Asia Pacific Economic Cooperation, a regional economic forum established in 1989, including the US, Japan, China, Australia, Indonesia, and Thailand.
Nature of regionalism (regional integration).
Three unique features of APEC.
1] Open regionalism – EU is an example of closed regionalism. Closed regionalism means highly institutionalized framework, tight norms. APEC has a minimum institutional structure.
2] Soft regionalism – bottom up approach. Countries determine voluntary targets.
3] Massive participation by private sector. Another unique feature is that the members are known as member economies rather than state parties. China as well as Taiwan and Hong Kong are member economies in APEC.
Objective of APEC
To create free trade area in Asia-pacific. Which means seamless trade in goods and services through harmonization of regulations, trade facilitation by cutting red tapism, develop common standards and reduce the transaction cost. It aims to make it the most efficient area in terms of ease of doing business.
It was first proposed by Australian Prime Minister Bob Hawke. At present there are 21 countries. In 1989, Australia and other 11 countries formed the body, China joined it in 1991. India has been applying for membership but India has not got the membership yet. In 1998 Vietnam, Russia and Peru were included.
Features of APEC.
Initially it was just for ease of doing business but now it is taking other objectives also, like non-conventional security threats.
Bogor goals : in 1994, member countries commited to create free trade area in Asia Pacific. Developed countries will reach the target by 2010 and developing countries by 2020. (Huge significance in case of collapse of WTO). 3_APEC has three pillars. 1) Trade and investment. 2) Business facilitation. 3) Economic and technical cooperation. 4_It represents 60% of global GDP and 40% of global population. 5_It has been playing constructive role since there is a deadlock in WTO.
Prospects at present.
For the first time, no communique was issued. (PNG). US president didn’t participated. US representative criticized China for protectionist policies. Warned smaller countries against joining BRI.
Geopolitics dominated over geo economics.
It depends upon US-China relations. Hope is on G20 communique.
It has been suggested that APEC countries should seriously consider India’s membership in APEC as a balancer to China and as a counterveiling force against China.
Why India has not been included so far?
Countries think that India is not enough liberalized. India will have to reform the labour laws. India has to improve on ease of doing business. India has to improve infrastructure, needs skill development. Why India is important for APEC? In the age of global economic slowdown, India is a sweet spot. India is a fastest growing among emerging economies. (7.3%). India is now emerging as a knowledge based economy. India has become 4th country in Asia, registering for patents. APEC countries can take advantage of IT sector. India has started implementing trade facilitation agreement of WTO. India is cutting red tapism by bringing e governance. India has introduced GST. India’s ranking in ease of doing business is improving. At present India has stable govt. which brings certainity of policy. What will be advantages for India? 1_There is a fear of collapse of WTO. 2_RCEP has not come into existence. 3_So far India has FTA with only ASEAN. 4_India should actively lobby for its membership in APEC otherwise India will be left out. What is the biggest advantage in APEC? APEC model – soft regionalism. It is a low risk venture. What are the prospects? Poor prospects. APEC countries will expect India to change. Why poor prospects? 1_Reluctance in India bureaucracy to change. 2_Divisive politics in India 3_APEC countries want India to liberalize its agricultural sector. In context of farmers movements, elections, there is hardly any scope. 4_India is fearful because it already has huge trade deficits. What India should do? No point being protectionist. Try to be competitive. What is the ultimate significance? Joining APEC is a part of India’s grand initiative of Act-East policy. India will become significant player in the region.
Please visit http://apec.org/About-Us/About-APEC for detailed and latest information on the topic.