The US has been expanding its economic footprint in the Indo-Pacific region. In May, it launched the Indo-Pacific Economic Framework (IPEF) bringing 12 countries (40 percent of the world’s GDP) on board.
The IPEF focuses on four key pillars: trade, supply chains, clean energy, and fair economy. The United States Agency for International Development (USAID) is at the forefront of implementing this framework, which is said to be the economic leg of the Indo-Pacific Strategy (IPS). Across the region, the US development agency has been implementing trade and competitiveness (T&C) programs.
A report prepared by the agency in 2021 states that it is a whole-of-government program designed to incentivize greater business engagement in the Indo-Pacific region by enhancing trade facilitation, improving market-based trade and competitiveness laws and policies, and increasing private sector participation.
The overall goal of T&C is to increase inclusive and broad-based sustained free and fair trade as well as competitiveness in the Indo-Pacific region.
In September this year, USAID launched a T & C project, the first of its kind, in Nepal. USAID and the Ministry of Industry, Commerce and Supplies jointly launched the project. The ministry, however, has said it will only play the role of an advisor to the program, while stressing that it is not an implementation partner.
“We cannot become a part of it but can facilitate the implementation of the project,” a senior ministry official told ApEx. He was apparently unaware of the fact that the project fell under the broader framework of IPS.
Foreign policy expert Rupak Sapkota said great powers are implementing the projects of their strategic importance in an opaque manner. “In order to avoid potential backlash, they are pushing such strategies in the guise of economic benefit, development and job creation,” he added.
According to Don McLain Gill, a Manila-based expert on Indo-Pacific affairs, the US initiative is crucial at least in theory, as there is a large infrastructure development gap in the region and the notoriety of China’s Belt and Road Initiative (BRI).
“China’s disregard for international macroeconomic stability by funding unsustainable projects for countries with low or non-existing credit ratings eventually burdens them by pulling these countries deeper into debt burdens,” he told ApEx. “The potential alternatives provided by the US and its allies are a welcoming development.”
This is not the first time the US or the West has pushed for a “game changing” alternative to China’s BRI. Such projects didn’t take off due to domestic constraints, which led to the inability of the US and its allies to provide the needed funds.
Ultimately, said Gill, the US and its allies must come up with a more comprehensive and practical strategy that leverages on their strengths and expertise for the benefit of the developing world.
“Presenting new initiatives year after year that are not fully funded, well-implemented, and quickly replaced may further tarnish the legitimacy and credibility of the West to provide robust platforms for growth amid China’s growing global ambitions,” he added.
Since the launch of IPEF, the US has been briefing other South Asian countries, but no formal discussion has been held with Nepal.
Bangladesh’s Foreign Minister AK Abdul said on Thursday that his country is looking into the pros and cons of the framework in order to decide whether it is beneficial to the country.
IPEF is regarded as a counterweight against Chinese influence in the region.
Last week, trade and economic ministers of all members of IPEF met to discuss economic issues including the digital economy. Though Nepal is not an official IPEF partner, observers say economic activities under the IPS are already taking place.
