The case for India’s membership to the APEC is not as sound as it seems at first glance. Two gaps exist that must be squared away by both India and existing APEC member economies.
The Asia-Pacific Economic Cooperation (APEC) turns 30 this year amid fragmenting multilateralism and strengthened geopolitics, symptoms of an international system in flux. Competition and divergence in the form of US-China tensions was on full display at the 2018 APEC summit, with its failure to produce a joint statement. Representing more than a third of the world population, 47% of global trade and 60% of world GDP, the Asia-Pacific’s primary economic dialogue too faces the spectres of unilateralism and protectionism, threatening its raison d’être.
Amid such transition and transformation persists the question of the forum’s enlargement, with pointed reference to India. India is the fastest growing large economy, a rising actor in the Asia-Pacific, and an increasingly legitimate stakeholder in regional and global governance. Ever since an official membership moratorium expired in 2010, momentum has gathered for India’s accession at various points,<1> but with no substantive result.
APEC last admitted new members in the previous millennium; is it finally ready to give new voice to a 21st century institution? More than two decades after first knocking on APEC’s doors, is India finally ripe for admission?
India’s more confident global outlook and engagement, on the back of its growing economic weight, is in lockstep with APEC’s need to advance its regional integration agenda and renew its relevance in a new economic and strategic landscape. However, rhetoric and reality clash on both the economic and geopolitical prongs of accepted reasoning for India’s membership. Unless the two gaps identified below are squared away — from both India’s and APEC’s ends — the idea of adding India to APEC will remain more exciting than its actual prospects.
India’s growth trajectory aligns with APEC’s agenda of enhancing regional integration through trade and investment liberalisation and facilitation across the Asia-Pacific. India is expected to become the fifth largest global economy this year, and its share of world GDP has more than doubled in the last 30 years. Critically, foreign trade accounts for an increasing share of India’s GDP, growing from less than 15% in the early 1990s to around 40% at present — on par with Indonesia, and higher than Japan, the US and APEC-hopeful Colombia.<2>
In short, there is nowhere else for India to grow but outward. Its stance at trade negotiations attests to this realisation, which has shifted from that of an inward-oriented obstructionist to a consensus-builder. Its status as an emerging power has played a role in this realisation, as has the changing structure of its economy. New requirements have come to the fore, such as the further integration of its flourishing services sector into global value chains, greater foreign investment and easier skilled worker flows.<3> Equally reflective of this awareness have been India’s domestic economic reforms, such as to its internal tax structure and its efforts to make the country a more hospitable environment for business.<4>
The material benefits on offer to APEC member economies by the addition of India to the forum include increased access to India’s labour force and booming consumer markets, as well as increased investment opportunities. In return, India will gain opportunities to raise its trade and investment profile in the region, gain access to APEC’s resources and expertise (including, importantly, the APEC Business Advisory Council), and proactively participate in topics of conversation at APEC forums that strongly resonate with India’s own developmental interests, such as automation, SMEs, and women’s economic participation.
While a bird’s eye view acknowledges strategic convergence on the economic value of India’s APEC membership, significant divergence exists between India and APEC in terms of inclination, behaviour and appetite on economic and trade issues. The shift in how India sees itself, from “a country of farmers
There is thus a gap between India’s protectionist impulses and its leadership’s globe-trotting economic diplomacy (note the 2014 blockade of the WTO’s Trade Facilitation Agreement by the Modi government, which has prioritised economic relations in its foreign policy engagement). India must rethink how it defines ‘national interest’ when it comes to global trade, especially in the face of its domestic priorities and structural economic changes. Only then will announced policies and necessary reforms firmly take root and lead to more effective signalling, including to APEC, of its intent to engage with the outside world.
It is no surprise that several APEC members are wary of India playing spoiler to the forum’s economic agenda. Given the consensus-based nature of the forum, India could slow the pace of reform. However, just as New Delhi needs to narrow the divergence between its foreign and trade policies, APEC member states must also reconcile their own respective gaps between foreign and economic worldviews regarding India. They must not seek to leverage India’s rise at the expense of its economic realities: India’s growth story will not be linear, and it will remain answerable to a diverse democracy. Demands for any ‘demonstration’ on India’s part of its readiness to join APEC must be tempered against this reality.
Indeed, APEC’s framework of voluntary and unilateral liberalisation, within an environment of regional peer learning and pressure as well as technical support, offers a time-tested pathway for India’s integration within the region. Previous new entrants into APEC, such as Indonesia, Malaysia, South Korea and Vietnam, have undergone the same process.
Closing the gap between the aims of foreign and trade policy will require earnest political will and sustained diplomatic firepower to back up credible intent from New Delhi to become a functioning member of APEC, and from APEC member countries to expand the forum.
India’s weight and ambition align with the need to revitalise APEC in a new political and economic climate. Firstly, India is a lynchpin of global growth and an advocate for strengthened globalisation. Southeast Asia has been a traditional and increasingly pointed target of India’s external outreach. Secondly, it has a real stake in pursuing rules-based regional governance, to ensure a conducive environment for inclusive development that is not dependent on any one regional power.<8> To this end, recent years have seen renewed Indian bilateral and trilateral engagement in the Indian Ocean, while a new Indo-Pacific division in its foreign ministry ties together Indian engagement across IORA, ASEAN and the nascent ‘Quad’.
Indian membership of APEC thus helps respond to the opportunities and challenges of increased protectionism and slowing growth in the West on one hand, and China’s unchecked regional advance on the other. In India, APEC will find an alternate market for labour, consumers and investments, and an additional counterweight to help check unilateral economic ambitions in the region. It will also help APEC embrace some notion of ‘Indo-Pacific’ and give it a renewed purpose in a renewed 21st century.
But does the ongoing era of fragmented globalisation put paid to the potential benefits of India’s inclusion into APEC? The emergence of RCEP and CPTPP will create winners and losers in the region, which make it necessary for India to participate in the emerging trade architecture. At worst, these narrower processes are a consequence of the failure of APEC to sufficiently advance trade liberalisation in the region; at best, APEC becomes a ‘halfway house’ between RCEP and a qualitative, CPTPP-like arrangement. In either case, this fragmentation shifts the goalposts for India in this region and raises questions about APEC’s role and function in today’s age.
Moreover, India has a seat at the table in other key decision-making forums. For instance, the EAS also discusses trade, albeit under a broader ambit, and also brings together regional leaders. Critically, it connects both Asia and the Pacific and is based on ASEAN centrality, a tenet in India’s Act East policy and Indo-Pacific vision that is missing in APEC. At the global stage, the G20 has emerged in the last decade as the “economic steering committee of the world.”<9>
In contrast to India, not all APEC member economies subscribe to the concept of the Indo-Pacific. Instead, they insist on “more obvious candidates” in the Pacific proper for future membership. Furthermore, some even wish to “double down” on the existing membership instead of thinking about expanding, given a multilateral system in distress.<10> As declared by a Chilean trade representative (Chile is APEC’s 2019 Chair), “If the issue of membership brings about a stalemate, then better to be as we are right now.”<11>
A political appetite persists for India’s accession to APEC in New Delhi, rejecting notions of APEC’s redundancy.<12> However, India should reassess whether the time has come and gone for it to truly capitalise on its membership in APEC, and accordingly prioritise this goal in its foreign policy. At the same time, APEC must conduct its own bracing reality check on the extent of its function and ambition, including its membership. This second gap, between the opportune time to seize the APEC opportunity and the function the forum serves, will not be as easy to resolve.
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Ritika Passi works at the intersection of economics and security. Her research focuses on regional connectivity initiatives and power shifts in global economic governance. She ...
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