Asia-Pacific Economic Cooperation (APEC)

What’s in Today’s Article?

• Why in the News?
• About Asia-Pacific Economic Cooperation (APEC)
• Significance of APEC
• India’s Willingness to Join the APEC Grouping
• Why is India not a Part of the APEC Grouping?
• News Summary

Why in the News?

• The Asia-Pacific Economic Cooperation (APEC) grouping is meeting in San Francisco in the United States.

About Asia-Pacific Economic Cooperation (APEC)

• The Asia-Pacific Economic Cooperation is a regional economic forum and was formed in 1989.
• Aim of the grouping - “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 on the basis of non-binding commitments with decisions taken through commitments and consensus undertaken on a voluntary basis.
• Member Countries:
  • 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.
  • The grouping's current members are Australia, Brunei, Hong Kong, New Zealand, Papua New Guinea, the Philippines, Indonesia, China, Japan, South Korea, Russia, Canada, the United States, Mexico, Peru, Chile, Malaysia, Vietnam, Singapore, Thailand and Taiwan.

Significance of APEC

• 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.
• APEC accounts for nearly 62 per cent of global GDP and nearly half of global trade.

India’s Willingness to Join the APEC Grouping

• India, which presently has 'observer' status, has been very keen to join the economic grouping as a full member.
  • India has expressed interest in joining APEC, and made a formal request in 1991.
  • The request to join was based on India’s geographical location, the potential size of the economy, and degree of trade interaction with the Asia-Pacific.
• India Needs APEC because
  • Strength of the grouping – The grouping represents more than a third of the world population, 47% of global trade and 60% of world GDP.
  • Aspiration of India – 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. Joining APEC is a natural corollary to Act East Policy of India.

Why is India not a Part of the APEC Grouping?

• 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.
• The main impediment, apparently, has been the opposition of some participants who have held India’s record on economic reforms and WTO engagement to be unsatisfactory and unworthy of meriting inclusion as a member in the grouping.
• 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.
• There has been a renewed push to grant membership status to India.
• A majority of members now believe that India must be brought into the fold for it has shown progress in reforming and liberalising its economy.
• Granting India membership status may also act as a catalyst for trade reform among emerging economies.
• Moreover, India’s maritime strength and strong strategic relations with the region’s major powers, member states point out, could be used to bring strategic balance within the grouping.

 News Summary

• The Asia-Pacific Economic Cooperation (APEC) grouping is meeting in San Francisco in the United States.
• US President Joe Biden and China’s President Xi Jinping will have their first in-person meeting in a year on the sidelines of the APEC summit.
• India is not a member; however, India’s Union Minister for Commerce and Industry, Shri Piyush Goyal, is attending the forum.

Q1) What is meant by Free Trade Agreement?

A free-trade agreement or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral.

Q2) What is meant by Customs Union?

A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff. Customs unions are established through trade pacts where the participant countries set up common external trade policy.

Source: Xi-Biden to meet amid US-China tensions: What is APEC, the forum they will be attending? | WION