The Indo-Pacific Economic Framework (IPEF) has concluded negotiations for its Supply Chain Agreement, aiming to boost the resilience, efficiency, and sustainability of supply chains by creating early warning systems for supply disruptions.
The proposed agreement marks the first trade deal made by members of the IPEF after it was first formed by the US last year. It brings together the US, Australia, India, Japan, South Korea, Indonesia, the Philippines, Malaysia, Thailand and Vietnam, as well as Brunei, New Zealand and Singapore.
The White House said: “This framework will help lower costs by making our supply chains more resilient in the long term, protecting us against costly disruptions that lead to higher prices for consumers.”
Over the past year, ministers of the group have conducted numerous meetings and negotiations to finalise the group’s Supply Chain Agreement.
The proposal was developed by engaging with businesses and conducting domestic consultations to increase investment in critical sectors, key goods, physical and digital infrastructure, transportation, and workforce projects.
IPEF ministers announced they are establishing three new bodies to facilitate cooperation among partners.
The Supply Chain Council will enable partners to work collaboratively on sector-specific shortages through diversification of sources, infrastructure and workforce development, enhanced logistics connectivity, business matching, joint research and development, and trade facilitation.
The Supply Chain Crisis Response Network, meanwhile, will establish an emergency communications channel so partners can seek support during a supply chain disruption. The network will facilitate information sharing and collaboration during a crisis, enabling faster responses that minimise negative effects on their economies.
The Labour Rights Advisory Board will create a committee of government, worker, and employer representatives to support labour rights in their supply chains, and promote sustainable trade and investment.
IPEF ministers also agreed to a number of other measures, including:
Providing a framework to build collective understanding of supply risks, supported by each countries’ monitoring of their critical sectors
Improving crisis coordination and response to disruption
Preparing businesses in IPEF economies to identify, manage and resolve bottlenecks by strengthening logistics and infrastructure
Promoting regulatory transparency in sectors critical to national security
Ensuring availability of skilled workers by upskilling and reskilling workers, promoting inclusivity and equal access
Identifying opportunities for technical assistance and capacity building in member countries’ supply chains
Once finalised, the proposed Agreement will be subject to IPEF partners’ domestic processes for signature, followed by ratification, acceptance, or approval.
The IPEF trade deal, which was greatly criticised when it was created last year, was recently praised by the Asia Society Policy Institute for providing a “clean slate” to supply chains.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.