India’s Brinkmanship at WTO Hurts It at APEC

The annual APEC summit is underway in Beijing. Perhaps the most notable absentee is India’s Prime Minister Narendra Modi, who received an unprecedented invitation in July from Chinese President Xi Jinping to attend the gathering. Despite growing to become the world’s third largest economy in PPP terms, India is not a member of APEC, and as a result would not normally attend the summit. But this year President Xi used his platform as the summit host to extend invitations to non-members India, Pakistan, and Mongolia. While Pakistan and Mongolia’s leaders made the trip to Beijing for APEC, Prime Minister Modi decided not to do so. It’s a missed opportunity for India’s economic diplomacy at a time it could use a boost.

For India, APEC, a grouping of twenty-one member economies across the Asia-Pacific region, has a complicated history on the membership front. Due to a moratorium that ran from 1998 through 2010, the forum did not consider any aspirants for membership during years of strong global economic growth. Following the expiration of the moratorium, APEC discussions on membership appear to be stuck in endless deliberation over regional balance and representation from sub-geographical areas within the forum. The result: in 2014, once again there are no moves to induct new member economies. As I wrote last summer, given the size of the Indian economy—now among the world’s largest by any measure, and dwarfing those of many current APEC members and aspirants—an APEC with India inside the tent makes economic sense. Especially since APEC is not a binding negotiating forum, but rather a community of norms and commitments to free and open trade.

So why isn’t India, a $2 trillion economy, on the fast track to APEC membership? Last July, following the news of President Xi’s APEC summit invitation to Modi, I thought the prospects looked brighter than ever in the past. As many have noted, the summit invitation is an implicit endorsement of membership. Having China’s support would seem to be an important step. But other countries, including the United States, have said little to reinforce India’s case and propel its candidacy forward.

Unfortunately in this case, it’s all about the politics, and here India’s multilateral economic diplomacy over the summer did not help its case. India’s role in torpedoing the World Trade Organization’s Trade Facilitation Agreement negotiated at Bali created a new and very unfortunate precedent in India’s multilateral track record. As I wrote at the time, it was always possible in the past to say that India upholds its multilateral commitments, but its decision to walk away from the Bali agreement rendered that statement false. The ongoing difficulties in reaching a path forward with India to preserve the Bali agreement have resulted in a crisis within the WTO about not only the limited accomplishments of the Doha Round, but more deeply about the principle of consensus on which it operates. India’s stance has also reinforced the notion among many countries, in both the developed and developing world, that India often plays the spoiler in global trade talks.

With the WTO crisis in the foreground, and with India as the key protagonist, it’s no wonder that a groundswell for Indian membership in APEC has simply not materialized. In the longer run, that’s a strategic and tactical mistake, as APEC will benefit from having India inside the trade tent—as will India, from becoming more fully integrated with a forum focused on promoting open trade. But more time will need to elapse—and the Bali agreement will need to be rescued in some fashion—before APEC member economies will likely take up the question of Indian membership. That’s why the Beijing APEC summit would have been a good opportunity for Modi to clarify his views on the open trading system and help keep India on the agenda for expansion. This missed opportunity can be recovered, but it will take time.