How Can India Join APEC?

DELHI – Asia Society

2 September 2015

BUNTY CHAND: Good evening everybody, thank you for being here on time and my name is Bunty Chand and I work for the Asia Society India Centre. There are several organizations of Asia Society in this room this evening so I work for the Asia Society India Centre and we are very proud to host this with our newly formed Asia Society Policy Institute which is about a year old and we have the first President of the Asia Society Policy Institute, The Honourable Kevin Rudd who is with us this evening. Today’s reception and discussion is about India and APEC, charting a path to membership. You’re here on a significant evening because this is the first initiative on India and one of the first initiatives of the Asia Society Policy Institute. I am going to let our very illustrious panel talk more about this project on the APEC and I’m going to do a brief introduction to our speakers this evening. The Honourable Kevin Rudd is President of the Asia Society Policy Institute and he served Australia’s 26^thPrime Minister and as Foreign Minister, he is Chair of the Independent Commission on Multilateralism and he leading a review of the UN system. He is Distinguished Fellow at Chatham House in London, a Distinguished Statesman for the Centre for Strategic and International Studies in Washington and a Distinguished Fellow at the Paulsen Institute at Chicago. Ambassador Shyam Saran doesn’t need an introduction to this crowd. As you know he was Foreign Secretary of India and he currently serves as Chairman for the Research and Information System for developing countries. The one person you may not have met previously is Minister Sung-Hwan Kim, who is currently serving as Chairman of the Gangwon Art and Culture Foundation and is also Visiting Professor at the Graduate School of International Studies and he served as Minister for Foreign Affairs and Trade of the Republic of Korea from 2010 to 2013. He’s got great familiarity with India having been at the Embassy here as well. As I said, this is the first initiative of the Asia Society Policy Institute and I’m know going to let Mr Kevin Rudd speak more about it. KEVIN RUDD: Thank you very much Bunty and thank you for the work that you do with the Asia Society’s India Centre which is based in Mumbai. Good to back in Delhi for my third visit this year and I always discover new things when I come here so for me this is of great enjoyment. To formally recognize and welcome my colleagues here, the Distinguished Former Foreign Secretary I got to know well over the last year that we’ve been working together and my good friend Foreign Minister Kim, we have shared many trials and tribulations together across our wider region over the years the subject that we have been dealing with here in Delhi over the last couple of day is very simple and at the same time somewhat complex. The simplicity is the subject, which is Indian membership of APEC. The complexity lies in three questions. One, is this the desire of the Indian government? We get the strong sense that that is the case. Two, if so, what is the attitude of APEC to Indian membership? And three, if the answer to both the above questions is positive then how do we proceed from here to securing Indian membership as soon as possible. The reason for we at the Asia Society Policy Institute embarking upon this exercise is at several layers. One, is that I looked carefully at the joint statement of President Modi and President Obama here in Delhi in January where the United States stated it welcomed India’s interest in becoming a member of APEC. But secondly, my own interest is triggered by historical matters because going back to 1989 when APEC was formed it was then an Australian government diplomatic initiative and in the 25 years since then, as has I think exceeded the expectations of its members over what it has been able to achieve in terms of regional economic integration. For me the puzzlement when I’ve been both Foreign Minister, Prime Minister, Member of Parliament, professional diplomat and just general citizen of the world as I am now, is whatever happened to prevent India being a member of this organization from the very beginning? And without wishing to retrace the history – looking at some of the sage minds in this room, a lot of you could easily answer this for me – what I’d like to do is add our own constructive efforts to the cause and set the historical record to rights by supporting India’s accession to APEC now. Two or three sets of points. The first is, what’s in it for India? The second is, what’s in it for APEC? And the third is, what’s the process and what do we do about it in a practical sense? On the ‘what’s in it for India?’ question, I think if you look at the baseline statistics concerning the APEC economies they more or less speak for themselves: nearly 60 per cent of global GDP; secondly, more than 50 per cent of global trade; and thirdly, on average 50 per cent of global FDI flows, both in bound and out bound (the numbers for each vary slightly, one slightly below 50 and the other considerably above 50). The truth is the level of intra-regional activity for that 25 year period has increased strongly and I believe has been one of the ingredients – not all of the ingredients – which has created the East Asian economic ‘miracle’ (though it is too strong a term) over that period of time. When I look at the practicalities of how APEC has been able to assist I look at my friend here from the Republic of Korea. When APEC was established in ’89, Korea was not a globalized economy but, I think as the Foreign Minister Kim will indicate soon, the assistance at a practical level which APEC membership has provided successive Korean governments on the path towards regional economic integration, the standardization of regulatory frameworks, common standards for goods and services et cetera, as well as the general culture of APEC which is outlook looking and inclusive of all the economies of the region – it has for his government and his country been on some considerable assistance. If you look at the great success story that is the Korean economy today globally, with so many recognizable global brands and so many supply chains in which Korean goods are such an integral part – then I think there is a story to be told purely on its own of the Korean example. Again from India’s perspective, the second point I’d make is this – I understand as a former Prime Minister, how toxic our domestic constituencies can be on the question of free trade negotiations when it comes to market access. These are always controversial in any country at any time. Right now Australia’s free trade agreement with China is the subject of vigorous political