What is Asia Pacific Economic Corridor
Context:
- The Asia Pacific Economic Cooperation (APEC) conference for 2023 took place last week in San Francisco. After a 12-year break, APEC was hosted by the US.
APEC: What is it?
- Promoting free trade throughout the Asia-Pacific region, the Asia-Pacific Economic Cooperation (APEC) is an intergovernmental conference including 21 member economies around the Pacific Rim.
- APEC was founded in 1989 with the goal of fostering equitable, sustainable, creative, safe, and balanced growth as well as quickening the pace of regional economic integration.
Result of the 2023 APEC summit:
- Though some nations objected to the proclamation including Israel and Ukraine, the Golden Gate proclamation was generally standard.
- China’s statement from the Xi-Biden Summit has disregarded the problems in West Asia and Ukraine.
- Russia’s Deputy Prime Minister Alexei Overchuk and China disagreed with the portions on Israel and Ukraine.
- As a result of the summit process, communication between China and the US has resumed after over a year. Following China’s suspension of military communications, the US-China Summit brought them back.
- There’s no new agreement on most other issues because China still wants its style of doing business to be embraced globally.
- Although it may have softened the edge of conflict, APEC highlighted the competition between the United States and China.
- China is eager to attract more investment and technology transfers, which the US restricts, since its economic might has waned.
- But rather than disconnecting, Biden informed the APEC CEOs that the US was de-risking and diversifying its relationship with China.
- Around APEC, there was a trilateral summit between the US, Japan, and Korea.
- The prompt resumption of the Japan-China Summit is related to this. During the Kishida-Xi meeting, they decided to create a new framework for trade dialogue. The limitations on semiconductors and other technologies might be addressed by this.
- A tripartite meeting of foreign ministers between China, Japan, and Korea is likewise proceeding.
- Morris Chang, the founder of Taiwan Semiconductor Manufacturing Company, represented Taiwan at APEC for the eighth time.
- The Taiwanese team met with other US officials and APEC members, such as Singapore.
- Since it represents the greatest level of interaction Taiwan receives from any institution, APEC is significant to Taiwan.
- Though it mostly concentrated on getting admitted into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Taiwan also talked about the problem of Chinese economic pressure.
- Around APEC, the CPTPP member nations convened.
- The US is not included in this, whereas China and Taiwan are applicants. The most recent country to join it is the UK.
- Since the trade component of the Indo-Pacific Economic Framework (IPEF) had not materialised, the trade ministers of the CPTPP looked forward.
- According to the Golden Gate Statement, APEC will work towards an Asia-Pacific free trade area and a WTO dispute resolution process that is operational and open to all members by 2024.
- The WTO is crucial for India, but if supply-chain activities and Indian export resilience are to succeed, a reconsideration of India’s exclusion from regional trading agreements in the Indo-Pacific and with the US is necessary.
Advantages for India of joining APEC:
- Increased trade and investment opportunities: APEC is a significant economic group that represents 40% of global commerce and over 60% of the world’s GDP. Gaining access to a market with over 2.9 billion customers and 21 economies through membership would increase India’s export potential and draw in foreign capital.
- Decreased trade barriers: Members of APEC have pledged to liberalise trade, which has resulted in a reduction of tariffs and non-tariff trade barriers. India’s participation would lower costs and boost competitiveness by facilitating simpler access to APEC markets.
- Enhanced trade facilitation: To improve supply chain efficiency, streamline customs procedures, and expedite border processes, APEC has put in place a number of initiatives. With India’s involvement, it would be able to implement these best practices, cutting trade expenses and enhancing logistics.
- Access to expertise and knowledge: APEC gives member economies a forum for exchanging best practices and knowledge. India might gain from having access to APEC’s extensive knowledge base in fields including economic development, technology, and trade policy.
- Enhanced regional integration: Trade, investment, infrastructure development, sustainable development, and other topics are among the many topics on which APEC fosters regional cooperation and collaboration. India’s participation would improve its economic relations with other Asian nations and make the Asia-Pacific area more prosperous and interconnected.
- Global recognition would increase as a result of India’s APEC membership since it would be seen as a significant economic force and an important participant in the Asia-Pacific area. It would draw in more collaborations and investment and strengthen India’s standing internationally.
- Economic development and growth: In general, India’s economy would benefit greatly from APEC membership, which would promote trade, investment, and economic growth. It would raise living standards, generate new employment possibilities, and support India’s long-term economic growth.
The difficulties of joining APEC:
- domestic economic changes (wider economic liberalisation).
- APEC decision-making by consensus (China has the power to impede India’s accession).
- the USA and China’s geopolitical rivalry.
- protection for agriculture and subsidies.
- obstacles related to bureaucracy.
- ensuring domestic support, particularly by permitting international businesses involved in dairy and farming.
Way Forward:
- India, which is in the same region, must participate in APEC in order to achieve its economic objectives. India may now be a superior option than fresh FDI in China as a result.
