Why is the Asia-Pacific Economic Cooperation (APEC) in the news?

Why in News?

• The APEC Summit 2025 will be hosted by Gyeongju, South Korea, with the theme “Building a Sustainable Future.”

About APEC (Asia-Pacific Economic Cooperation)

• Established: 1989
• Headquarters: Singapore
• Members: 21 economies, including the USA, China, Japan, Australia, Canada, and South Korea — together accounting for 60% of global GDP and 47% of global trade.
• Nature: APEC operates on a non-binding, consensus-based approach.
• Objective: To promote sustainable economic growth, free and open trade, investment, and regional cooperation.
• Key Focus Areas:
  • Trade liberalization
  • Digital economy
  • Climate change
  • Capacity building

Trade Tensions and Policy Uncertainty

• The US–China tariff war continues to affect regional trade.
• APEC Report 2025 projects:
• Regional GDP growth may decline to 2.6% (from 3.6% in 2024).
• Export growth: 0.4%, Import growth: 0.1%.
• Rising uncertainty due to the Trump administration’s tariffs and China’s restrictions on rare earth mineral exports.
  

Economic Growth and Inclusive Development

• The APEC region, representing 60% of global GDP, faces uneven growth amid global slowdown signals.
• Inflation is easing, but investment remains weak.
• 2025 Priorities:
• Transition to the formal economy (Lima Roadmap 2025–2040)
• Enhancing the participation of indigenous communities in economic development.

Digital Economy and Artificial Intelligence (AI)

• The APEC Internet and Digital Economy Roadmap (AIDER) concludes in 2025.
• New challenges emerging:

• • AI ethics
  • Data privacy and governance
  • Bridging the digital divide

Climate Change and Sustainability

• Despite geopolitical tensions, climate issues remain central to APEC’s agenda.
• Continued emphasis on the Bangkok Goals on Bio-Circular-Green Economy (BCG Model).
• Key focus areas for 2025:
• Energy cooperation
• Food security
• Supply chain resilience
• Reports highlight sustainable growth as the foundation of regional cooperation.

Geopolitical Challenges

• Regional and global security concerns are influencing APEC dynamics.
• Major developments:
• Russia–Ukraine conflict
• Middle East unrest
• US–China strategic rivalry
• India and APEC
• India’s Status:
• Not a member of APEC but has shown consistent interest in joining since the early 1990s.

Reasons for India’s Non-Membership:

1. Geographical Criteria:
   APEC limits membership to “Asia-Pacific” economies; India is often categorized under the “Indo-Pacific” region.

2. Pace of Economic Liberalization:
   India’s market reforms in the 1990s were slower than APEC’s liberal economies.

3. China’s Opposition:
   China reportedly resisted India’s entry to maintain its influence within APEC.

4. Moratorium Policy:
   Since 1997, APEC has maintained a moratorium on new memberships.

Why APEC Matters for India:

1.Regional Economic Integration:

• APEC economies contribute ~60% of global GDP and ~48% of global trade.
• Membership would give India access to large, dynamic markets.

2.Boost to Trade and Investment:

• Reduced tariffs among members would benefit Indian exports.

3.Diplomatic Leverage:

• Provides a dialogue platform with major economies like the US, China, and Japan.

4.Economic Reforms:

• Membership could accelerate India’s trade facilitation, digital trade, and supply chain reforms.

India’s Current Strategy:

• Though not a full member, India participates as an Observer and in Partner Dialogue mechanisms.
• India is strengthening engagement through alternative platforms such as:
• BRICS
• Indo-Pacific Economic Framework (IPEF)
• QUAD
• RCEP (Regional Comprehensive Economic Partnership) – indirectly connecting with APEC economies.
• Amid US tariff policies and shifting trade dynamics, India is pursuing bilateral trade agreements with key APEC members — notably the UK and Australia — to enhance market access and economic cooperation