debate and parliamentary debate in Australia. This is where it is important to underline clearly in our discussion here in Delhi what APEC is not. What APEC is not is a platform for negotiation of market access. It has nothing to do with market access. Market access is the subject of formal trade negotiations bilaterally, pluralaterally and multilaterally through the systems which you as professionals are all familiar. But often in the translations when people talk about Indian APEC membership here in India, people often leap quickly to conclusion that it has something to do with market access directly or indirectly. I believe if we are to successfully prosecute this exercise of doing what we all can to get India into APEC we have to hit that nail right on the head in public discussions. There is a second reason supporting India’s APEC membership which is, it is not something which of itself should alarm domestic constituencies. Thirdly, what APEC is is a trade facilitation mechanism. What it does and it does effectively, with all of us as member states – developing and developed countries over decades now, I see the Ambassador for Vietnam here and for his country as well in my observation – is provide formal and informal processes between officials involving multiple government agencies of all the 21 APEC member states of dealing with the core challenge of, how do you bring about the best set of regulatory standards for goods and for services across all these economies while not dictating the pace which these changes should be made or not telling member states about how they should go about it? In other words, it is a voluntary arrangement. But it is a voluntary arrangement that benefits enormously from the collective intellectual capital from all these officials in all these countries who are at various stages of, let’s call it, the regulatory coherence agenda in support of their own respective trade policies around the world. This is I think is one of the great value added dimensions of APEC. As I said in a press conference earlier today, APEC is not the product of some great European statute handed down from on high. APEC is a family which works together on common challenges to deal with the nuts and bolts of trade facilitation within border, at borders and beyond borders. But on a purely voluntary basis so the member states can work at whatever pace they wish to. Another reason why I would encourage our friends in India to pursue APEC membership is because there, however, a broader culture around APEC which I think has affected and infused all of its members over the last quarter of a century. This is a culture that says, “it is better for all of us to look out and to engage the economies around us as comprehensively as we can because frankly it is good for our collective growth, it is good for our collective trade, it is good for our collective investment and frankly it is good therefore for our citizens and jobs.” The culture created through the APEC process – whether it is in Hanoi or whether it is in Canberra or whether it is Tokyo or whether it is in Manila – through all these officials dealing with each other over a period of time it forms quite an open culture. It’s the closest I think we have in broader Asia for emulating what’s called within South East Asia, the ASEAN way of doings things – collaborative, consultative and I think constructive. Two last points in terms of why I think it is a good thing for India. If the government of India in the future decides it does want to embrace other forms of trade liberalization on market access questions, either through future consideration of the TPP or future consideration of FTAP, then the bottom line is you cannot do that unless you are members of APEC first. So it doesn’t actually mandate that once you have joined APEC that you’ve got to do those other things – quite the reverse. If you look at the current round of TPP negotiations they include economies such as Australia’s and Vietnam’s but doesn’t include, for example, Korea’s at present. Korea I think has probably made an internal decision to proceed in that direction. A precondition of these other trade market access agreements is membership of APEC. My final point is the flip side to the point just made which is it would be a concern for all of us if in fact India, by not joining APEC soon, progressively found itself increasingly removed from the norms of trade policy engagement across our wider region. That is, if you’re not in APEC, you’re not in FTAP, you’re not in TPP – in the long term these are sovereign matters for India – there is a danger that progressively India becomes more removed from what I’d describe as the trade policy consensus of the wider region. That in summary, colleagues, is the argument we have put to our friends in Delhi but also other arguments relevant to those to our friends in the wider region. I’ll just conclude on two points because I don’t want to crowd the time of my colleagues and I want to leave plenty of time for our distinguished members of the audience to express their points of view and ask questions which may be relevant. On the interests of APEC in India, the argument I’d simply put in APEC capitals is, it is a tragedy for APEC that this dynamic economy – that is India and one growing at such a fast clip at present and one which has such enormous growth potential as Shyam Saran has made in multiple presentations with me over the last couple of days – for it to be excluded from the APEC family. It’s actually a very good thing for APEC. So this is not just a one-way beneficiary street, although I do think it will be useful for our friends in India. Form the reverse end, by adding the dynamism of the Indian economy and its long term growth potential and within that this enormous capacity you have (as yet unrealised) in your growing and young workforce relative to those of the region (China’s labour market is already contracting, it’s workforce began to contract three years ago). This is of enormous potential benefit. To conclude on this, I note carefully what the government of India says is its strategic policy ambitions. I note carefully strategic policy positions on ‘Make in India’, strategic policy positions on ‘Act East’ – I can think of no better mechanism to give that both substantive and symbolic effect than for India to accede to APEC membership. It is, I think, long overdue. APEC by definition is to India’s East and APEC makes a lot of things. A key question here is – against the government’s core objectives which are the competitiveness of the Indian economy and greater access to global and regional supply chains – that this becomes another mechanism which can assist those two processes for India. And of