13 countries sign sign climate financing pact

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The government on Thursday said 13 IPEF (Indo-Pacific Economic Framework for Prosperity) bloc members have signed fair and clean economy agreements, while India will ink the deal after getting domestic approval.

“India did not formally sign these agreements as domestic approval processes are still underway and will be completed after the formation of the new government,” the commerce ministry said in a statement.

The government formation process in the country is on as the Lok Sabha elections got over this week.

Commenting on the agreement, bureaucrats told The Economic Times that the agreement comes under the Indo-Pacific Economic Framework (IPEF) and is known as the Clean Economy Agreement. Its objective is to help member countries meet respective objectives in climate by improving market conditions.

The countries in this framework apart from the US and India include Australia, Japan, Fiji, South Korea, New Zealand, Singapore and Thailand. The significance of the network lies in the fact that between themselves they represent 40% of global GDP and 28% of the global trade in goods and services.

Incidentally, it is the second pact under the Indo-Pacific Economic Framework, which has 14 members. In November 2023, the member countries signed a supply chain resilience agreement.

The IPEF rests on four pillars of trade, clean economy, supply chains and issues such as anti-corruption and tax (fair economy).

As the name suggests, the clean economy pillar focuses on environmental issues, how to mitigate greenhouse gas emissions in various industries, carbon capture utilisation and storage, and collaborative financing mechanisms to facilitate trading and reduce barriers for low-carbon projects.

Some of the outcomes expected from the 14 member countries are reducing the climate impact of the transportation industry, which is already one of the avowed goals of the government at the Centre and advanced sustainable agricultural practices. Other domains that come under this pillar are resisting deforestation, working with companies that source products from the Indo-Pacific region and create enabling conditions necessary to facilitate these activities.

However, like most international agreements there are areas where experts have advised caution. Trade experts have cautioned that India’s negotiators and policymakers should not relent and allow import of GM seeds and foods under the excuse of food security. This is an area which may open up the gates to a surge of imports of subsidised agri commodity.

“Large seed monopolies want farmers to buy seeds from them every time if once bought,” a trade expert from the national capital told the newspaper, arguing India must “not agree to restrict farmers’ rights to reproduce or exchange seeds or surrender the right to limit trade or provide subsidies to farmers for fertilisers, electricity, and irrigation.”