India will oppose any attempt to weave in mandatory commitments on labour and environment standards in the three pillars — supply chains, clean energy & infrastructure and fair economy — of the US-led Indo-Pacific Economic Framework it is negotiating with member countries, sources tracking the matter have said.

The 14-member alliance, launched by US President Joe Biden last year to challenge China’s growing influence in the Indo-Pacific region, is set to hold its second negotiating round in Bali on March 13-19, and Indian officials already have their job cut out for it.

“India decided to keep out of the trade pillar, the first of the four pillars of the IPEF, as it was not comfortable with proposed commitments in a number of areas, including labour and environment. However, if the US and other members try to bring in mandatory commitments on labour standards and environment in the other three pillars too, India will oppose it,” the source said.

Other members of the IPEF include Australia, Brunei, Fiji, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam.

Labour provisions

“IPEF is not a traditional trade agreement as there are no negotiations on reducing tariff. It is all about rules governing trade and that is why India needs to be watchful to ensure that it does not compromise on its rights for sovereign decision making in crucial areas,” another source said.

New Delhi does not have an issue with labour provisions such as non-exploitation of workers, prevention of child labour and payment of minimum wages as Indian laws suitably address these matters. “But labour standards under IPEF cannot be mandatorily enforced allowing for disputes and dispute resolution by third parties”, the source pointed out. The same applies for environment norms.

The Biden regime has made it clear that labour laws would be an integral part of all its trade talks. Last January,  US Trade Representative Katherine Tai announced the country’s focused trade strategy to combat forced labour. “I am committed to working with our trade partners to create a fair, rules-based international trading system where the use of forced labour in traded goods and services, including forced child labour, becomes a thing of the past,” she said.

There are also apprehensions that if the US intends to use the USCMA (US, Canada, Mexico Agreement) as the model, the stringent environmental and labour standards that it contains could be severely detrimental to India’s interests. If the standards are breached, disputes could be filed and penalties, in the form of higher tariffs on identified items, could be imposed.

“The Ministerial texts of all three IPEF pillars, where India has agreed for negotiations, mention upholding of labour rights based on the ILO Declaration on Fundamental Principles and Rights at Work. The fact is that of the eight ILO Fundamental Conventions, India has ratified six. It has not ratified the ones on the right to organise convention and the right to collective bargaining. India will certainly not be interested in mandates in these areas,” the source said.

Observer status

New Delhi has asked for observer status in the first pillar of the IPEF, where provisions and initiatives on labour, environment, digital economy, agriculture, competition  policy, transparency and good regulatory practices, trade facilitation, inclusivity, and technical assistance and economic cooperation are to be pursued. “Till India is given observer status, it cannot decide on joining the pillar as it needs to know what exactly is going on there,” the source said.

US Commerce Secretary Gina Raimondo, during her recent India visit, said she was hopeful that IPEF negotiations would be wrapped up this year.