Has India’s Hour at APEC Finally Come?

For years, India has sought membership in the Asia-Pacific Economic Cooperation (APEC) forum. APEC’s founding, in 1989, acknowledged the growing economic interdependency of Pacific Rim countries as a new century loomed on the horizon. For New Delhi, which left behind decades of dirigisme economic policy in favor of liberalization following a balance-of-payments crisis in the early 1990s, APEC has long been seen as a logical place to have its interests heard. India’s stated “Look East” policy, also forged in the early-1990s and more recently re-cast as a more energetic “Act East” policy, also made APEC membership an important objective.

Still, a generation later, India is not a member. In 2011, at the United States’ invitation, India participated in the APEC forum as an observer. When the 21 Pacific Rim states that comprise APEC meet later this year in the Philippines, they should formally consider India’s request for membership. Allowing India to participate in APEC would not only benefit New Delhi as it continues to grow economically at breakneck speeds – now the fastest-growing major emerging economy in the world given China’s recent economic doldrums – it also stands to benefit the region and the world at large.

On the face of it, the core reason that India didn’t gain entry into APEC in the 1990s, before a 1997 moratorium on membership went into place, was due to the undeniable geographic fact that it would be a stretch to include India as part of the geography of the Pacific Rim. Fair enough. At the time, India didn’t have the economic clout, promising growth rates, or geopolitical heft it enjoys today. Much of APEC’s raison d’être, per its members, stems from its underlying geographic logic. Many of APEC’s smaller member economies have claimed that India’s participation in the group could offset the “balance” of the forum away from the Pacific – indeed, with a population of 1.2 billion and a $2.5 trillion nominal GDP, India’s formal participation would have a non-negligible effect on APEC’s agenda and focus.

The membership moratorium dampened New Delhi’s interest, while it remained in place. The moratorium lasted for ten years, beginning in 1997 and ending in 2007, after which it was extended for an additional three years. Since 2010, however, India’s case to join APEC has been a good deal stronger. While the moratorium was in place, India experienced a massive wave of promising economic growth and global integration. Today, only the obviously unchanged geographic issue – APEC continues to comprise exclusively of states with some vantage on the Pacific Ocean – detracts from what is otherwise an obviously compelling membership bid.

What APEC Does

Forget the barriers for a minute – what does APEC actually do and what does it matter if India joins or not? In some ways, it’s easier to identify what APEC isn’t rather than what it is. APEC isn’t a regulatory intergovernmental organization like the World Trade Organization (WTO); its members don’t meet to discuss binding statutes and agreements on market access, tariffs, or trade policy. Similarly, APEC isn’t a launching pad for free-trade agreements, like the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP), or the Free-Trade Area of the Asia Pacific (FTAAP), all of which include some subset of APEC members but were negotiated through different forums.

APEC, according to its mission statement, describes its objective as supporting “sustainable economic growth and prosperity in the Asia-Pacific region.” To go about this mission, APEC primarily exercises convening power. Every year, the APEC summit grabs headlines precisely because it manages to get 21 heads of government and/or foreign ministers in a single place to discuss economic and strategic issues concerning one of the world’s most densely populated and economically dynamic regions. Though some may write off APEC’s broader significance in the alphabet soup of global organizations and forums as a marginal “talk shop,” there is real value in these leaders coming together to state their concerns, interests, and share best practices. This is where APEC excels.

Unlike the emerging economies of East and Southeast Asia, India has never quite won full integration into the region’s trade architecture. Part of this is due to India’s own approach to trade policy – New Delhi has gained a reputation for itself as somewhat protectionist and skeptical when it comes to trade expansion, at the WTO’s Doha round certainly, and even leading up to the Bali Package. At the same time, investors, entrepreneurs, and policymakers, in the West and East equally, have sought an opening of India’s economy. As India surpasses China as the world’s fastest-growing major emerging economy, it continues to liberalize and open up under its center-right Bharatiya Janata Party-led government. However, more could be done – and this is where APEC comes in.

Under the APEC tent, India would have access to technical groups, expert multilateral consultations, and have a sense of best practices toward eliminating barriers to trade, improving market access and bolstering investor confidence. As far as New Delhi’s interests are concerned, the Modi government’s “Make in India” initiative to turn the country into a manufacturing powerhouse would be well-served by India’s APEC participation. Former Australian Prime Minister Kevin Rudd, now the head of the Asia Society Policy Institute, has further argued that including India in APEC would pave the way for New Delhi’s inclusion in trans-regional trade agreements. Given APEC’s non-binding and non-regulatory nature, the domestic political constraints that have historically driven India’s trade diplomacy will be less of a factor in inhibiting its participation in the forum.

The crux of it is that “APEC membership is a low-risk, high-reward pathway for India to participate more fully in the Asia-Pacific and global trading system,” as Rudd has noted. Support for Indian membership exists among current APEC members: the United States, China, and Russia have all within the past year said that they would welcome India’s participation in the group. For both New Delhi and the 21 member states of APEC, including India, starting in 2015, is a no brainer. When the leaders meet in Manila this year, they should seriously consider New Delhi’s membership. The forum simply can’t reach its true potential as long as it excludes ones of Asia’s largest economies.