IPEF SUPPLY CHAIN AGREEMENT – A USEFUL BUT MODEST STEP – BUSINESS FORUM

Media release, 29 May 2023

“Supply chains are the arteries of global trade – any moves to make them function more efficiently and make sure they are resilient in times of crisis are to be welcomed”, says NZIBF Executive Director Stephen Jacobi.

Mr Jacobi was reacting to the announcement from Detroit that the 14 members of the Indo Pacific Economic Framework (IPEF) have substantially concluded a Supply Chain Agreement.

“This new agreement could provide some useful if modest mechanisms for participating economies to identify and monitor critical supply chains, discuss developments and react quickly in times of crisis, such as we saw during the recent pandemic. Provided these undertakings are acted upon, they could provide some practical reassurance and support to companies moving goods and services across multiple jurisdictions”.

Mr Jacobi said however such collaborative mechanisms will go only so far to avoiding future supply chain disruption.

“We have yet to see the detail of the agreement but it would appear that these measures are not legally binding on the economies, not subject to any dispute settlement and not accompanied by commitments prohibiting export and import bans, eliminating unnecessary and expensive tariffs and especially non-tariff barriers or actionable commitments to keep supply chains open. These sorts of problems all arose during the pandemic, frustrating in some cases the pandemic response, and we need to avoid them happening in the future”.

Mr Jacobi noted that important supply chains in the Asia Pacific would be left out of the scope of the agreement which further reduced its impact. He said it would be interesting to see how the relationship between this agreement and the World Trade Organization (WTO) has been expressed.

“Global trade needs above all the security provided by global rules which apply equally to all members of the WTO. Regional undertakings can support the multilateral trading system when they recognise the primacy of the WTO, are developed in an open and non-exclusionary manner and are open to accessions by partners willing to meet the required standards”, concluded Mr Jacobi.

Note: IPEF Members are the United States, Japan, Australia, New Zealand, the Republic of Korea, India, Fiji, and seven ASEAN countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam).