The Indo-Pacific Economic Framework for Prosperity (IPEF) is an economic initiative and regional arrangement launched by U.S. President Joe Biden on May 23, 2022, in Tokyo, with 14 founding member nations, including India. It was created to reassert U.S. economic engagement in the Indo-Pacific and provide a U.S.-led alternative to counter growing Chinese economic influence in the region. Unlike traditional free trade agreements (FTAs), the IPEF does not include provisions for market access or tariff reduction.
The framework operates through an overarching agreement and four segmented pillars of cooperation: Pillar I (Trade), Pillar II (Supply Chains), Pillar III (Clean Economy), and Pillar IV (Fair Economy). India has joined Pillars II, III, and IV, but maintains an observer status in the Trade Pillar due to concerns over commitments in areas like digital trade.
Key mechanisms include the IPEF Supply Chain Agreement (Pillar II), which was substantially concluded in May 2023 and entered into force on February 24, 2024, establishing a Supply Chain Council and a Crisis Response Network to enhance resilience. The Clean Economy Agreement (Pillar III) focuses on climate action, green investment, and decarbonisation. The Fair Economy Agreement (Pillar IV) details commitments to enact and enforce anti-corruption, anti-bribery, and effective tax initiatives. Negotiations for Pillars III and IV were substantially concluded in November 2023. The IPEF connects to the broader U.S. Indo-Pacific Strategy and is often compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor to the Trans-Pacific Partnership (TPP), from which the U.S. withdrew. The IPEF Agreement establishes an IPEF Council at the ministerial level to oversee the framework's architecture.