India is in the same region and needs to engage with aspects of APEC so that its economic goals can be met. This can make India a better alternative to new FDI in China

The 2023 Asia Pacific Economic Cooperation (APEC) summit was held in San Francisco last week. The US hosted APEC after a gap of 12 years. The “US thinks it is back” is perhaps the most cogent message emerging from the summit. Though a forum for economic leaders, there were some strategic outcomes. The Golden Gate Declaration was fairly routine though some countries did not agree to include references to Ukraine and Israel in the declaration. Hence, a chair’s statement as an annexure was adopted. This followed the reiteration of known positions in a summary form. China had ignored the Ukraine and West Asia crises from its readout of the Xi-Biden Summit. China and Russian Deputy Prime Minister Alexei Overchuk opposed the Ukraine and Israel sections.

The outcome of the summit process is that China and US are talking again after nearly a year. The US-China Summit restored communications, including military, which was suspended by China. On most other matters, there is no new agreement because China still wants its way of dealing with the world to be accepted. The US believes that China’s way and its values need challenge. APEC emphasised the rivalry between them but perhaps reduced the rough edge of confrontation.

China’s economic strength has dissipated, and it is keen to woo further investment and technology transfers, which the US curbs. However, Biden told the APEC CEOs that the US was de-risking and diversifying from China, not decoupling.

The fraught nature of the world today makes the reopening of summit communications between the US and China seem like a big thing. The US-Japan-Korea trilateral summit was held around APEC. Related to this is the quick resumption of the Japan-China Summit. Through the Kishida-Xi meeting, they agreed to establish a new dialogue framework on trade. This may deal with the restrictions on semiconductors and other technology. Japan, China and Korea are also moving ahead on a trilateral foreign ministers’ meeting. In November, all Quad leaders other than India have met Xi Jinping.

Taiwan was represented at APEC by Morris Chang, founder of Taiwan Semiconductor Manufacturing Company, for the ninth time. He did not meet Biden except being at the leaders’ lunch and plenary meetings. He met Vice President Kamala Harris and had a longer meeting with White House’s National Economic Council director Lael Brainard to discuss economic expansion. Other US officials and APEC members like Singapore undertook meetings with the Taiwanese delegation.

For Taiwan, APEC is important as it is the highest level of interaction it gets under any institution. Taiwan discussed the issue of Chinese economic coercion, but mainly focused on admission into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP member countries met around APEC. The US is missing from this and Taiwan and China are applicants. The UK is the latest inclusion into it. The CPTPP trade ministers looked ahead since the trade aspect of Indo Pacific Economic Framework (IPEF) had failed to materialise.

The US-led IPEF had some success with three pillars dealing with supply-chain resiliency, clean energy and anti-corruption measures now agreed upon. The trade pillar, of which India is not a part, is facing US internal problems. This set back Biden’s effort to posit IPEF during APEC as a symbol of its economic re-engagement in Asia. The US remains an uncertain trading partner despite its assertion that it can be a balance to China in the region.

The Golden Gate Statement says that APEC will seek a well-functioning dispute settlement system for WTO, accessible to all members by 2024, and pursue a Free Trade Area of the Asia-Pacific. The WTO aspect is important for India but India’s absence from regional trading arrangements in the Indo-Pacific and with the US needs a relook if the supply-chain initiatives and Indian export resilience is to benefit.

APEC is among the early institutions in the Indo-Pacific, but since it does not include India, it is still restricted to the old functional terminology of the Asia-Pacific. China prefers this, too. APEC labels its members as economies rather than countries, making it easier for the participation of Hong Kong and Chinese Taipei (Taiwan).

The APEC focus was on sustainability, inclusion, resilience and innovation. India has similar objectives. In order to attain these, a peaceful engagement between China and the US is imperative. If successful, these can make APEC the locomotive for sustainable growth and shared benefits. India is in the same region and needs to engage with aspects of APEC so that its economic goals can be met. This can make India a better alternative to new FDI in China.

Source: The Indian Express

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