US, International Partners Conclude Supply Chain Agreement as Part of Indo-Pacific Economic Framework
On May 27, the United States and its Indo-Pacific Economic Framework (“IPEF”) partners announced that they had concluded negotiations for a supply chain agreement under IPEF after talks in Detroit, Michigan.1 The agreement is the first one concluded under the IPEF negotiating framework; three more “pillars” remain to be negotiated under IPEF.2 Though negotiations on the supply chain agreement have concluded, the IPEF member states must now return to their national governments to finalize the text of the agreement.
Background on IPEF
During a visit to Tokyo, Japan, in May 2022, President Biden announced the creation of IPEF with Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.3 IPEF is structured around four main pillars: trade; supply chains; clean energy, decarbonization, and infrastructure; and tax and anticorruption.4 Rather than creating one comprehensive agreement covering all policy areas for all member states, IPEF is structured in such a way that member states may choose to participate only in certain pillars of the framework.5
From the US perspective, the Department of Commerce and the Office of the US Trade Representative share negotiating duties for IPEF, depending on the pillar.6 The Department of Commerce led negotiations on the supply chain pillar.7
Features of the Supply Chain Agreement
The overriding purpose of the newly announced supply chain agreement, from the US perspective, is to “ensure that American workers, consumers, and businesses benefit from resilient, reliable, and efficient supply chains.”8 As negotiated, the agreement establishes three new bodies:
- IPEF Supply Chain Council: This Council will be tasked with overseeing the development of sector-specific action plans to build resilience and competitiveness in critical sectors.9
- IPEF Supply Chain Crisis Response Network: This network will serve as an emergency communications channel when one IPEF member experiences a supply chain crisis so that partners can work together to develop a response.10
- IPEF Labor Rights Advisory Board: This board will identify areas where labor rights pose a risk to supply chains. The board would also have a mechanism to resolve facility-level allegations of labor rights concerns.11
Next Steps
Though negotiations have concluded, the IPEF partners have not yet finalized the text of the agreement. Instead, each government will conduct a legal review and develop a final text for signature and ratification.12 In the meantime, the United States and the other IPEF partners will begin to engage with the private sector in their respective countries in support of the goals outlined in the agreement.13 For instance, the Biden Administration will hold symposia on supply chain security, conduct trade missions, and launch exchange programs, along with other efforts, to advance the supply chain goals described in the agreement.14
1 https://www.commerce.gov/news/press-releases/2023/05/substantial-conclusion-negotiations-landmark-ipef-supply-chain.
2 https://www.reuters.com/markets/asia/us-led-indo-pacific-talks-produce-deal-supply-chain-early-warnings-2023-05-27/.
3 https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/23/fact-sheet-in-asia-president-biden-and-a-dozen-indo-pacific-partners-launch-the-indo-pacific-economic-framework-for-prosperity/.
4 https://ustr.gov/trade-agreements/agreements-under-negotiation/indo-pacific-economic-framework-prosperity-ipef.
6 https://www.commerce.gov/ipef.
7 https://www.commerce.gov/news/press-releases/2023/05/substantial-conclusion-negotiations-landmark-ipef-supply-chain.
