India stays away from another multi-country deal that could ease access to its markets

Three years after pulling out of a regional free trade agreement endorsed by China, India has stayed out of talks with a US-led group of Asian nations for multi-country deals. The Indo-Pacific Economy Framework that involves 14 nations, is US President Biden’s strategy to counter China’s influence in the region. By refusing to sign the group’s negotiation track, India has opted out of easing access to its markets for other member countries.

Apprehension due to lack of clarity

India’s Commerce Minister Piyush Goyal cited lack of clarity on benefits from cooperation on environment, digital trade and labour, as the reason for staying out of the talks. The decision is also meant to avoid conditions that could harm the country. While briefing the media, Goyal added that India will wait till the final contours are decided, before formally associating with the trade track. As long as supply chains and clean energy are concerned, India will continue to move ahead.

Not just a strategy to counter China?

Although the framework is Biden’s bid to strengthen ties with Asian nations on trade, taxation and climate change, the US insists that countries don’t have to pick between Washington or Beijing. The US has repeatedly highlighted that since IPEF doesn’t call for removal of tariffs or higher market access, it is not a free trade agreement like China-backed RCEP, which India had earlier stayed away from.

Back in 2019, India had cited concerns over the livelihood of vulnerable Indians as a reason to avoid the RCEP. The free trade agreement which aims to do away with 90 per cent tariffs in two decades, covers about 30 per cent of the world’s population and global GDP across 15 member countries. But at the same time the RCEP has raised concerns due to lack of provisions to protect workers and the environment.

On the other hand, US officials highlighted the flexibility of IPEF by citing India’s refusal to sign the negotiation track, during a media briefing. The US Trade Representative Katherine Tai reiterated that India-US bilateral trade talks won’t be affected by New Delhi’s decision. The IPEF’s four pillars include supply chains, clean energy, tax and anti-corruption, India has signed up for cooperation on three of those.