Indo-Pacific Economic Framework Ministers Reach Substantive Agreement on Supply Chains

INTI- Detroit, United States, During the Indo-Pacific Economic Framework Ministerial Meeting (IPEF-MM) held on Saturday (May 27), all member countries of the IPEF announced the substantive completion of one of the four main pillars of the framework, namely Pillar II, focusing on the Supply Chains Agreement. If realized, this agreement will be the world's first regional cooperation framework that specifically addresses supply chain issues.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, Minister of Industry Agus Gumiwang, and Indonesian Ambassador to the United States Rosan Roeslani represented Indonesia at the IPEF-MM, where supply chain issues were the main topic of discussion and conclusion.

Discussions on Pillars II-IV have been conducted in three rounds of IPEF negotiations, held in Brisbane in December 2022, Bali in March 2023, and Singapore in May 2023, as well as a special negotiation round for Pillars II-IV in New Delhi in February 2023. These negotiations were supported by several virtual intersessional rounds.

Leading the discussions on Pillar II, United States Secretary of Commerce, Gina Raimondo, stated that the negotiations on the substance of Pillar II had been concluded in a remarkably short period. Secretary Raimondo expressed hope that this momentum of agreement could be replicated in the other pillars of the IPEF.

In general, the agreement under Pillar II aims to enhance the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusiveness of the supply chains of IPEF members through collaborative efforts and individual actions taken by each member.

Through the IPEF Ministerial Meeting, the participating countries committed to realizing the expected cooperation in the IPEF Supply Chains Agreement. The cooperation will involve the business sector and related programs such as technical assistance and capacity building. The results of this cooperation are expected to increase investments in critical sectors, key goods, physical and digital infrastructure, transportation, and employment projects.

To support these commitments, the establishment of three new bodies within the IPEF Supply Chains Agreement was proposed to facilitate collaboration among IPEF partners on supply chain issues. The three bodies are the IPEF Supply Chain Council, IPEF Supply Chain Crisis Response Network, and IPEF Labor Rights Advisory Board. Each member country is expected to include senior officials as representatives in each of these bodies.

The IPEF partner countries agreed to take the necessary steps, including domestic consultations and legal reviews, to prepare the final text of the IPEF Supply Chains Agreement. Once finalized, the agreement will undergo domestic processes in each IPEF member country for signing and ratification.

Following the IPEF Ministerial Meeting in Detroit, the final step in finalizing the Pillar II agreement is the legal scrubbing process, which is expected to be completed during the fourth round of IPEF negotiations scheduled to be held in South Korea in July 2023.***