‘Don’t make binding concessions for APEC’

India’s interest likely to come up during PM’s U.S. trip

India’s interest in becoming an APEC member is likely to come up for discussion between MEA officials and their American counterparts during Prime Minister Narendra Modi’s trip to the U.S. this month. File Photo

The Commerce Ministry has cautioned the Ministry of External Affairs (MEA) against ceding to demands that India offer binding concessions to secure an Asia-Pacific Economic Cooperation (APEC) membership, high-level government sources said.

The 21 members of the APEC forum, which comprises countries bordering the Pacific Ocean including the U.S., China and Japan, account for about half the world’s trade and almost 60 per cent of global GDP. Among APEC’s objectives is ensuring that goods, services, investment and people move easily across borders in the Asia-Pacific region.

Industrial tariffs

Among the binding concessions being sought from India are an agreement to reduce industrial tariffs to very low levels or eliminate them over a specified time period, an early deal on a Bilateral Investment Treaty with the U.S., and its participating in negotiations for a proposed Investment Facilitation Agreement at the World Trade Organisation-level, according to the sources.

India’s interest in becoming an APEC member is likely to come up for discussion between MEA officials and their American counterparts during Prime Minister Narendra Modi’s trip to the U.S. this month.

During recent inter-ministerial consultations, the commerce ministry conveyed to the MEA its concern over demands — learnt to be made by certain sections in U.S. industry and government — that India offer the concessions in lieu of consideration for APEC membership, the officials said.

Commerce Minister Nirmala Sitharaman last month told the Rajya Sabha that India had applied for APEC membership in 1991 on the basis of its geographic location, potential size of the economy and degree of trade interaction with the Asia-Pacific.

“However, at the fifth APEC Leaders' meeting in Vancouver in 1997, a decision was taken to place a ten-year moratorium on expanding membership, which continues informally till date,” the minister told members of the Upper House. “India is engaging with APEC member countries to develop a consensus on lifting the informal moratorium on accepting new members and to actively push for India’s candidature for membership of APEC,” she added.

Allows freedom

APEC structure allows its members freedom to set their own goals and timelines as well as undertake action on a voluntary and non-binding basis in areas identified for cooperation. “We are fine if discussions are on accepting India as an APEC member without asking us to agree to binding concessions, which means we can undertake reforms and implement our liberalisation process on a voluntary and non-binding basis,” an official, who did not wish to be identified, said.

Separately, at an event organised by industry body FICCI and the Centre for WTO Studies on Tuesday, Arvind Mehta, additional secretary in the commerce ministry, said there is a possibility that some APEC member countries may ask India to satisfy them with a Voluntary Individual Action Plan specifying what India can do toward trade and investment liberalisation.

Mr. Mehta said the aspects that can be easily incorporated in this Plan include trade facilitation measures and the legislation on Goods and Services Tax, but the tough part is including the demands for elimination of tariffs over a specified period of time.

While India understands that high tariffs are not favourable, at the same time eliminating tariffs would hurt the country’s economy, he said. Industry could recommend appropriate tariff rates so that the government can make a proposal that could be called the voice of moderation at the APEC membership negotiations, Mr. Mehta said.