Economic framework will have more impact than trade pact: US Secretary of Commerce

New Delhi:

US Commerce Secretary Gina Raimondo expressed hope on Thursday that the Indo-Pacific Economic Framework (IPEF) will have more economic impact than a free trade agreement (FTA) with India.

The IPEF was jointly launched by the US and other partner countries of the Indo-Pacific region on May 23 in Tokyo. The 14 IPEF partners represent 40 percent of global GDP and 28 percent of global trade in goods and services.

The framework is structured around four pillars related to trade, supply chains, clean economy and fair economy (issues such as taxation and anti-corruption). India has withdrawn from the trade pillar and decided to join the remaining three subjects related to supply chains, clean economy and fair economy.

Gina Raimondo said a trade deal with India is not currently on the table and the US Congress has stated that there is no appetite for a free trade deal.

“My hope is that the IPEF… my strong belief is that in many ways it will prove to be more economic than a free trade agreement,” she said in a televised fireside talk here.

She added that this framework would be a modern day equivalent of a trade agreement.

“And this is what we’re trying to figure out through IPEF and if we get it right,” it would help create more jobs in both countries than the traditional free trade agreement.

When asked about cooperation in semiconductors, the US Secretary of Commerce said that India and the US will hold a formal discussion on the sector.

“I am working very closely with my counterpart (Minister of Commerce and Industry Piyush Goyal). Tomorrow we will have the official meetings of the CEO forum and the commercial dialogue and we have talked a lot about semiconductors and we will have a formal discussion between the US government and government of India around semiconductors,” she said.

There are synergies between India and the US in semiconductor design and technology, she added.

Raimondo said the US and the world are overly dependent on Taiwan for semiconductors and “we have a desire to work closely with our allies, including India” in this sector.

She also said that there are huge opportunities in both countries to increase trade and investment.

India has a stable business environment and would benefit from US companies looking to diversify their supply chains, she said.

On challenges in India, she said India has a “quite high” tariff on certain components that go into semiconductors or other electronic items.

She said US investors talk about tough foreign investment rules in certain industries and regulatory differences at the state level.

“But the truth is that at any time you can increase transparency and reduce layers of bureaucracy and regulation. It eases the path to more trade,” she added.

Raimondo is here for the India-US Commercial Dialogue and the India-US CEO Forum.

India-US Commercial Dialogue and CEO Forum will be held on March 10 to discuss cooperation across sectors that could unlock new trade and investment opportunities between the two countries, the Commerce Ministry said.

The Dialogue is a cooperative venture that includes regular government-to-government meetings held in conjunction with private sector meetings, with the aim of facilitating trade and maximizing investment opportunities across a wide range of economic sectors.