On March 13-19, Indonesia hosted the second negotiating round of the Indo-Pacific Economic Framework for Prosperity which happened just a month after the special negotiating round in New Delhi, India, on Pillars II-IV of the Framework. While no new deliverables were announced, a joint statement from the Office of the U.S. Trade Representative (USTR) and Department of Commerce at the end of the negotiating round indicated that negotiators set the groundwork for an “aggressive” negotiating in 2023 to finalize IPEF agreements.
During this negotiating round U.S. negotiators tabled text-based proposals tabled on nearly all IPEF pillars and subtopics. The USTR negotiators tabled text for the first time on labor, environment, digital trade, and technical assistance, and Australian and New Zealander officials jointly tabled text on inclusivity for Pillar I. The negotiators continued to form texts for Pillar II and III, which will likely have non-binding commitments. Pillar IV on the contrary is expected to be binding, at least from the USG point of view, with the hope of addressing corruption in developing countries. Moreover, the IPEF is expected to be a forum for tax experts to collaborate and use OECD two-pillar solutions as a basis.
The introduction of digital, labor, and environmental texts gained large attention and became the focal point of the Bali meeting. These issues are expected to gain similar attention in the third round to be held in Singapore on May 8-15, 2023. Many of the ASEAN participating countries are were still interested in including market access and the issue of the WTO Moratorium on Customs Duties will be discussed in the IPEF and labor is currently one of the most contentious issues. In parallel, some optimists say there are signs that the negotiators are looking to develop concrete action plans and projects that can be rolled out during the APEC SOM 2 Official Meetings and Ministers for Trade (MRT) meeting in Detroit on May 14-26 without having to wait to conclude an agreement.
