India, Japan and Australia are planning to widen the ambit of their proposed supply-chain partnership to include more like-minded countries in the Indo-Pacific region — a move seen as countering China’s dominance in world trade.
ASEAN countries would be good candidates to reach out to next for bolstering this partnership, an official source told FE.
In September, trade ministers of India, Japan and Australia decided to launch an initiative later this year to achieve supply-chain resilience in the Indo-Pacific region. The decision came at a time when China’s expansionist agenda across the South China sea and its borders with India had rattled several countries in the region. The idea is also to reduce the reliance on China for supply of goods and services.
The initiative, currently limited to the government-to-government level, will also involve industries as well as academia of these nations, according to senior government officials. The partnership is important, as it currently involves three major players in the Asia-Pacific region, with combined gross domestic product of $9.3 trillion and trade (both goods and services) of $3.6 trillion in 2019.
Senior officials who are hammering out broad contours of the partnership are initially focussing on these countries’ trade with the world — from the raw material to the finished goods stage — in 10 key sectors. Accordingly, supply-chains may be tweaked. These sectors are petroleum and petrochemicals, automobiles, steel, pharmaceuticals, textiles and garments, marine products, financial services, IT services, tourism and travel services, and skill development. Of course, this list of sectors will go through further stakeholder consultations, according to the officials.
“The ministers reaffirmed their determination to take a lead in delivering a free, fair, inclusive, non-discriminatory, transparent, predictable and stable trade and investment environment and in keeping their markets open,” according to a joint statement after a meeting of the ministers in September.
Commerce and industry minister Piyush Goyal, Japan’s minister of economy, trade and industry Hiroshi Kajiyama and Australia’s trade, tourism and industry minister Simon Birmingham had attended the virtual meeting.
The move, originally mooted by Japan, gathered speed after the Covid-19 outbreak exposed China’s unreliability as a supplier, especially to those countries with which it shares lukewarm relations, said a source.
Addressing the meeting, Goyal had said the initiative couldn’t have come at a more opportune time in the post-Covid scenario when “there is a likelihood of re-churning of supply chains in the Indo-Pacific region and it’s incumbent on us to take the initiative”.
Already, India, Japan and Australia make up the Quadrilateral Security Dialogue, or Quad, along with the US, to strengthen national security consultation.
The pandemic has not just posed an unprecedented health crisis but also caused a sharp contraction in economic activities, disrupting trade and investments. The International Monetary Fund (IMF) has predicted as much as 4.4% contraction for 2020 global GDP, warning that the Covid-19 outbreak has plunged the global economy into its worst recession since the Great Depression in 1930s. The WTO, too, has in warned that global trade volume growth could crash by a steep 9.2% in 2020 from last year.