To Beat China, India Must Engage with APEC

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To Beat China, India Must Engage with APEC Blog Image

Why in News?

  • The 2023 Asia Pacific Economic Cooperation (APEC) summit was held in San Francisco last week. The US hosted APEC after a gap of 12 years.
  • Despite being in the same region, India is not a part of APEC but India needs to engage with aspects of APEC so that its economic goals can be met. 

The Asia Pacific Economic Cooperation (APEC)

  • The APEC is a regional economic forum that was formed in 1989.The objective of the grouping is to leverage the growing interdependence of the Asia-Pacific and create greater prosperity for the people of the region through regional economic integration.
  • The focus of APEC has been on trade and economic issues and hence, it terms the countries as “economies.”
  • It has been operating based on non-binding commitments with decisions taken through commitments and consensus undertaken on a voluntary basis.
  • Currently, APEC has 21 members. The criterion for membership, however, is that each member must be an independent economic entity, rather than a sovereign state.

Significance of APEC

  • APEC accounts for nearly 62 per cent of global GDP and nearly half of global trade.
  • Since its formation, the grouping championed the lowering of trade tariffs, free trade, and economic liberalisation.
  • As per the US State Department, during its first five years of operation, APEC established its core objectives.
  • In the Seoul Declaration (1991), APEC member economies proclaimed the creation of a liberalised free trade area around the Pacific Rim as the principal objective of the organisation.

Key Outcomes of APEC Summit Held in San Fransisco

  • Eased US-China Relations to Some Extent
    • After nearly a year of suspension, the APEC Summit facilitated the restoration of communications between the US and China.
    • The summit reinstated military communications that were previously suspended by China.
  • No New Agreements: Despite renewed communication, there were no new agreements as China seeks global acceptance of its approach, while the US challenges China's values.
  • Geopolitical Dynamics: APEC highlighted the rivalry between China and the US but potentially reduced the confrontational edge.
  • No Consensus on Global Crises: China's readout of the Xi-Biden Summit omitted references to the Ukraine and West Asia crises, indicating differing priorities.
  • Regional Dialogues and Agreements
    • US-Japan-Korea Trilateral Summit Held around APEC, indicating regional collaboration and diplomatic efforts.
    • Japan-China Summit around APEC led to an agreement on establishing a new dialogue framework on trade, focusing on issues like semiconductor restrictions.
  • Taiwan's Participation
    • Taiwan, represented by Morris Chang, focused on economic expansion, discussing issues such as Chinese economic coercion, and seeking admission into the CPTPP.
    • APEC serves as a crucial platform for Taiwan, allowing discussions on economic matters and trade partnerships.
  • Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)Member Meetings
    • CPTPP member countries met around APEC, addressing issues related to trade and economic cooperation.
    • But the absence of the US in CPTPP discussions, contrasting with Taiwan and China as applicants, raises questions about the US's role in regional trade.
  • Setback for US-Led Indo-Pacific Economic Framework (IPEF)
    • While the IPEF achieved success in certain areas, such as supply-chain resiliency, clean energy, and anti-corruption measures, the trade pillar faces challenges.
    • Biden's effort to position IPEF during APEC as a symbol of economic re-engagement in Asia faced setbacks due to internal problems, making the US an uncertain trading partner.
  • Talks on WTO Reform: The Golden Gate Statement outlines APEC's commitment to establishing a well-functioning dispute settlement system for the WTO by 2024.

Reason Why India is Not a Member of APEC

  • APEC’s Resistance to Protectionism
    • Although many members have been in favour of the inclusion of India, some opposed the idea citing the economic reforms which took place in the country and claiming that it has 'protectionist instincts'.
    • APEC’s guiding motive was to resist protectionist policies by individual member states, and the promotion of trade liberalisation and economic cooperation within the affiliated Asia-Pacific economies.
    • By that description, India did not seem to fit in.
  • India’s Record on Economic Reforms and WTO Engagement: The main impediment has been the opposition of some participants who have held India’s record on economic reforms and WTO engagement to be unsatisfactory.
  • Membership freeze: Another reason for not making India part of the grouping was a membership freeze which came into force in 1997. However, it was not extended in 2012.

Why India Must Engage with APEC?

  • Strength of the grouping: The grouping represents more than a third of the world population, 47% of global trade and 60% of world GDP.
  • To Fulfil its Aspirations
    • India aspires to become a $5 trillion economy and requires $1 trillion for investment in infrastructure.
    • Outside the west Europe, most of the capital surplus nations are in Asia Pacific which can quench India’s thirst for investment.
  • Natural Corollary to Act East Policy: Indian has already become a member of SCO and joining APEC is a natural corollary to Act East Policy of India.
  • Can Expand Economic Opportunities for India
    • India's potential entry into APEC opens significant trade and investment avenues.
    • APEC presents an extensive market of over 2.9 billion consumers across 21 economies.
    • This membership promises to elevate India's export capabilities and attract foreign investment, fostering economic growth.
  • Can Minimise Trade Obstacles
    • APEC member nations have pledged to promote trade liberalisation, resulting in reduced tariffs and non-tariff barriers.
    • India stands to benefit from its entry into APEC markets, translating to lower costs and heightened competitiveness in the global trade landscape.
  • India Can Benefit from Streamlining Trade Processes
    • APEC has successfully implemented initiatives aimed at simplifying customs procedures, optimising border processes, and enhancing overall supply chain efficiency.
    • India's involvement in APEC would allow it to adopt these proven strategies, leading to reduced trade costs and improved logistical operations.
  • India Can Tap into Global Knowledge Pool
    • APEC serves as a valuable platform for the exchange of knowledge and best practices among member economies.
    • By joining APEC, India gains access to a wealth of expertise in crucial areas such as trade policy, technology, and economic development.
    • This knowledge-sharing aspect holds the potential to significantly benefit India's economic and technological advancement.


  • APEC has strategically emphasised sustainability, inclusion, resilience, and innovation as key focal points. India shares these objectives, and by aligning with APEC's priorities, it can enhance its economic trajectory.
  • Considering APEC's emphasis on sustainability and innovation, India can present itself as an alternative for new Foreign Direct Investment (FDI) when compared to China.
  • This alignment positions India as a proactive participant in the region's economic dynamics. Therefore, India must increase its engagement with APEC to beat China to have strategic edge in the region.

Q1) What is the objective of CPTPP?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between Canada and 10 other countries in the Indo-Pacific. CPTPP covers virtually all sectors and aspects of trade between Canada and member countries to reduce trade barriers and facilitate trade.

Q2) What are the four pillars of IPEF?

The 14 IPEF partners represent 40 percent of global GDP and 28 percent of global goods and services trade. The launch began discussions of future negotiations on the following pillars: (1) Trade; (2) Supply Chains; (3) Clean Energy, Decarbonization, and Infrastructure; and (4) Tax and Anti-Corruption.

Source: The Indian Express