Asia-Pacific Economic Cooperation (APEC):

 The is a regional economic forum of 21 Pacific Rim member established in 1989 to

leverage the growing interdependence of the Asia-Pacific.
 APEC's 21 members aim to create greater prosperity for the people of the region by
accelerating regional economic integration and thereby promoting free trade
throughout the Asia-Pacific region.
 It has a Secretariat based in Singapore.
 In 1994 during Bogor, Indonesia summit, APEC sets the Bogor Goals of “free and
open trade and investment in the Asia-Pacific by 2010 for industrialized
economies and 2020 for developing economies.”
 APEC operates as a cooperative, multilateral economic and trade forum.
 There are no binding commitments or treaty obligations.

Growth and Development of the Region:

 These 21 member countries collectively account for more than a third of the world
population, 47% of global trade and 60% of world GDP (as of 2018)
 Further, per capita income in the region rose by 74%
 Average tariffs fell from 17% in 1989 to 5.2% in 2012.
 The APEC removed trade barriers between members, harmonized standards and
regulations, and streamlined customs procedures which have enabled goods to
move more easily across borders.
 APEC region’s total trade increased over seven times—outpacing the rest of the
world with two-thirds of this trade occurring between member economies.

Challenges:
The APEC internally is split into two factions between China and USA, the widening
differences since 2018 APEC Summit resulted in a Trade war between the two.
TPP & USA Exit

2018 APEC – Papua New Guinea & USA-China Disputes:

The China-USA differences on various aspects of Trade resulted in the failure of APEC
Summit. They did not even agree on a routine joint statement that would be issued at the end
of the summit as a tradition. Thus the 2018 summit ended without even issuing a Joint
Statement.

 USA criticised of China’s “One Belt, One Road” initiative as a debt-trap diplomacy a
geopolitical strategy.
 It also criticized China’s unfair trade practices, subsidies, market barriers, trade
manipulation and intellectual property theft.
 The United States proposed a reform of the World Trade Organization to slash the
inappropriate benefits to largest economies like China, India and other countries.
 China criticized USA’s America First policy its protectionism and unilateralism
especially the tariffs Trump has imposed on $250 billion worth of Chinese goods to
force China to change its policies.

“The entire world is worried,” said Prime Minister Peter O’Neill of Papua New Guinea.
Prime Minister Justin Trudeau of Canada said, “I don’t think it will come as a huge surprise
that there are differing visions,”.

Creation of Sub-Regional Agreements: APEC in toto does not have any economic
framework or FTA on its own but there are few internal Sub-regional agreements like RCEP
(Regional Comprehensive Economic Partnership) and TPP (Trans-Pacific Partnership) which
scholars argue have further undercut the importance of APEC.

Free-Trade Areas: The FTA members do their trade and achieve their self –trade interest at
the expense of the non-FTA members.

Lack of implementation: Scholars argue that APEC members are more of proposes rather
than implementers. Member countries hardly put their proposals into action because of
economic indifferences. The Free Trade Area of the Asia Pacific, or FTAAP, is a proposal
to create a free trade agreement existing since 2006 but never fructified.

Non-Binding nature: Critics argue that APEC’s non-binding nature has allowed
overlapping, and sometimes contradictory, economic and trade agreements to be negotiated.

Exclusion of India: India is the world’s fifth largest and Asia’s third-largest economy.
During 1989, foreign trade accounted for just 15 percent of India’s GDP, but that rose to 40
percent by 2017. India exclusion undermines APEC’s efforts to expand trade and innovation
throughout the region.

India & APEC:

 India has requested membership in APEC, and received initial support from the
United States, Japan, Australia.
 India is an observer state of APEC since 2011 and has applied for its membership.
  Act East Policy: India launched it in 2014 For further strengthening of economic ties
of India East and Southeast Asia
 India has set up an Indo-Pacific territorial division in the Ministry of External
Affairs in 2019.

USA, INDIA & APEC:

 USA supported India’s membership in APEC
 US wants to propel its Pivot to Asia Foreign Policy & want India in the group
 The US recently renamed its Pacific Command to the Indo-Pacific Command as it
seeks to give teeth to its Indo-Pacific policy.

Why has India not got membership of APEC?

India first made a request for membership of the group, in 1993 and then in 2007. In 1997 a
moratorium on membership was put in place for a ten-year period which was extended
further till 2010. However currently there is no moratorium on membership.

The reasons cited for not including India are as follows:

1. India was denied APEC membership in 2007 on the ground that its economy was not
integrated into the global system
2. lack of consensus on including any new member
3. fears of disrupting consensus procedures
4. extra-regional status of India: it is not a Pacific Rim nation.
5. large trade deficit of India
6. India’s record in trade negotiations, bilaterally as well as in the World Trade
Organization (WTO), has made some APEC economies concerned that including
India would slow momentum for achieving the forum’s objectives
7. India’s economic policies are generally considered as protectionist and inward
which is considered against the liberalized and free market principles of APEC.

Advantages for India:

1. It will enable to integrate with the global economy, and help boost economic growth
2. India will benefit from investments inflows that are crucial for advancements in
different sectors of the economy
3. It gives India access to Global Value Chains (GVCs), greater foreign investment and
easier skilled worker flows.
4. It can facilitate into TPP (Trans-Pacific Partnership)

Advantages for APEC:

1. APEC members would gain greater access to India’s booming consumer market, vast
labour resources, and ample investment opportunities
2. India will act as an effective counterweight to growing influence of the Chinese
economy.

APEC Chile 2019 Summit:

It was originally to be held in November 2019 in Chile, was cancelled due to the protests by
sections of its population over inequality, the cost of living, privatisation and political
corruption.

APEC 2020 Summit is to be held in November in Kuala Lumpur Malaysia

APEC First Summit was held in 1989 in Canberra, Australia