Countries negotiating the Indo-Pacific Economic Partnership announced at a ministerial meeting May 27 the “substantial conclusion of negotiations” on an agreement to make their supply chains more resilient and competitive. Participants also noted more limited progress on trade and other issues on which they are working to conclude agreements, possibly by the end of this year.
IPEF was launched in 2022 with the aim of strengthening U.S. ties to the region and creating “a stronger, fairer, more resilient economy for families, workers, and businesses.” Australia, Brunei, Fiji, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam are the current participants, and each of them except India has pledged to take part in all the initiative’s four pillars: trade (which India opted out of), supply chains, clean economy, and fair economy.
The supply chain agreement would create (1) an IPEF Supply Chain Council to oversee the development of sector-specific action plans designed to build resilience and competitiveness in (as-yet-unidentified) critical sectors, including by helping companies identify and address supply chain vulnerabilities before they become significant bottlenecks, and (2) an IPEF Supply Chain Crisis Response Network that can serve as an emergency communications channel and help support the timely delivery of affected goods during an acute supply chain crisis. The agreement would also establish an IPEF Labor Rights Advisory Board to help identify areas where labor rights concerns pose risks to the resilience and competitiveness of partners’ supply chains, create a mechanism to address facility-specific allegations of labor rights inconsistencies, and ensure the availability of a sufficient number of skilled workers in critical sectors and key goods.
According to a joint statement, efforts in these areas will also “respect market principles; minimize market distortions, including unnecessary restrictions and impediments to trade; and protect business confidential information.”
Participants will next take steps, including further domestic consultations and a comprehensive legal review, to prepare a final text for signature. However, they will also “begin work immediately” to increase investment in critical sectors, key goods, physical and digital infrastructure, transportation, and workforce projects.
In addition, the U.S. intends to take the following steps in support of the agreement.
- work toward mutual recognition arrangements between CTPAT and the authorized economic operator programs of IPEF member states that don’t already have them
- support cooperation on digital shipping, including pilot projects with IPEF partners starting with the port of Singapore
- invite experts from each IPEF market to improve cargo risk assessment practices, share best practices in incident response planning, and enhance their ability to identify import dependencies and other potential supply chain bottlenecks
- conduct a fact-finding mission to select IPEF markets that includes Secretary of Commerce Gina Raimondo and the President’s Export Council
- conduct up to ten trade missions over the next five years focused on linking U.S. exporters to opportunities in sectors where IPEF partners are seeking increased diversification and resilience
- announce several new feasibility studies and reverse trade missions to support supply chain modernization in IPEF markets
- hold a series of trainings and symposia on issues related to supply chain monitoring and operations
- launch an exchange program to match early- and mid-career professionals from IPEF countries with professional development opportunities related to supply chain operations
For more information on IPEF, please contact Nicole Bivens Collinson at (202) 730-4956 or via email.
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