AFTINET JSCOT submission on IPEF Supply Chain agreement and 3 other IPEF texts released

June 11, 2024: As previously reported, the IPEF Pillar 2 Supply Chain agreement was signed last November, has been tabled in Parliament and is now being reviewed by the Joint Standing Committee on Treaties.

The  AFTINET submission is here.

The AFTINET submission strongly criticised the fact that the Supply Chain Agreement came into force and is being implemented before being reviewed by the Joint Standing Committee on Treaties. This was possible because the text of the agreement allowed implementation after ratification by 5 countries, but implementation could commence in all countries even if they have not ratified. Since there is no implementing legislation, the agreement will not be voted on in Parliament. This makes the Parliamentary review process redundant. We strongly recommend that this process not be repeated.

Nevertheless the AFTINET submission informs the Committee of our analysis of the agreement, which aims to diversify supply chains away from China and set standards for labour rights in supply chains. Because there are no market access arrangements like tariff reductions it is a diplomatic agreement and there are no penalties for violations. The agreement sets up a series of committees to implement these aims. We welcome the fact that there is reference to the International Labour Organisation core labour rights and there are committees to monitor labour standards and to discuss complaints about violations of them. However the commitments are aspirational rather than binding, the committees will release very limited information and there are no penalties for violations.

The AFTINET submission recommends changes to strengthen commitments, improve transparency of reporting and complaints processes and that there should be penalties for violations.

Text of other IPEF Agreements Signed and Released  June 6

There are 4 pillars in the IPEF negotiations. The Pillar 1 agreement on trade has still not been agreed or signed, pending the US elections.

Last week in Singapore the IPEF countries met and signed the agreements on Pillar 3 Clean Economy, Pillar 4 Fair Economy, and the overarching framework agreement. There are reports that India did not sign the agreements at the Singapore meeting. This delay might have been caused by the need for the Indian government  to process the Indian election result.

The 3 IPEF texts have been released and are available on the DFAT website (scroll down to the end of the page).

https://www.dfat.gov.au/trade/organisations/wto-g20-oecd-apec/indo-pacific-economic-framework

Because there is no market access these are diplomatic agreements and there are no trade penalties for breaching them, so they are less enforceable than other trade agreements.

It is not clear when these latter 3  agreements will be tabled in Parliament and reviewed by the Joint Standing Committee on Treaties, but it may be after they have completed the review of the Pillar 2 Supply Chain agreement.

 

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