course, benefit the wider region as well. My concluding point is just on process. You’re all seasoned diplomats within this room and you all know that from time to time negotiations can be stuck for years and years. Sometimes decades. That has certainly been the case in terms of this question. I may be wrong but I think there is something of an alignment of the planets of the question of Indian membership in APEC. President Obama and his relationship with Prime Minister Modi, their statement in January. President Obama is a strong supporter of India and in office for another year. Who knows what happens after the next US Presidential elections, I have no idea. But it is certainly strongly centre place in President Obama’s thinking right now. As seasoned professionals you would know that not all agencies of the United States government would be wildly enthusiastic about Indian membership of Indian because of India’s traditional trade policy posture in various trade negotiations not least with the Americans. But when you have the President of the United States batting for India – I have a simply judgement which says we should use that now in the current dynamics. Secondly, as I run around the region and speak to other governments I detect no opposition from other governments to India’s accession including China. I’ve had discussions directly with China’s Foreign Minister of this subject and asked him quite directly whether China would have any problem with this at any level and he said no. I was quite transparent with him about what we were doing as this taskforce of the Asia Society Policy group. Thirdly, we have the posture on future economic reform and the internationalization of the Indian economy here under Prime Minister Modi’s leadership. That’s what I call an alignment of the planets. But for this to happen our time is relatively short. APEC has a summit at the end of this year at Manila in November. The Prime Minister is off to the United States for UNGA in about two or three weeks time and we all know what UNGA is like – it is always a busy time. But this APEC coming up in November must take a decision whether to formally open the membership question for discussion and deliberation and discussion in the ’15-’16 period. We must have a decision out of the APEC Summit in Manila in November to open this up because India is not the only potential applicant state. You have Myanmar, you have Laos, you have Cambodia, you have Colombia, you have Costa Rica, you have Ecuador. That requires direct advocacy from our friends in India across their vast and sophisticated diplomatic network across the region and in the United States for all these ducks to be put in a row to make it happen next year. Because by the time we get to the subsequent APEC Summit to be held in Lima, Peru at the end of next year – President Obama will already be at that stage a definitional lame-duck because it will post-date the early November elections. He won’t even be able to quack he’ll be that lame. The key work has to be done in this twelve month period. The idea that we can just push it off into the future and it will all be fine and dandy – maybe that will be right – but I just think we have a remarkable opportunity now to make it work. If I could ask my colleagues, led by former Foreign Secretary and then my friend Foreign Minister Kim, to add to the conversation as they see fit and then we’ll throw it open. SHYAM SARAN: Thank you very much Prime Minister Rudd. I think you have very comprehensively covered the subject in your remarks. I don’t really have very much to add to what you have said but let me just point out that in the earlier interaction we had with the media this morning I made the point that in terms of our ‘Act East’ policy, if there is a missing link it is APEC membership. The sooner we overcome this missing link the better it would be. Two or three points that we have tried to make. One is to address any kind of concern that business and industry have and some parts of Indian government may have that seeking membership of APEC could lead to or could be a backdoor to India facing demands for making certain concessions on trade related issues. We have tried to dispel this concern. APEC is not about market access. APEC is not about reducing tariffs or opening up the market. It is certainly about helping countries who are members to graduate to higher standards, benchmarks, in various areas on a voluntary basis. There is no compulsion in terms of what India has to do as an APEC member. That is one important point because sometimes one perceives that there is that anxiety, that membership of APEC may open India or expose India to demands in terms of trade liberalization at a pace which is different from what India may be comfortable with. There is no such compulsion. The second point is that, with respect the global system that is emerging or the global architecture that is emerging, there is no doubt in my mind that we are moving away from essentially a focus on tariffs to focus more and more on standards, on norms, on regulatory coherence. These are the kinds of things that if you look at so-called gold standard trade agreements which are being negotiated like, for example, the TPP or the TTIP – that is what the whole game is all about. So whether we like it or not, if we are looking at India being a part and parcel of this emerging architecture we will need to take into about these emerging trends. What APEC is does is, because it has a large number of working groups, which are working groups essentially on these standards – how these international standards are emerging. There is a wide spectrum by the way because not all APEC members once they join really go up to the top end of the scale. Because there are several developing countries which are at a lower level of development than India is. But in terms of familiarizing Indian business and industry to those emerging norms and trends or benchmarks, I think APEC is a very good platform to be able to give us that familiarization. The second very important issue is that the APEC has actually grown from a business initiative – I think if I’m not mistaken it was a Pacific Basin Cooperation Conference – it was a business initiative and business has continued to be a very important actor in the whole APEC process. It is much more business driven than some of the trade agreements are. To the extent that this is a forum where networking amongst business is possible, I think it is a very welcome platform for India. Because once you get commensuration with those standards, with those benchmarks and you wish to see how this can be achieved you have the possibility of networking with both governments but also more importantly with you business partners