The 2023 Asia Pacific Economic Cooperation (APEC) Summit, hosted in San Francisco, emerged as a focal point for reshaping the future of regional economic cooperation.

2023 APEC Summit:

Key Development: Renewal of U.S.-China communications.

Theme: “Creating a Resilient and Sustainable Future for All.”

Focus Areas:

• Free, fair, and open trade.
• Inclusive and sustainable growth.

Key Declarations:

• Golden Gate Declaration: Aims at resilience and sustainability in member economies.
• APEC Action Agenda on Climate Change and Energy Security: Addresses climate crisis and energy security.

Strategic Moves:

• U.S. strategy of reducing reliance on China.
• Taiwan''s interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

What is APEC?

Formation:

• Established: 1989 (informal), 1993 (formal).
• Headquarters: Singapore.
• Membership: 21 economies, including major players like the U.S., China, Japan, and Russia.
• India: Observer since 2011, seeking membership.

Goals and Objectives:

• Economic growth and prosperity.
• Promoting free trade and regional economic integration.
• Focus on human security and creating a conducive business environment.

Significance:

• Accounts for nearly half of global trade.
• 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.

Functions and Achievements:

• Projects in areas like digital skills, energy efficiency, and disaster resilience.
• Significant reduction in average tariffs since inception.

Decision-making:

• Consensus-based, without binding commitments.

Challenges:

• Issues like trade wars, economic impacts of COVID-19, and creation of sub-regional agreements.

Engaging with APEC: Strategic Importance for India

Economic and Trade Benefits:

1. Economic Growth: Engaging with APEC, which accounts for 60% of global GDP, can significantly boost India''s economic growth by opening new markets for its goods and services.
2. Trade Opportunities: Membership in APEC enhances India’s trade prospects, offering avenues for increased exports and market diversification.
3. Technology Transfer: APEC''s engagement facilitates access to advanced technologies, vital for India''s industrial and economic development.

Strategic and Global Integration:

1. Global Integration: Joining APEC helps integrate India into global supply chains, enhancing its attractiveness for foreign investments.
2. Strategic Positioning: APEC participation strengthens India''s strategic stance in the Asia-Pacific, impacting its geopolitical influence and regional stability.
3. Competing with China: APEC serves as a platform for India to economically compete with China, asserting its role in regional and global economic scenarios.

Innovation and Regional Cooperation:

1. Innovation and Best Practices: APEC''s focus on innovation aligns with India’s goals, promoting advancements in key sectors.
2. Regional Stability: Engagement with APEC fosters regional stability, essential for collaborative economic development in Asia-Pacific.

Challenges in India-APEC Relations

1. APEC’s Moratorium: India''s aspiration to join APEC is hindered by the moratorium on new members since 1997.
2. Trade Liberalization Concerns: India is perceived by some APEC members as hesitant towards trade liberalization and regional integration.
3. Bilateral Investment Treaties: There are apprehensions regarding India’s approach to negotiating bilateral investment treaties, impacting economic collaboration prospects.
4. Pace of Domestic Reforms: India faces critique for the slow pace of economic reforms, particularly in FTAs and tax policies.
5. Domestic Resistance: Protectionist tendencies within India pose challenges to its further integration into international trade, complicating negotiations with APEC.

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
  • Outside the west Europe, most of the capital surplus nations are in Asia Pacific which can quench India’s thirst for investment.
• 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.
• 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?

• The ostensible reason for India''s non-inclusion in the APEC is its extra-regional status. APEC is essentially a group of ''Pacific'' countries that came together in 1989 to form an economic community. Its 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.
• 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.

India''s Inclusion in APEC: Strategic Benefits and Global Implications

• Economic Growth and Market Expansion: India, as one of the largest economies globally, can significantly contribute to APEC’s goals of fostering economic growth and expanding markets. India''s dynamic economy and large consumer base present substantial opportunities for market expansion within the APEC framework.
• Diverse Economic Opportunities: India''s inclusion in APEC adds diverse economic opportunities, leveraging its unique strengths in sectors like IT, pharmaceuticals, and agriculture. This diversification can enrich the economic spectrum of APEC economies, fostering varied avenues for cooperation and growth.
• Counterbalance to China: India serves as a natural counterbalance to China within APEC. Its inclusion would promote a more diversified and balanced economic landscape in the region, potentially leading to a more equitable distribution of economic influence and opportunities.
• Global Trade and Investment Hub: As a growing hub for global trade and investment, India''s status would augment APEC''s role in facilitating international trade and economic cooperation. India''s market potential, coupled with its developing infrastructure and policy reforms, makes it an attractive destination for trade and investment within the APEC region.

India''s potential membership in APEC is not only significant for its own economic growth but also for the strategic balance and economic dynamism it brings to the APEC forum. The inclusion of India would add a new dimension to APEC’s efforts in promoting regional economic integration and cooperation in the Asia-Pacific region.