India stays out of ‘trade pillar’ at Indo-Pacific meet

India stays out of ‘trade pillar’ at Indo-Pacific meet

Minister cites concerns over likely discriminatory clauses

India stayed out of the joint declaration on the trade pillar of the U.S.-led Indo-Pacific Economic Framework ministerial meet in Los Angeles, with Union Commerce Minister Piyush Goyal citing concerns over possible discrimination against developing economies.

India was the only one of the 14 IPEF countries, which include South East Asian countries, Australia, New Zealand, South Korea and Japan, not to join the declaration on trade.

However, a statement by the government said India had “engaged exhaustively” on all the four pillars, and was “comfortable” with the outcome statements on the other three pillars: supply chains, clean economy (clean energy) and fair economy (tax and anti-corruption).

The decision to stay out came just four months after the launch of the talks by the IPEF leaders, including Prime Minister Narendra Modi, on the sidelines of the Quad Summit in Tokyo in May.

“We have to see what benefits member countries will derive and whether any conditionalities on aspects like environment may discriminate against developing countries, who have the imperative to provide low cost and affordable energy to meet the needs of our growing economy,” Mr. Goyal said, explaining the decision at a press conference after the meeting.

He also complimented the IPEF members for the speed of the launch of the ministerial talks and said the IPEF grouping would set rules between those countries that believe in “fair play, transparency and rules-based trading” in future.

Mr. Goyal said that that one of the reasons for staying out of the trade pillar was that the “contours of the framework” had not emerged yet, particularly on the kind of commitment each country would have to make on “environment, labour, digital trade and public procurement”.

In addition, Mr. Goyal pointed to the fact that the government was still firming up its data protection and privacy laws, in a reference to the 2019 Personal Data Protection Bill that the Modi government withdrew from Parliament in August.

The IPEF move by Mr. Goyal also mirrors India’s decision to walk out after seven years of negotiations from the Regional Comprehensive Economic Partnership (RCEP), a grouping resembling the IPEF that includes China but doesn’t include the U.S.

A government statement pointed out, however, that India had not walked out of the IPEF talks, and that delegations would continue to participate in future IPEF talks, including on trade with an “open mind”.

Moreover, the RCEP negotiated a full-trade agreement, including tariff reductions and market access rules, something the U.S. has made it clear that the IPEF is not speaking about at all.

The 14 IPEF partners represent 40% of global GDP and 28% of global goods and services trade.

At the press conference at the end of the IPEF ministerial meeting, U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo also stressed that India was “not now in the trade pillar of the IPEF”, but that they continue to talk both bilaterally and within the IPEF on bringing India in.

Mr. Goyal held talks on the sidelines with Ms. Tai and Ms. Raimondo as well as his counterparts from Australia, Indonesia, Japan and Vietnam.

At the end of the IPEF ministerial on Thursday, a joint declaration issued referenced four separate ministerial statements on the four pillars, each beginning with the names of the countries signing on to them. India was not mentioned on the statement on pillar 1, trade.

“In the Trade Pillar, the IPEF partners will seek high-standard provisions in areas that are foundational to resilient, sustainable, and inclusive economic growth, including labour, environment, digital economy, agriculture, transparency and good regulatory practices, competition, inclusivity, trade facilitation, and technical assistance and economic development,” the declaration said.

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