to precisely do that. I think that is an important advantage that India would have. Then I would like to also point to the fact that when I look at India’s engagement with the Asia-Pacific, frankly speaking, that engagement is already of a very high order. If you look at the cumulative investment that India has made – Indian companies have made – in APEC countries it is already in the order of nearly $50 billion. That’s not chicken feed. If you look at India’s external economic relations and how they have evolved over the last few decades, the fastest growing, the most dynamic component of India’s external economic relations is precisely in this region. Even with ASEAN our trade is already something like $70 billion. We have a target of $100 billion. If you look at recent trends in India’s relationships with important countries, say Japan – Japan has become a very important economic and administrative partner for India. So has ROK, so has Australia. So if you’re looking at India’s own external economic relations, then there is no doubt that this is already a very important segment of the global market for India. And therefore, it is strange, as Prime Minister Rudd said, that India is not there, despite the fact that we are already very much engaged with this region. I think for that reason it is very important that we should be seeking APEC membership. The last point I would like to make is, even though at this stage this is still very much, as I said, an aspirational body. A body which does not work through legal commitments or mandatory commitments. However, you are all aware of the fact that last APEC Summit China did propose that we should start a study of an Asia-Pacific (INAUDIBLE). Which would be, if it is realized, a huge bloc of the most major economies in the world. Because it would include China, it would include the United States, it would include Japan, it would include Australia, it would include virtually all the major economies of the world except the Europeans and maybe the West Asians. If this study is going to start fairly soon and if it is going to really go forward, whether you like it or not, it is going to have a very major impact on India’s economic prospects. So I’d consider it to be better that we are in APEC, we have the possibility of participating in this study – of at least influencing the contours of what is emerging from this rather than be outside. Let us not have to these things by default; it is more important that we position ourselves so that we are able to influence how this architecture that is emerging is actually shaped. For these reasons we have felt this is an initiative worth taking forward and we are extremely grateful to Prime Minister Rudd who has taken the initiative to constitute this taskforce and I’m very privileged to be part of this. I do hope that, both in terms of getting an alignment within India itself for this particular initiative but also convincing other APEC members to really look at India’s membership in a positive manner. All the indications that we have so far is that all the APEC members without hardly any exception are actually very welcoming of India’s membership in APEC. But that does not mean that we can just sit back at let it happen. It won’t happen automatically. It requires a tremendous effort on our part as well. I hope that effort will be forthcoming. SUNG-HWAN KIM: Thank you Prime Minister Kevin. First I wish to express my thanks to the Prime Minister for including me in this taskforce. When I was first offered the chance to join this taskforce, without hesitation I joined because I believe India’s joining APEC is both beneficial to APEC members, member economies and also to India as well. I want to talk about why I think that way for several reasons. First, India is the third largest economy in Asia and India is a critical centre of economic growth in the region. India still has not yet met its full potential, there is still large potential to grow more. Some estimates project that India could be the world’s third largest economy by 2030. So if APEC economies, APEC states include India then it is a serious thing. Second, India’s growing consumer base and the large market are a tremendous opportunity for APEC economies and businesses. Some projections predict that India’s consumption expenditure will be the third largest in the world by 2020. APEC economies cannot afford to ignore such a large market. Third, India’s large and growing labour supply can be an integral part of regional and global value chains. Many economies will face labour shortages in the coming years because of ageing population. On the other hand, India’s labour force is one of the youngest and the largest in the world. Fourth, India is certainly a destination for Korean businesspeople to invest and India’s APEC membership would make India ever more attractive to our investors. Fifth, my government welcomes great economic cooperation with India. While I was in government I participated in finalizing the CEPA with India and since then our bilateral trade which was less than US$1 billion in 1991, becomes around US$16 billion last year. Now Korea is one of India’s top 15 trading partners. Finally, APEC membership would not only help strengthen India’s strategic engagement with Korea, it would also further one of India’s key foreign policy initiatives – the ‘Act East’ policy. As symbolised by the recent elevation – when Prime Minister Modi visited my country this May – we elevated our bilateral relationship to a ‘special strategic partnership’. So the Korean government welcomes greater engagement with India in East and South East Asia. For these reason I think this is a very important and very timely initiative. As the Secretary said, on the part of Indian government there will need to be some diplomatic activity to get there. If the Indian government has made it clear to the member economies that it is a priority of India, I strongly believe that including my own country and all other member economies will welcome India’s membership. Thank you. KEVIN RUDD: So colleagues if you have any points you’d like to express, any questions you’d like to ask the floor is yours. Part of our reasons for wanting to engage with distinguished colleagues here in Delhi is, even in my limited knowledge for how policy is done in this town, is that all of you are persons of influence in the foreign policy discourse of this country. Therefore, engaging you in this way we thought was a good thing in terms of the broader socialization of the subject here within Delhi, particularly, mindful of the fact that time is not eternal on this question and we do need to act relatively soon. AUDIENCE MEMBER: Thank you Your Excellences. I am Yogendra Kumar, former