An agreement involving the United States, Japan and other Indo-Pacific economies on supply chain resilience took effect Saturday, in what is being dubbed a first-of-its-kind multinational deal laying out steps for enhancing collaboration in times of significant disruption in the region.
The deal, negotiated under the U.S.-led Indo-Pacific Economic Framework launched in 2022, allows members to help each other secure critical items in times when supply chains are disrupted, such as during a pandemic. Since China is not part of IPEF, some consider it a means of reducing reliance on the country for semiconductors and other key goods.
Among the 14 economies that have joined the framework, five countries — the United States, Japan, Fiji, India, and Singapore — saw the supply chain agreement enter into force, having completed the necessary domestic procedures.
IPEF has focused on establishing what members call “high-standard commitments” to deepen economic engagement on four pillars — trade, supply chain resilience, clean energy, and proper taxation coupled with anti-corruption measures.
The supply chain deal, agreed in May 2023 and signed in November, is the first to come into force among the agreements reached by IPEF members.
Under the deal, countries identify “critical sectors” and “key goods” while developing action plans providing recommendations to increase the resilience and competitiveness of those items.
Members will also form an IPEF Supply Chain Crisis Response Network as an emergency communications channel and to facilitate the exchange of information, providing a platform for requesting and offering assistance in response to supply chain disruptions.
Network as an emergency communications channel and to facilitate the exchange of information, providing a platform for requesting and offering assistance in response to supply chain disruptions.
The agreement will also seek to address labor rights concerns across IPEF supply chains by establishing a body composed of representatives for governments, workers and employers.
Prior to the agreement coming into effect, the Japanese government said it expected the deal would help strengthen “supply chains with like-minded countries both in times of peace and in times of emergency.”
IPEF represents about 40 percent of global gross domestic product. It groups Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, the United States and Vietnam.
IPEF members have announced agreements in all of the pillars except trade.
IPEF is an effort by the administration of U.S. President Joe Biden to seek deeper economic engagement in the fast-growing Indo-Pacific, where China has been expanding its influence, although it is not a traditional free trade agreement involving tariff-cutting commitments.