Asia Society Policy Institute To Work For India’s Membership in APEC

Despite having a population of 1.2 billion and the world’s ninth largest economy, India remains excluded from several regional economic organizations like the Asia-Pacific Economic Cooperation (APEC) — a situation experts say is detrimental to both India and the international community.

India’s economy is only partly integrated into the global economy, particularly regional trade arrangements in a dynamic Asia-Pacific. The emergence of regional trade agreements such as the Trans Pacific Partnership (TPP) threatens to further distance India from the global supply chains critical to Prime Minister Modi’s “Make in India” initiative.

Asia Society Policy Institute (ASPI) has convened a high-level, international task force to develop a strategy for India’s membership in the Asia-Pacific Economic Cooperation forum. To be chaired by Kevin Rudd, ASPI will develop the case for India’s membership in APEC, identify the benefits and obstacles to it, and seek to generate support for India’s membership in India and among APEC members.

Rudd served as Australia’s 26th Prime Minister and as Foreign Minister. As Chair of the Independent Commission on Multilateralism, Rudd is leading a review of the UN system.

Ajay Banga, co-chair of ASPI, is President and Chief Executive Officer of MasterCard and a member of its board of directors. He serves as a member of President Obama’s Advisory Committee for Trade Policy and Negotiations. Amb. Shyam Saran, another co-chair of ASPI,  was Foreign Secretary of India from 2004 to 2006 and currently serves as Chairman for the Research and Information System for Developing Countries (RIS), a think tank specializing in studies on economic and trade issues.

The task force will include members from India, the United States, and key APEC member economies from Asia. ASPI will share a report of the task force with the Government of India, APEC member economies, and business communities in all those economies in early 2016. The Confederation of Indian Industry is partnering with ASPI on this initiative.

Rudd noted that India’s delayed entry is as much about the negotiation process as internal economic issues. “The dynamic of any negotiating room at the top is always in the direction delay, it is rarely in the direction of decision,” Rudd said. “There are two things that are eternal: the kingdom of heaven and the bureaucracies of our various countries.”

“Business globally, and especially in the U.S., should be delighted by the prospect of India joining APEC,” said Banga. “An India that’s much more open, much more aligned with the trade protocols and practices of APEC members, is an India that is way better positioned for integration into global supply chains.”

Shyam Saran, one of several panelists appearing via Skype, emphasized that his country realizes the importance of international economic associations. “Let me say very categorically that India is very keenly interested in becoming part of APEC,” he said, adding that the country has in fact applied in the past but was stopped by a moratorium on new members.

Panelists pointed out that some member countries remain skeptical of India’s ability to conform to APEC trade norms and culture. “The U.S. reluctance to embrace India into APEC for these many years has been a fear that India would slow down the process of moving toward greater trade facilitation and liberalization,” Fred Bergsten, a senior fellow at the Peterson Institute for International Economics, said. “India, along with some other countries, has sometimes caused problems for global trade negotiations.”

Bergsten added that if India were to join APEC, it could pave the way to membership in the even more exclusive Trans-Pacific Partnership (TPP). Being part of an organization like this, according to Peterson Institute estimates, could expand India’s exports by as much as $500 billion per year by 2025.

Sunil Kant Munjal, joint managing director and chairman of Hero MindMine Institute Ltd., said that it’s hard for India to institute the needed reforms as quickly as countries like China did. “There’s literally not one other large economy in the world that has given civil liberties first and has tried to turn itself into a market economy and a global market economy,” he said. “It is a fairly unique experiment in that sense, so some of the things have been slower than we’d like, but it’s also because of the complex and extremely diverse society that we have in India.”

India’s entry into the Asia-Pacific Economic Cooperation forum (APEC), which accounts for nearly 60 percent of global GDP, would provide a pathway for greater integration into the region’s economy. It would also ensure that trade remains a unifying force in the region, where competing trade regimes are straining ties.