Ambassador to the Philippines as my last posting. First of all I want to say I feel honoured to be invited to be invited to this event by Your Excellences. An important subject that we are raising today has tremendous significant in the current moment in the global economy and the developments concerning the Chinese economy, which actually in my view has the characteristics of a command economy. In fact, 1994 the Yuan devaluation by 33 per cent actually transformed the Asian and the world economy. In the prevailing Asia-Pacific geopolitics and geo-economics, India will bring value to APEC if the organization is to be seen as a strategy construct and a locomotive for the region’s economic growth. India’s growing profile in the Asia-Pacific region in all respects is well known – whether strategic or economic – this member of ASEAN related forums including the East Asia Summit which have their own economic blueprints. Most APEC countries are participating in the negotiation of the FTA involving ASEAN’s FTA partners. Then, of course, India’s membership of G20 et cetera actually does in a way represent and signify India’s global economic linkages. APEC was envisaged as an inclusive regional and liberalizing economy sphere when it was launched. The growing integration of India in the regional economy will bolster the driving principles of APEC. In several respects India compares favourably with the developing member countries of APEC and in others the peer pressure dynamics would certainly reduce the gaps between India and APEC. The decision to launch APEC FTA will set off a process which will only be strengthened if India was a part of it. The US-launched TPP would likely upstage APEC. Although the decisions are non-binding, the APEC has over the years emerged as a powerhouse of ideas rather like the OECD but with a strong Asia-Pacific focus. With this role as a thought leader India can contribute substantially to it. India having successfully weathered global and regional economic cataclysms can be a part of a norm setting process in this particular thing. More so as we find the turbulent Chinese economy which has effects in the Asia-Pacific and across the globe, it is symptomatic of the vulnerability of the global logistics, production and supply chains which needs to be insulated from the growing frequency of such seismic shocks by increasing frequency and asymptomatic unpredictable occurrences of these economic shocks characterise today’s world as has been mentioned by several leading analysts. And they have serious geopolitical and security consequences. Not only are there mechanisms such as shock absorbers to be developed, but APEC’s expertize deployed for thinking through different scenarios before they loom on the horizon. India will also benefit from membership in many ways – sharing expertize will strengthen the reform process and help change the discourse within the country. India’s cooperation with OECD is illustrative in this regard. APEC’s business travel card is a great advantage for Indian businessmen – I know from my experience in Manila when I was there what difficulty leading Indian businessmen had in coming to Manila. APEC also has a strong collaboration program among its members about the financing the combatting of transnational crime from which India can greatly benefit. AUDIENCE MEMBER: I’m inclined Mr Prime Minister to turn this into a conversation? RUDD: I’m all for conversing here. AUDIENCE MEMBER: Great. You know India very well. India loves to be a member of various organizations. And India is a traditional, conservative member of organization which once we join in we do not terribly favour expansion of those organizations. I need not cite examples. So from that practical point of view I’m particularly concerned to elicit your views further on what you said on two things. One, where would the opposition come in November when members of APEC try to expand it? I believe there is still considerable reservation and resistance within the organization. The second question sir is about, while we of course deeply respect your knowledge of China there was some scepticism when I heard you say that the Chinese Foreign Minister has told you that China would very happily and gladly favour India coming in. Now this kind of thing, when we listen in Delhi, we become very sceptical. So could you please throw some more light on that as well?RUDD: Just to answer briefly. Where do I see the problems coming from? It’s town called Washington, it’s on the banks of the Potomac. The truth is your introductory remarks about Indian conceptual frameworks for participating in international organizations, I will not comment on. I will note them but I will not comment on them. Certainly in Washington there are a whole bunch of folks there who are sceptical about India. Sceptical about India when it comes to full, positive, constructive participation in forums designed to ultimately liberalize the trading environment. The challenge is this, to be blunt, if India wants to do this India will need to forcefully advocate its position through the channels of diplomacy, make it clear that this is the unequivocal position of the government of India for the reasons that we’ve run through here if they are in fact shared by the government. So that the President of the United States, who is deeply sympathetic towards this country, can prevail over resistance in other arms of his administration led by the USTR who will lead the argument against. That is my blunt direct Australian-esque advice about what needs to be done. As for our friends in the People’s Republic of China, I can only faithfully report to you what he has said. But let me put this in a slightly broader context and make two points. One is, the Chinese economy is under pressure and under stress. This has become not just the topic du jour, it has become the topic du monde over the last month plus. Even prior to that happening, and I go to Beijing reasonably frequently, if you try to plumb the depths of Chinese economic interests underpinning, for example, the New Silk Road initiative. The Chinese are seeking to identify external drivers of growth elsewhere in the global economy because they wish to themselves be able to leverage that growth in terms of their own domestic growth deficit. Net exports in China are now a net negative contributor to growth. That has not been the case since 1979. So when you look at APEC and Indian participation, the answer is somewhat the same as China’s interest in Indian participation in the One Belt One Road initiative. That is, their bottom line assessment, in my view, is they want all economies to rise because they see this as actually complementary and supportive of their own economic development