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US-led Pacific group reaches deal on supply chain resilience

Fourteen countries in US-led Indo-Pacific trade talks agreed on supply chain coordination, the most substantial progress so far in President Joe Biden’s new initiative for the region.

Commerce Secretary Gina Raimondo made the announcement on Saturday alongside US Trade Representative Katherine Tai at a gathering of ministers from countries participating in the Indo-Pacific Economic Framework.

The US began the initiative, known as IPEF, as a way to counter China’s growing influence and make up for lost ground after pulling out of previous efforts to set regional trade rules.

The IPEF countries include Japan, India and South Korea, which all rank among the 10 biggest national economies in the world. The nations included in the framework represent about $38 trillion in economic output.

The framework is the most significant American economic engagement in the region since President Donald Trump pulled out of the Trans-Pacific Partnership in 2017, but it stops short of reducing tariffs like a traditional free-trade agreement, which some countries have sought. 

Raimondo on Saturday said the IPEF supply chain agreement includes creating a “response network” to provide emergency communications on supply chains and the establishment of a labor rights advisory board.


Raimondo sees the framework’s supply chain work aiming to avoid the kind of bottlenecks that occurred during the Covid-19 pandemic, as well as future layoffs and stoppage of manufacturing and assembly lines. The supply chains agreement will offer a “concrete, practical solution” to future disruptions, Raimondo said during a separate briefing earlier in the week.

Steps on supply chains include establishing a council to coordinate in different sectors; preparing emergency responses; and creating a labor rights advisory board to address worker training.

No sectors are singled out in the agreement, because the US will need to work with partners to determine what’s most important, Raimondo said, while adding that she anticipated it would be useful for technologies like computer chips and other critical inputs.

Supply chains are one of the four “pillars” in the framework that countries began discussing last year — along with clean economy, which focuses on the transition to renewable energy and fighting climate change; fair economy, which includes taxation and corruption issues; and trade.

Raimondo said that the US will be working to reach an overall agreement for the remaining aspects of the framework by the time that Biden hosts leaders from the Asia-Pacific Economic Cooperation forum in San Francisco in November.

While an agreement on supply chains marks progress, some of the remaining pillars could be harder to resolve, such as trade, in which India isn’t participating because of concerns about potential environment and labor commitments. Trade is also an issue where, historically, countries have struggled to come to agreement.



© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

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