India into APEC: Three APEC reasons why

Malcolm Cook
Senior Fellow, Institute of Southeast Asian Studies

If Indian Prime Minister Modi accepts Chinese President Xi’s surprise (to the other members of APEC and to India) invitation to attend the APEC Leaders Meeting in Beijing in November, it will bring India closer to its twenty-year goal of becoming an APEC member economy. In 2005, I supported the  continued thwarting of this Indian aspiration for what I thought were sound, APEC-based reasons. (http://www.lowyinstitute.org/publications/how-save-apec)

Nine years on, the regional trade diplomacy picture has fundamentally changed while APEC has not. The Doha Round’s continuing comatose state has underpinned a continuing proliferation of bilateral preferential trade deals and an attempt at an Asia-Pacific regional trade deal (the Trans-Pacific Partnership) and an ASEAN-based, East Asian one (The Regional Comprehensive Economic Partnership).

Many hope that these two deals will be struck and then stitched together, under APEC auspices, into a Free Trade Area of the Asia-Pacific. A circuitous way of achieving APEC’s trade and investment Bogor Goals with a few non-APEC members (Laos, Cambodia, Myanmar and India) thrown in. The APEC Business Advisory Council, the originators of the FTAAP idea, have just reiterated the presumed benefits to APEC of pursuing an FTAAP and recommended that the APEC summit in Beijing agree on an FTAAP road map. (http://business.inquirer.net/174635/apec-free-trade-pact-pushed)

Reflecting the idea that APEC is primarily a trade and investment liberalization forum, supporters of India into APEC see that APEC membership will enhance trade and investment liberalization in India (http://www.cfr.org/india/bringing-india-inside-asian-trade-tent/p33173)
 while fretting that India’s decidedly patchy trade and investment liberalization record may slow APEC’s momentum down further on this front or keep, as it has for the last two decades, India out of APEC looking in. (http://www.pecc.org/blog/entry/india-and-apec-not-yet-there-but-getting-closer)

India’s membership in APEC could certainly benefit APEC and India but not in these ways. The birth of the narrower and newer RCEP and TPP processes stem directly from the fact that APEC has failed as a trade and investment liberalization negotiation forum, a cold hard fact the drumbeat for an APEC-based FTAAP is deaf to. India’s tough, defensive approach to trade liberalization and its membership in RCEP will likely mean that India will not join APEC, if ever invited by a consensus vote of the 21 APEC members, primarily, to further its trade and investment liberalization agenda.

Rather India’s membership in APEC would enhance two of APEC’s greatest strengths, one well known and one overshadowed by the overweening focus on APEC as a trade and investment liberalization body. The first strength is the annual leaders meeting, the first to bring together the leaders of the United States, China, Japan, Russia and Indonesia and 16 small and medium powers. The East Asia Summit now brings together all of these major powers and India and the United States and Japan with strong support from South Korea, Australia and Singapore, want to turn the East Asia Summit into the premier regional organisation for strategic matters. The longer India is not at the APEC head table, especially if India continues to gain economic and strategic importance, the more this favours the East Asia Summit’s leaders’ meetings over APEC’s.

APEC greatest understated strength is as a consultation forum bringing together developed and developing countries to promote a broad trade and investment facilitation agenda, one of APEC’s three pillars and its sturdiest by far. No other regional economic forum provides this opportunity to members and India’s economic reform and development could certainly benefit from looking East through APEC for more trade and investment facilitation information, technical support and lessons learned from other APEC economies. The trade and facilitation benefits that India could garner from APEC would benefit all by making the Indian market less opaque and labyrinthine.

It is time for APEC to go beyond the Bogor Goals and their focus on trade and investment liberalization and India joining APEC may help APEC, by hook or by crook, do just this.