objectives but frankly their emerging growth deficit. I’m not sitting before you to say that our Chinese friends are immune from geopolitical objectives. I’ve been dealing with the People’s Republic of China since 1984 and I have some familiarity with how our friends in Beijing operate. They are as geopolitical as, frankly, the rest of us are. But I think for the reasons I have just outlined I do not see evidence of China at this stage objecting to Indian membership. But here is a final cautionary note, if India passes up the opportunity I do become concerned in a different set of political circumstances in ten or fifteen years time as to whether the circumstances which now exist whether the rest of the membership of APEC including China will be as benign as it is right now. So I’m all for seizing the opportunity while it lasts. AUDIENCE MEMBER: That’s actually a good – or perhaps a bad point – for me to segue into what I’m about to say. Let me say at the outset that if push came to shove and if it was faced with a binary choice I would plump for going to APEC membership. That shouldn’t be the thing. The question is how do we do that with our eyes open? Because it is a slippery slop for precisely some of the reasons you eluded to, I’d take a different interpretation. Traditionally, the Indian approach which we have done, for example, with OECD and with other multilaterals has been to avoid slippery slopes. I don’t think we are in a position to do that anymore. We need to be more sure footed while keeping our eyes open. My concern is that we are precisely not in a position to keep up with all the requirements that membership brings. For example, the gentleman here earlier said that we can provide intellectual leadership et cetera. Frankly, in all of the situations that we have been in, we have traditionally been outgunned and unable to forcefully articulate a position. In the end we are seen as obstructionist and it is not because we are really obstructionist it is because we are trying to articulate a position which are unable to do forcefully with all the people around. Next will be the TPP – I’m sort of jumping over here – let’s look at the pressure for example, Vietnam and New Zealand are coming under. When we come under that pressure we’ll probably capitulate not even knowing that we are capitulating. Look at what happened to the secret TPP draft that has been done – these are complex things and in some ways I begin to have some sympathy for avoiding slippery slopes but I don’t think we should. What needs to be done for us to articulate forcefully the sort of terms and conditions of APEC membership to be truly inclusive. Right now I’m afraid the shots are still being called by the US and not the US overall but particularistic US business interests. RUDD: I’m sure Saran would like to answer as well so I’ll just throw out a very direct response. Number one, everyone in this country and everyone in the region wants the Indian economy to grow sustainably and strongly. For the people of Indian and frankly for the benefit of the world. People like this country. They really do. They want to see the boats rise and to see poor people have opportunities. You will not, as professional diplomats, underestimate the degree of international goodwill towards this country which is for a range of different reasons – anything from culture, language, good food and the fact that you are a vibrant democracy. Secondly, for the Indian economy to grow, the government of India has concluded that you must internationalize and globalize your economy for two reasons. One is, to grow the economy you must become increasingly competitive as all countries do. And secondly, you have to become more competitive in order to enter global supply chains and that means growing your manufacturing as a consequence of that and the employment generation. I agree with you in the binary – if one option is a mercantilist India which turns inward, it doesn’t exist in the 21^st century. So the other is how do you internationalize? Which leads me to my final point. There are no prerequisites for entry to APEC on the part of any applicant state. Secondly, all agreements are by consensus. Thirdly, when they are reached, application and implementation is entirely voluntary. Why have you never seen a single report in 25 years of something called an ‘APEC dispute’? We’ve seen a lot of disputes in the European Union. But you’ve never seen as APEC dispute. We don’t run around saying, “Well we signed that communiqué last year and those bloody New Zealanders are off again escaping their responsibilities under Communiqué X.” It just doesn’t work that way. Therefore, what is the material advantage? The material advantage in its nuts and bolts lies in your domestic regulatory agencies – whether they are in commerce, whether they are in transport, whether they are in energy, or whether they are in other sectors to do with investment. Working with their counterparts across the region and elsewhere on common projects concerning how do we get the best standards for products and services possible in the region. Then it is entirely a separate question as to whether you want to do anything about it. I think what emerges over time, when the officials get together they say, “Actually, yes, we can do this without any penalty to our domestic producers and suppliers and whatever else.” But if you chose not to that is fine as well. My final point is made in very cogent terms before by Foreign Secretary Saran is there is not a universal APEC standard, there are different levels of action by different member states. That is as it should be. I would seek to – when you raise the question of the slippery slope – throw that accusation at a market access negotiation on TPP and currently the Australians and everyone else, the Vietnamese are giving the Americans a hard time over their TPP draft. Throw that accusation against a future FTAP if you want to. Throw that accusation against the WTO, my evidence is you regularly do. But not about APEC, it is entirely different and it is a great smorgasbord of regulatory reform opportunities across the economy behind the border, at the border and beyond the border from which you can chose the timing and the pace and the intensity consistent with your domestic political circumstances. SARAN: Thank you Prime Minister. First of all, to think that we just sit across the table with negotiators and we are bound to be taken for a ride. I think that is a very defensive and a defeatist kind of attitude. I think the reality is actually the opposite – that the Indian negotiators are the ones who fight til the very bitter end to safeguard what they regard as India’s interests. So to think that by entering into any into