Today’s First IPEF Ministerial Meeting Including Korea, “Discussion on Semiconductor and Rare Earth Exchange in Emergencies”

Discussion on Joint Statement Aiming to Establish Supply Chain Crisis Management Mechanism
Including Medical Protective Clothing and Secondary Batteries Possible
Some May Hesitate to Participate Considering Relations with China

U.S. President Joe Biden is attending the launch event of the 'Indo-Pacific Economic Framework' (IPEF) held in Tokyo, along with Japanese Prime Minister Fumio Kishida and Indian Prime Minister Narendra Modi.
[Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] On the 8th, Nihon Keizai reported that the participating countries of the Indo-Pacific Economic Framework (IPEF), an economic cooperation body led by the United States, are discussing a plan to exchange semiconductors and medical supplies in emergencies. This is interpreted as a measure to counter China, which uses critical materials as tools of security and diplomacy.

Nihon Keizai stated that at the IPEF ministerial meeting held over two days on the 8th and 9th in Los Angeles, USA, 14 countries will engage in discussions on establishing a system for the circulation of critical materials. IPEF is a regional comprehensive economic cooperation body that addresses new trade agendas such as supply chains, infrastructure, and clean energy.

According to the report, the talks are expected to proceed in a direction that includes the goal of "establishing a supply chain crisis management mechanism" in the joint statement. If the countries agree to the statement later, IPEF participants will start from next year to share inventory data and risk information on semiconductors and medical supplies, and establish a cooperative system to secure alternative supply chains in case a problem arises in one country.

Nihon Keizai anticipated that critical materials will include semiconductors, medical protective clothing necessary for COVID-19 response, rare earth elements, and secondary batteries.

This plan by IPEF appears to be aimed at countering China. China has historically weaponized its resources whenever international disputes occurred. In 2010, amid escalating tensions with Japan over the Senkaku Islands, China restricted exports of rare earth elements.

Moreover, as US-China conflicts have intensified recently, China is reportedly considering controlling exports of rare earth elements, which are key raw materials for advanced weapons including the F-35 fighter jet. After the spread of COVID-19, countries dependent on Chinese-made masks and protective clothing faced difficulties procuring medical supplies due to logistics disruptions.

Nihon Keizai analyzed that many IPEF member countries have strengths in producing critical materials, enabling the establishment of a mutually complementary supply chain system. Currently, 50% of the world's semiconductors are produced in the South Korea-US-Japan market, and 30% of rare earth elements are produced in Australia and India. Indonesia has a high production share of medical protective clothing. This structure allows countries to leverage each other's strengths and form complementary relationships.

However, some countries may hesitate to participate due to concerns about distancing themselves from China. Taiwan's absence from this IPEF is largely due to consideration of Southeast Asian countries mindful of their relations with China. In late February, the US political media outlet Politico stated, "IPEF is a plan for Asia, and those (Asian countries) will not want to be involved in a plan that appears to be an anti-China coalition."

Earlier, in May, China warned the South Korean government, which officially announced its participation in IPEF, stating, "Preventing the risk of a new Cold War and opposing bloc confrontation are related to the fundamental interests of both countries." In response, the South Korean presidential office stated, "This is absolutely not about excluding China," expressing that China is overreacting. As the South Korean government participates in both Chip4 (South Korea, US, Japan, Taiwan) and IPEF, the Chinese government views this as joining the US's encirclement of China and is sending watchful signals.

Meanwhile, Ahn Deok-geun, head of the Trade Negotiations Bureau at the Ministry of Trade, Industry and Energy, is scheduled to attend the first IPEF ministerial meeting held on this day to discuss the scope and agenda of negotiations.

This content was produced with the assistance of AI translation services.