Asia-Pacific Economic Cooperation’s Vietnam Summit 2017: Missing link in India’s Act East Policy

Prime Minister Narendra Modi with Prime Minister of Vietnam Nguyen Xuan Phuc. Photo: Twitter.

New Delhi, November 4: The 2017 Asia-Pacific Economic Cooperation (APEC) summit is being held in Da Nang, Vietnam.  The summit would culminate with talks and deliberation in the Economic Leaders’ Week, scheduled for 6-11 November 2017. The US President Donald Trump would address the APEC CEO meeting on November 10, 2017.

The theme of the summit is “Creating New Dynamism, Fostering a Shared Future”. The Leaders’ declaration would contain key action points and commitments made by the 21 economies and would be one of the main items of interest for those watching the summit.

All Members of APEC. Photo Credit: APEC Secretariat.

Following crucial aspects would be interesting to note from APEC summit 2017 in Vietnam:

First, considering that the summit will bring together leaders, ministers, senior officials, and CEOs from economies that account for over 60% of global trade and world’s GDP, it is worth looking at policies and agreements that will push the inclusive growth agenda forward.

Vietnam, as the 2017 host, has selected four priorities as the focus of this year’s meetings: promoting sustainable, innovative and inclusive growth; deepening regional economic integration; strengthening micro, small and medium enterprises’ competitiveness and innovation in the digital age; enhancing food security and sustainable agriculture in response to climate change.

Second, the distinguishing fact about APEC as a premium economic forum is the cooperative process predominantly concerned with trade and economic issues. Under the leadership of former US President Barak Obama, the Trans-Pacific Partnership Agreement (TPPA) was finalized with 12 economies out of 21 APEC members. The largest trade agreement in history was signed in February 2016.

But, with a change of guard at the highest level, trade inclination has undergone a significant shift. Given Trump’s trade-restrictive indications, his appearance at the summit will give us further indication of how he intends to position the US policy in Asia Pacific and the overall APEC rapport as well.

Third, it is interesting that apart from the APEC Leaders’ Week, there are multiple interactions and engagements on the side, mainly in the form of bilateral meetings among the attendees, to ensure a certain level of consensus regarding ongoing concerns prior to the actual discussion.

Fourth, Indian economic programs now rely on greater access to foreign markets, investment sources, and value chains to bolster manufacturing and create jobs at home. APEC’s efforts have focused on simplifying regulatory arrangements; reducing barriers to foreign trade and investment; and, cultivating a culture of economic openness, dialogue, and cooperation.

APEC regularly discusses major global concerns such as food security; the environment; urban growth; market access; and efficient outcomes in trade, investment, value chains, and technology, all of which are important to India.

Prime Minister Modi’s vision of India’s economic future and the policies to achieve it are very much in line with APEC’s goals and initiatives in last two decades. It is this reason why India’s membership to APEC is of paramount importance now.

Fifth, host of APEC 2011 summit, United States invited India to participate as an observer and submitted its request for membership. But, many obstacles are highlighted for India’s full accessibility to APEC. Dominant ones are arriving at a ‘consensus’ amongst the existing members on India’s membership. Many APEC members still remain sceptical on India’s value added to the forum.

However, India has developed strong bilateral economic ties with most of the individual APEC countries. The Prime Minister aggressively pursued foreign entanglements and especially proactive dialogues during state visits or participation in various summits of Asia-pacific countries. He has visited 13 out of 21 APEC members since his assentation to office in 2014.

His multiple times’ visits were mostly to China, Japan, Russia, Singapore and US, the major members of APEC. The Prime Minister also visited other prominent APEC member countries like Australia, Canada, Malaysia, Mexico, South Korea, Thailand and Vietnam.

It is believed that the United States of America and Japan are best positioned to advocate on India’s behalf. These economies, along with China, Korea, Australia, and Vietnam, could be asked to provide necessary support and diplomatic resources to India’s cause. When Indian APEC membership talk was more vigorous in 2016, Chile has supported it.

Sixth, the relationship between India and Vietnam has been developing fast in recent years in all the four pillars: political, economic, defence and culture. Two countries graduated their relationship to “comprehensive strategic partnership” in 2016 when Prime Minister Modi visited Ha Noi.

India and Vietnam are both members of the Mekong–Ganga Cooperation, created to enhance close ties between India and nations of Southeast Asia and Regional Comprehensive Economic Partnership (RCEP) negotiation. Vietnam has supported India’s bid to become a permanent member of the U.N. Security Council and to join the APEC. This is once again a good opportunity for India to make use of its strong ties with Vietnam for its own diplomatic promotion.

Seventh, the present Government under the formidable leadership of Prime Minister Modi, has strongly focused on FDI and better links with Global Value Chains (GVCs) to expand the manufacturing sector. The economies that are most integrated with GVCs are APEC members, with 10 of them having the highest GVC participation globally. India’s accession to APEC will be equally advantageous for the forum as it will have opportunities in post-integration of one of fastest and largest growing open economy. These facts have been highlighted by APEC Secretariat.

Despite all, not much ground has been gained on India’s candidature to Asia-Pacific Economic Cooperation (APEC) since 2016, and the strong sentiments towards it are waning without any official expression pertaining to it. Union Finance Minister Arun Jaitley during his 2016 state visit to the US categorically stated India’s eagerness to join APEC. Arun Jaitley’s statements were considered as a strong signal by many international organisations, especially trade facilitators that Indian Government would seriously pursue membership in APEC.

Time is ripe to hasten the diplomatic discourse and invest in resources that would eventually fructify into India’s membership to APEC as early as possible. As a host, Vietnam could be instrumental in seeing through this discussion. Access to the prestigious the APEC would weld the missing link in India’s Act East Policy for India.

The author of the article Ajay Kumar is an Economist and Advisor with Merino Industries Ltd.

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