The Indo-Pacific Economic Framework for Prosperity (IPEF) is an economic initiative, not a traditional trade agreement, launched by U.S. President Joe Biden on May 23, 2022, in Tokyo. It was created to strengthen economic partnerships and advance resilience, sustainability, inclusiveness, and competitiveness among participating countries in the Indo-Pacific region. The framework is seen as a move by the US to re-engage economically and set new rules for the 21st-century economy, particularly in the face of a rising China.
The IPEF is structured around four distinct pillars of cooperation, with an overarching agreement to oversee the architecture. Pillar I (Trade) seeks to develop high-standard provisions on areas like the digital economy, labor, and the environment, but does not include traditional market access or tariff concessions. Pillar II (Supply Chains) focuses on improving the resilience of supply chains and includes establishing a crisis response mechanism. Pillar III (Clean Economy) promotes cooperation on clean energy, decarbonization, and infrastructure, facilitating green investment flows. Pillar IV (Fair Economy) aims to improve the business environment by addressing corruption, reinforcing the rule of law, and enhancing tax transparency.
The IPEF includes 14 founding member nations, including Australia, Japan, the United States, and India. India joined the framework but has maintained an observer status in Pillar I (Trade) due to concerns over commitments in areas like digital trade and regulations. Negotiations for the Supply Chain Agreement (Pillar II) were substantially concluded in May 2023, and the Clean Economy (Pillar III), Fair Economy (Pillar IV), and the overarching Agreement on IPEF were substantially concluded in November 2023. The IPEF complements existing regional architecture like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but unlike the CPTPP, it is not a Free Trade Agreement (FTA) and is non-binding in nature.