- IPEF Pillars reach substantial conclusion and outcomes within 18 months of launch 2023-11-17
The Republic of Korea participated in the Indo-Pacific Economic Framework for Prosperity (IPEF) ministerial meetings held through November 13-14 in San Francisco along with other 13 member countries to announce the outcomes gained from the last 18 months of negotiations.
Member countries signed the Pillar II (Supply Chain) Agreement, which was already concluded in May this year, and also concluded negotiations for the Clean Economy Pillar and the Fair Economy Pillar. They took stock of the negotiation progress for the Trade Pillar and agreed to continue negotiations throughout next year.
As the IPEF ministerial meetings have sealed the agreements for all three Pillars abovementioned, a massive economic bloc occupying 40 percent of the world’s GDP and 28 percent of total trade in goods and services has been formed. These outcomes were gained after only a year and a half after the launch of the Framework, made possible based on the consensus among the 14 member nations on the need to boost supply chain resiliency and stabilization, transition to a clean economy, and establish a fair economy through the joint response and cooperation system of the Asia-Pacific region countries.
The Supply Chain Pillar was the first to reach a conclusion in negotiations (May), and the IPEF leaders signed the Agreement at the ministers’ meeting in San Francisco. The Agreement contains measures for an emergency response network in the form of an intergovernmental high-level consultative system to be activated within 15 days following a country’s request upon perceived supply chain emergency within the region, as well as cooperation initiatives for seeking joint investment opportunities and technology collaboration by identifying supply chain bottlenecks, B2B matching, and improving the logistics infrastructure for diversifying the supply chain.
The Clean Economy Agreement is expected to serve as the institutional foundation for participating countries’ stronger cooperation for transitioning into a clean economy with respect to energy transition and the reduction of emissions in industrial and transport areas. It contains measures addressing all stages of nuclear power, hydrogen, and other clean energy sources from production and carbon reduction technologies to carbon trading markets for strengthening international cooperation in developing relevant technologies, rules and standards. As for core areas like clean energy storage, renewable energy and decarbonization, approximately USD 155 billion worth of new intraregional investments, including private investment, have been mentioned. The Clean Economy Agreement is to come into force next year once it undergoes legal scrubbing and other follow-up procedures.
The Fair Economy Agreement sets out to strengthen protection of corruption reporters and revises rules related to the punishment of public servants guilty of graft or other illicit acts in the process of undertaking government procurement tasks. The Agreement also outlines initiatives for heightening transparency and efficiency of tax administration through more active tax information exchanges among tax authorities and leveraging the tax initiatives of international organizations like the Organization for Economic Co-operation and Development (OECD). This Agreement can enhance IPEF member countries’ level of integrity overall, fostering a more favorable business environment for companies and mitigating concerns of double taxation from operating in overseas markets. The Fair Economy Agreement is to enter into force next year as well, after undergoing similar procedures.
Despite the considerable progress made over seven official negotiating rounds and numerous ministerial and intersessional meetings, IPEF member countries have agreed to continue negotiations for the Trade Pillar in 2024.
IPEF member countries intend to promptly and flexibly respond to newly emerging global issues based on the tangible cooperation system built over the above Agreements and related progress. To this end, an IPEF Council will be organized to steer the entire IPEF system.
The Korean government plans to participate actively in the future IPEF Trade Pillar negotiations and cooperate with other IPEF member countries for a swift and effective entry into force of the Supply Chain, Clean Economy and Fair Economy Agreements.