On September 7, 2023, the U.S. Department of Commerce released the text of the Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Agreement three days before a U.S. delegation is set to travel to Bangkok, Thailand for the fifth negotiating round. In this round, IPEF partners will focus on Pillars I (Trade), III (Clean Economy), and IV (Fair Economy). The fifth negotiating round comes after previous negotiating rounds in Australia, Indonesia, Singapore, and South Korea, a special negotiating round in India, and a ministerial meeting in Michigan to announce the conclusion of negotiations on Pillar II (Supply Chains).
IPEF is not a traditional trade agreement. As it focuses on providing mechanisms for information sharing, its benefits will be realized as parties utilize them. Parties will have to collaborate with domestic industries to implement IPEF’s goals. In a press release by the U.S. Department of Commerce, U.S. Commerce Secretary Gina Raimondo commented that “[b]y working toward finalization of this monumental Agreement, the United States is taking an important step forward to fortify bonds with our partners throughout the Indo-Pacific. Working in lockstep, we will be prepared to best address our shared economic challenges together.”
In the text, the governments of Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, Philippines, Singapore, Thailand, the United States, and Viet Nam agree to advance collaboration to strengthen supply chains. This includes undertaking activities that “increase the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity of IPEF supply chains, taking into account the different economic and geographic characteristics and capacity constraints of each Party as well as individual characteristics of different sectors and goods.”[1]
The text also makes clear that IPEF partners will collaborate to form an IPEF Supply Chain Council to oversee collaboration on supply chains, an IPEF Supply Chain Crisis Response Network to facilitate an emergency communication channel that could respond to, mitigate, and recover from supply chain disruptions, and an IPEF Labor Rights Advisory Board with government, workers, and employers to identify labor rights concerns and develop recommendations.
The IPEF Supply Chain Council will also focus on “key goods” and “critical sectors.” The text defines key goods as “raw, in-process, or manufactured materials, articles, or commodities…” and “critical sectors” as “sectors that produce goods and supply any related essential services critical to a Party’s national security, public health and safety, or prevention of significant or widespread economic disruptions….”
Additionally, the facility-specific labor rights provisions in the text echo the Rapid Response Labor Mechanism in the United States-Mexico-Canada Agreement (USMCA) in requiring parties to the IPEF to develop procedures for the receipt and consideration of “allegations of labor rights inconsistencies at subject facilities located in the territory of another Party.”[2] The procedures outlined in these provisions for handling the allegations also broadly parallel those under the USMCA. At this time, the IPEF Agreement has not entered into effect. In June 2023, Crowell & Moring International (CMI) and the Women in International Trade (WIIT) hosted IPEF’s Chief Negotiators in our DC offices. As negotiations move forward, CMI and Crowell & Moring LLP will continue to monitor IPEF and highlight major developments.
[1] IPEF Agreement Relating to Supply Chain Resilience, Article 2
[2] IPEF Agreement Relating to Supply Chain Resilience, Article 9