IPEF versus RCEP

Source: The post is based on an article “IPEF versus RCEP” published in the Business Standard on 28^th July 2022.

Syllabus: GS 2 International Relations: Regional Grouping etc.

Relevance: Indo-Pacific Economic Framework (IPEF) and Regional Economic Cooperation Partnership (RCEP)

News: In recent months, The US announced the formation of the Indo-Pacific Economic Framework (IPEF) at the Quadrilateral Security Dialogue (QUAD) Summit meeting in Tokyo.

About the IPEF

Members: It includes the four QUAD countries, South Korea, New Zealand, Fiji and seven out of the 10 members of the Association of South-East Asian Nations (ASEAN).

About the Regional Comprehensive Economic Partnership (RCEP)

India participated in multiple rounds of RCEP discussions but chose to opt out of this grouping.

Issues with the IPEF

The major ASEAN economies may continue to maintain close economic ties with China while simultaneously establishing ties with the US, as they have done in the past.

The major ASEAN economies may be averse to the IPEF because it can dilute the centrality in South-East Asia.

What were the reasons which compelled India to join the IPEF?

(1) At present global organizations like the G20 may not achieve anything of systemic significance for India. This is because the ongoing Ukraine war has created a rift between the US and West-Europe with both Russia-China.

(2) India is facing an ongoing military stalemate with China on the Indo-Sino Border.

(3) There are other matters of continuing concern for China.  Since the 1950s, China has been making comparisons between its one-party communist China with the plurality of democratic India despite the latter’s much smaller economy.

(4) India has given shelter to “His Holiness the Dalai Lama” in India.

What should be done?

India should learn from Japan. It has taken practical steps. It has become a member of RCEP and IPEF, keeping its trading interests in mind. India too should have been a member of RCEP.

Plurilateral groupings that are trade-related or strategic can be useful.

However, multi-country formations cannot overcome failures in implementing sound policies relating to a nation’s economy or defence. Therefore, reforms should be taken in this regard.