engagement which are freely negotiated – to think that this is inevitably a slippery slope for India, I think that is a very defeatist attitude to take. I do not think the reality matches what your impression is. As far as APEC is concerned, in any case, it is not about negotiating a treaty. I am surprised that again and again we point out that this is not about a trade treaty, this is not about market access, this is actually about entering into a club – if you like – of countries who wish to collaborate together to increase the size of the pie. Now it is entirely up to you if you don’t want to increase the size of the pie for yourself but here is an opportunity and an opportunity which I believe is actually something that if we do not grasp, as Prime Minister Rudd said, today we might find it much more difficult in the future. Why? Because whether we like it or not, as I said, your access to markets is being increasingly linked to observance of standards, norms, regulatory coherence (whatever name you call it). Whether it is in the TPP or the TTIP or it is going to be migrated into the RCEP, the fact is that today a large number of your own enterprises are actually doing very well by conforming to the standards which are required in the markets. It is not as if this is something which is alien to Indian industry, in fact there are a very large number of top of the line enterprises in India who are doing precisely that. Several of the Indian companies are actually acquiring assets abroad, like in Korea for example, not only to expand their business but also to be able to have access to high tech technology. Because that enables them to raise their standards and have a bigger slice of the pie. To think that this is something which is unfamiliar to India, that’s not the case. What is the problem here? The problem here is what has been true of individual enterprises is not true as far as the entire economy. Enterprises are competitive, India’s economy is not necessarily competitive. And you cannot really survive in today’s global market, particularly for the reasons that have been mentioned – the world economy is slowing down, the main markets in the world are slowing down – you have to fight that much harder in order to get a bigger slice of the global market. If you facing that competitive situation here is a forum which does not impose mandatory commitments on you but gives you the opportunity to, number one, familiarize yourself with those emerging standards and because as I mentioned it is a business oriented grouping where business places a much more important role than governments do, it provides you a platform where there can be business collaborations. Where you can actually work together with business counterpart organizations to up your game. Without the downside of, am I on a slippery slope? Again, I would end by saying that I hope that we would not approach these issues with that kind of a mental state, of being fearful of where this is going to lead to. I think it is much more important to go into it with the mindset that it is by going in that we can shape the outcome and not be shaped by the outcome. I think that is very important. AUDIENCE MEMBER: Thank you. Firstly, my compliments to all three of you. I think this is an important initiative and, for what it’s worth, I fully support it. I think the important point made is that this is a forum we are talking about. It is not negotiating market access and as, former Foreign Secretary Saran said, when we look at FTAP which lies ahead it is important that we be a member of APEC otherwise you cannot have a role to play in negotiating what comes out of that. But more than that – I think that was the last point he made – if you want be involved in standard setting (and standard setting is hugely important now) you have to be part of this world. But I want to step back for a minute. Reassured interests in this nearly a quarter of a century ago, it was frozen but it has opened up again. In Manila decisions will be taken. As I see it there are three issues here. Three little barriers to be jumped over. Firstly, people are saying that some countries from ASEAN, some from Latin America and India and I’m yet to see who out of all these countries ranging from Myanmar and Cambodia and Panama and India and so on. That’s one issue, we have to make sure that India is brought out as an important Asian country. It is absolutely correct when you say that this is a $2 trillion plus economy et cetera, as Foreign Minister of Korea mentioned, but even if we weren’t and even if our rate of growth was not that, even then we count. You cannot have a forum like this, APEC, without India. It makes absolutely no sense. So it is in the interests of all APEC members that we join. When we are growing at 6 plus, 7 plus or whatever base percentage you want to use as a rate of growth at the moment, India has to be there. The issues, as I see it beyond balance, are two and both have been mentioned by you. I want to draw them out a bit. One is China. We have heard very often from the Chinese, and I can give you several examples – SCO membership is one. For many years, publically – yes; privately – no. So that is an issue and I think some effort and pressure needs to be put on them. I don’t see an issue with Japan. Secondly, USA. You rightly pointed out President Obama may be in favour but he has to push down the view that comes from the USTR. And that is not the USTR’s view; the USTR has no view of its own. It’s the view of the industries which are putting pressure on it, trying to make linkages between market access issues and India becoming a member. I think that part needs to be brought out and that pressure needs to come from many countries, not merely from India. We can certainly try to do our best and I don’t see what the issue would be there when we have applied in the past. It makes absolute good common sense that we do so in future too. But I think the USTR serves as a (INAUDIBLE) for US industry – pushing their requests for this or that access and unfortunately that is what is determining the policy. This has to be a political decision. It has to be a decision of the Whitehouse. I think as much pressure as can come from friendly countries saying that, “We need India, you can’t talk up APEC as a forum without India being there, it makes no sense and you should rename yourselves. TPP and FTAP all comes much later. I wouldn’t worry about TPP nobody is talking of us joining and there will be a lengthy negotiation. I don’t think we are ready for that at all but this is not what we are talking about. So my suggestion would be, and I fully appreciate and support what you’re doing, that you also need to explain to the Americans at the topmost levels