalisation with freer movement of capital and skilled labour fl ows and concerted attempts made to promote input- and output-oriented innovations and technological progress in the region.

The Indo-Pacific Economic Framework (IPEF) for Prosperity was launched in May 2022 by the American government with 13 initial partners (Experts briefings 2022).1 These countries are, namely Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the United States (US), and Vietnam, which all together share 40% of world gross domestic product (GDP).2 As per the fact sheet of the White House, the IPEF has four pillars: connected economy, resilient economy, clean economy, and fair economy, whereas the major focus would be on seven aspects, such as trade facilitation for small and medium entrepreneurs, standards for a digital economy and technology, supply chain resilience, decarburisation and clean energy, infrastructure, worker’s standards and other areas of shared interests. Goodman and Reinsch (2022) constructively suggest for well-engineered and managed region formation for the success of the US economic and strategic interests.3 On the other, Yeon (2022) describes that at the time of turmoil and unrest in the world economy, countries should follow the principle of security interest rather than the sole focus on its own growth. The growing trade war and strategic interest rivalry between US and China warns and suggests for more security related interests rather than mere economic objectives.

The briefing further exhibits the intention of the grouping is to reassure the US remaining in the region. Hence, it is not a free trade agreement (FTA) as it will not involve trade negotiations and will not include market access for goods or services through traditional schedules, though we think that there may be commercial opportunity for New Zealand in the trade pillar through the negotiation of rules on trade facilitation, on digital trade, and on regulatory cooperation among other things. Thus, the IPEF aims to strengthen economic partnership, particularly to support the US’s strategic interest in the region. The IPEF includes India, the US and Fiji and excludes the countries from the Regional Comprehensive Economic Partnership (RCEP) region such as China, Cambodia, Lao PDR, and Myanmar. The IPEF counts all Association of Southeast Asian Nations (ASEAN) members except its three, namely Cambodia, Lao PDR, and Myanmar, and therefore deviates from the so-called ASEAN centrality.

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Updated On : 30th Jan, 2023
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