A historic multinational agreement aimed at bolstering supply chain resilience in the Indo-Pacific region was announced on Saturday, February 24, as reported by Kyodo News. Led by the United States, Japan, and several Indo-Pacific nations, the agreement is designed to facilitate mutual assistance in the event of natural disasters and other international crises, including the ongoing pandemic.
Among the countries participating in the agreement are Fiji, India, and Singapore, among others. This groundbreaking initiative stems from the US-led Indo-Pacific Economic Framework (IPEF), which was launched in May 2022 by President Biden. The framework encompasses various aspects including trade, supply chains, clean economy, and fair economy, as outlined by the US Department of Commerce.
Notably absent from the agreement is China, a significant player in the region.
US Commerce Secretary Gina Raimondo emphasized the collaborative nature of the pact, stating that it will facilitate a joint effort to strengthen supply chains. The agreement, signed by 14 IPEF partners in May 2023, marks a crucial step towards enhancing supply chain resilience, particularly under the IPEF Fair Economy agreement.
This development carries substantial significance, given that the member countries collectively represent about 40 percent of global gross domestic product and 28 percent of global goods and services trade. India, in particular, has witnessed significant economic transformation over the past decade.
Highlighting the economic implications, the US Department of Commerce pointed out that foreign direct investment in the region exceeded $969 billion in 2020 and has nearly doubled over the last decade. Trade with the Indo-Pacific sustains over three million American jobs and attracts nearly $900 billion in foreign direct investment into the United States.
China’s response to the IPEF initiative was captured in a Global Times article in May 2023, quoting China’s Commerce Minister Wang Wentao. He expressed concerns over the exclusion of China from the agreement and emphasized the need for candid dialogue to address core issues in bilateral relations.
The emergence of this supply chain agreement underscores the growing importance of collaboration and resilience in global trade dynamics.
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