Kevin Rudd Announces ASPI Initiative on India's Accession to APEC

During an ASPI event on June 16, 2015 about India’s first year under Prime Minister Narendra Modi, ASPI President Kevin Rudd announced that ASPI will convene a high-level task force to construct a road map for India’s inclusion in the Asia-Pacific Economic Cooperation (APEC) forum. The co-chairs of the task force will be Ajay Banga, President and CEO of MasterCard, and Shyam Saran, former Foreign Secretary of India and Chairman of Research and Information System for Developing Countries in India. An edited transcript of his remarks appears below.

I want to make an announcement about what we’re doing at the Asia Society in terms of our contribution to the public policy debate on India in the global economy and in the regional economy. One of the challenging questions in the Indian public policy discourse in recent decades has been the role of trade. Trade and free trade, in particular, have often been seen as toxic elements in the public policy debate within India. It’s been highly politicized in recent times, in one direction or another. But the bottom line is this. One of the concerns which friends of India have around the world is, Is India as fully integrated into global trade and investment and global supply chains as it needs to be to achieve its full economic potential in the future?

Of course, this all comes to a head, given the recent debates about future architectural arrangements for trade and free trade in Asia and the Pacific: the TPP, the Trans-Pacific Partnership, whose fate and future, in part, hang in what deliberations occur in the United States Congress, but also other proposals for free trade arrangements in the Asia-Pacific region, including the Free Trade Area for Asia and the Pacific, FTAAP, recently put forward by the Chinese coming out of the most recent APEC summit in Beijing at the end of last year. Then, of course, you have wider free trade agendas in terms of the debate unfolding around TTIP, the Transatlantic Trade and Investment Partnership.

In the midst of these two great trade debates, there is now an institution which we should focus on as well, which is APEC [Asia-Pacific Economic Cooperation]. APEC has been around for twenty-five years. APEC’s advantage, since it was founded back in 1989, has been to generally facilitate the opening of the wider Asia-Pacific region to greater flows of free trade and investment. It has done a lot of the nuts and bolts work of dealing with trade facilitation, the complex web of regulatory arrangements between states which stand in the way of easier trade flows across the region. And, after twenty-five years, if you look across APEC member states, it’s actually performed a very large function in creating a culture of free trade liberalization across the wider region. It hasn’t, of itself, abolished all forms of protectionism, but has provided a stepping stone in the direction of freer trade.

Those of us who have been members of APEC — and I’ve certainly experienced that myself as Prime Minister of Australia working with other heads of government in the APEC region — have, however, noticed one large omission. And that omission is India. In the twenty-five years of APEC’s existence, India has not been a member. But, now an opportunity arises, because for a long period of time, APEC’s future membership had been frozen. Now, the freezing-out of future members from APEC has been unfrozen by the existing members of that institution, and India therefore looms large as a potential inclusion into this body.

We here at the Asia Society Policy Institute believe this is an important measure for the future. Why? A number of reasons.

Looking at it from the perspective of the pan-Asian, pan-Asia-Pacific economy as a whole, not to have India as part of the APEC family makes no sense. If we take the growth projections seriously, we’re looking at the eventual emergence of an Indian economy, that would be second in the world after China’s and perhaps, in the longer term, rivaling that of China in aggregate size, it makes no sense for the rest of the wider Asia-Pacific region to see India outside the APEC family.

I’d also hazard a suggestion to our friends in Delhi that APEC membership would be good for India, as well. And by this, I mean simply to ensure that we take all the measures necessary to integrate India fully into the global supply chain as it unfolds across the economies of the Asia-Pacific region. Mention was made before in our discussion on investment of what’s going to happen with manufacturing jobs in India and the “Make in India” proposal which was put forward by Prime Minister Modi to create 100 million jobs in manufacturing in India. One way in which that could be ensured is if India were fully integrated into the global supply chain to the rest of Asia. Informally, within the APEC family, that’s already occurring: between Japan and China, and now from China, as its wage rates go up, to the rest of Southeast Asia and other parts of South Asia and beyond. India should be the beneficiary of this, as well, in our argument. I also think it would be good for the overall strategic stability of the wider Asia-Pacific region if we have India as part of the APEC family.

So, the arguments I would put as President of ASPI is that it is good for the wider region, good for the regional economy, good for regional stability, but also good for India, for this threshold to be crossed, for India to become part of the APEC family. The final point I’d make is that none of this is easy. Politics in India in Delhi are complex. Politics in a city not far to our south from here called Washington, D.C. are complex on this question as well. But, if I could hazard a view from many other members of the APEC family, we would actually welcome India into this institution.

For those reasons, we at the Asia Society Policy Institute have decided to convene a high-level task force to construct our own road map for India’s inclusion in the membership of APEC. I will chair this task force, which will be co-chaired by Ajay Banga, President and CEO of MasterCard here in New York, a good friend of the Asia Society and a person who speaks with some authority in terms of Indian business in this country and also in India itself. It will be co-chaired by Shyam Saran, former Indian Foreign Secretary, who’s currently serving as Chairman of the Research and Information Systems for Developing Countries in India. The Confederation of Indian Industry, India’s premier business association, will be partnering with the Asia Society Policy Institute on this initiative, and it will bring India’s industry views to the task force and help us to engage the Indian government.

We will be formally launching the work of this initiative in the coming weeks. We will then be adding other task force members from the business community and elsewhere, not just in India and the United States, but from across the wider APEC family.

To conclude, we see this is as a useful initiative for the future. What is taken up by the government in Delhi and the other governments of the APEC region will be a matter for them. But we’re in the business of providing, I hope, the best case possible for India’s inclusion in the APEC family, and to do our bit to, shall I say, nudge it along in the political processes in capitals as well. And I look forward to the day when we can consider India as a full member of what has been an enormously successful institution in bringing the economies of the Asia-Pacific region together. I commend the initiative to you.