that this is a political decision they have to take. They have to calm down the USTR and others who might have a different view and make sure this process goes ahead. And also the Chinese so they know. You can see what’s happening with the property market, with the stock market in China. As you said, ‘Act East’, ‘Make in India’ – all this makes sense for India to be a member and I think it is in everyone’s interest. It is no longer merely in India’s interest to be there. I think there should now be a suction demand for the APEC membership that we want India on board. RUDD: We might make this the last question as we abandon for a quick drink and a retreat. Or in my case it might be a long drink. My attitude is pretty simple – you’re either in the opportunities business or in the problems business. And I’m all for seizing the opportunities and causing the problems to conform to the opportunities, rather than – as most of us do in the foreign policy business – give you an infinite list of what could wrong. Certainly, when I have been both Prime Minister and Foreign Minister, my regular response to my officials was, “Thanks guys, I really appreciate the list of how many disasters we’re facing this week and what has gone wrong and what could go wrong. Just a few thoughts on how we might be able to do something right and seize some opportunities out there?” It is wise for all bureaucracies to be inherently cautious. I understand that. Remember I began life as a professional diplomat so I understand the trade, the craft, the business, the enterprise that is our common profession. But I’d just make this point. One about India, if you decide this is what you want you want to do – and I believe this is the active internal debate of the Indian government now – then you must reach that decision and argue it yourself through your own diplomacy forcefully and directly in Washington and other capitals. Bear in mind also Manila because they are the host country and I know from APEC experience, having been to APEC Summits myself, you have considerable discretion as the host country on what’s finally placed on the agenda. Two, on the question of Washington itself which you eluded to. My comments earlier on I thought echoed very much your own about the internal divides within Washington DC. You don’t need to convince me that the USTR acts on behalf of American interests. I mean, I’ve dealt with these guys over a long period of time. Friend of Mike Froman, friend of Bob Zoellick when he was in the USTR and I’ve had more fights with those guys than I’ve ever had agreements in that particular portfolio. The political task and the diplomatic task is to provide such a clear statement of Indian interests to the President from the Prime Minister at a political level and then, through the other arms of the US government, for them to know that to say no to India on this would be a very big call. I believe that if there is a strong push by India and Washington on this and you’ve got your strategic and commercial dialogue coming up within three weeks followed by the Prime Minister’s meeting with President Obama at the margins of UNGA. Frankly, this is where the message needs to be registered loud and clear. As for the other countries of APEC joining the cause I would simply say this: India should be mobilizing Japan, India should be mobilizing Korea, India needs to be mobilizing Australia, India needs to be mobilizing New Zealand. If among those countries they are all in the door in Washington saying, “What the hell are you guys doing thinking about keeping the door half-closed on India? For god sake guys grow up and get on with it.” Speaking for the Anglo-Saxons in that group that is precisely what we’d say to our American friends. I’m sure the Japanese and Koreans are much more polite than we are and that’s the difference between us and I salute the more refined members of our company. I would actually start mobilizing those closest to the United States and don’t forget Canada as well as an APEC member state. Singapore is also critical. On the third point about China, I know SCO is not APEC. I made these remarks yesterday. My own view is that if you look at the emerging architectures of Asia they worry me in this sense because there is an impending bifurcation between maritime Asia and continental Asia. Maritime Asia, something of an emerging contest between China and the United States but currently anchored firmly in US allies and US friends around the region across the Indo-Pacific. Continental Asia, where China along with its relationship with Russia is seeking to construct a different set of arrangements around SCO and SECA. Frankly, the latter gets very little attention in the international media or frankly in any thinktank in Washington. Most thinktanks in Washington couldn’t tell you what SCO and SECA were all about. The only reason I only is that I had to read all this stuff for my research on regional architecture to find out exactly what China was saying on its view of contintental architecture. On these political and security questions I think China’s position is pretty forthright. On economic issues I believe the fundamental interest our Chinese friends have is still to grow the pan-regional economy because the core of Chinese perceptions of its own national growth long-term and its own power – frankly, a strong regional economy suits those interests. For those reasons, on balance and having dealt with our Chinese friends for more than 30 years myself, I’m still of the view that when push comes to shove and the meeting is occurring in Manila, China would find it enormously difficult – with Xi Jinping in the chair having recently hosted Prime Minister Modi in Beijing and the reverse visit having occurred here despire the kerfuffle on the border – I think he’d find it very difficult in the company of APEC member states to be the one person out. It would become very clear in that gathering that that was the case, it’s not something you can disguise. There’s no willing proxy in that APEC membership group and say, “I, country X, suddenly have an impassioned position on Indian membership in APEC or non-extension that I’m going to die in a ditch on this and prevent consensus.” If you think about some of the other states whose names have been mentioned as possible APEC member counties in the future, and I will not name them, I can conceive of a future set of circumstances in which, shall I say, other states could act as message carriers for certain other large powers but it would be most undiplomatic of me to say so and I assume that will be deleted from the video record. Colleagues thank you for coming, please have a drink of your way out and I appreciate very much your attendance this evening.