SAN FRANCISCO: Countries in the US-led Indo-Pacific Economic Framework (IPEF) on Thursday (Nov 16) announced agreement on two more “pillars” of the initiative, covering cooperation on clean energy and anti-corruption measures, even as IPEF trade talks languish.
Ministers from the 14 IPEF countries also formally signed the previously agreed text of a third pillar, covering supply chain resiliency, at a meeting during the Asia Pacific Economic Cooperation (APEC) leaders’ summit in San Francisco.
The agreements on three of the four IPEF pillars leave the initiative’s trade pillar in limbo after negotiations over the past week failed to produce a deal.
The lack of an IPEF trade agreement is a setback for the Biden administration. It had aimed to showcase the initiative during the APEC summit as a symbol of its economic re-engagement in Asia, providing countries a counterweight to China’s growing trade and economic clout in the region.
But US Commerce Secretary Gina Raimondo said progress on supply chains, clean energy and anti-corruption had generated “tons of enthusiasm” from IPEF partners.
IPEF “is solving problems in supply chains, in infrastructure, in a climate that are highly relevant to our partners”, Raimondo told reporters.
The member countries also agreed to create a ministerial-level council to review and manage all four pillars, with meetings annually. It also creates a separate commission that focuses on the Commerce-led pillars.
The clean energy pillar contains pledges to accelerate the research, development and deployment of clean energy and “climate-friendly” technologies, according to a joint statement from the 14 countries issued by Commerce.
Raimondo said the clean energy agreement will create avenues for more private investment into IPEF member countries to accelerate their transitions to low-carbon energy sources, including a US$30 million “catalytic capital fund” that will help develop “bankable” clean energy products and provide countries technical assistance. The US and Japan are contributing US$10 million each, while Australia is contributing US$8 million.
A separate group of private sector firms and non-profit groups will focus on mobilizing climate investments in IPEF countries, she said.
The group, called the Indo-Pacific Partnership for Prosperity, lists as among its steering committee CEOs and partners from KKR, RockCreek, Global Infrastructure Partners and the Rockefeller Foundation.
NO ENFORCEMENT MECHANISM
On the pillar aimed at fighting corruption and tax evasion, the countries agreed to take steps to prevent, detect, prosecute and sanction corruption offences identified under United Nations Convention Against Corruptions, including anti-money laundering measures.
A senior US Commerce Department official said it calls for both legally binding and non-binding transparency on anti-corruption and tax administration laws.
But the official said there would be no traditional dispute settlement system to enforce compliance with the anti-corruption provisions. Instead, the text calls for new capacity-building tools to help countries develop better institutions and compliance.
Countries participating in IPEF are Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Vietnam and the United States. All but India and Fiji are also members of APEC.