Globalisation in times of crisis and war: the role of the OECD since the Russian Federation's aggression against Ukraine
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly
debate on 24 January 2024 (4th sitting) (see Doc. 15868, report of the Committee on Political Affairs and Democracy,
rapporteur: Mr George Katrougalos; and Doc. 15887, opinion of the Committee on Social Affairs, Health
and Sustainable Development, rapporteur: Ms Liliana Tanguy). Text adopted by the Assembly on
24 January 2024 (4th sitting).
1. The Parliamentary
Assembly of the Council of Europe, enlarged to include the delegations
of the national parliaments of the Organisation for Economic Co-operation
and Development (OECD) member States that are not members of the
Council of Europe and a delegation from the European Parliament,
is a unique platform for parliamentary scrutiny of OECD activities.
Every two years, it holds the enlarged Assembly debates focusing on
specific themes, defined in collaboration with the OECD.
2. The last enlarged Assembly debate, held in April 2021, focused
on “Fighting fiscal injustice: the work of the OECD on taxation
of digital economy”.
Resolution
2370 (2021) underlined that fair and redistributive taxation is
both an essential tool for governments to raise the funds necessary
for the proper functioning of public services and a fundamental
anchor for democracy, and commended the role of the OECD in this
field and its work on the Inclusive Framework on Base Erosion and
Profit Shifting (BEPS), which are instrumental in reaching global
consensus on how to make the international tax system fairer and
more stable. The enlarged Assembly welcomes the steps taken towards
implementing the global minimum tax by 2025 and encourages the OECD
to persevere in completing the set of measures foreseen under the
two-pillar solution together with its efforts to build tax capacity
in developing countries.
3. This time, the enlarged Assembly focuses on the ways in which
the new global context, resulting inter alia from
shocks provoked by the Covid-19 pandemic and the Russian Federation’s
war of aggression against Ukraine, has affected the already existing
negative trends in globalisation and the role that the OECD can
play to mitigate them. Worries about trade dependencies and supply
disruptions are not new, but current public debates put them in
the spotlight, particularly as global economic and geopolitical
outlooks are worsening. They have recently resulted in another wave
of calls for “slowbalisation”, “deglobalisation”, “friendshoring”, “nearshoring”,
creation of “trading blocks” or “relocalisation”. Tensions between
the United States of America and China on broader geopolitical issues
have also raised the spectre of “decoupling” of the two world’s
biggest economies. Even the perspective of eventual trade wars between
the USA and the European Union was discussed, in the aftermath of
the US Inflation Reduction Act (IRA), which came into effect on
1 January 2023.
4. The enlarged Assembly notes with interest the OECD’s statement
on the occasion of the 2023 OECD Ministerial Council Meeting, under
the theme: “Securing a resilient future: shared values and global partnerships”.
On this occasion, OECD member States reaffirmed the following: “Our
like-minded community remains committed to: the shared values of
individual liberty, democracy, the rule of law, human rights, gender equality,
environmental sustainability and tackling inequalities, as set out
in our 2021 Vision Statement; as well as diversity and inclusion.
… We reaffirm the importance of multilateralism and standing united
in addressing global challenges, and in reaching out beyond our
current membership to enhance and develop global partnerships. …
We value the OECD’s role in promoting free and fair trade, investment,
and supply chain resilience, as set out in the new OECD trade strategy;
and facilitating international cooperation to counter attempts to
undermine open, market-based economic systems.”
5. The enlarged Assembly is worried that, according to the OECD,
in the wake of the Covid-19 pandemic, the Russian Federation’s war
of aggression against Ukraine and the related energy and cost-of-living
crisis, most OECD countries have been grappling with fiscal deficits,
elevated public debt levels and a subdued outlook for economic growth.
In 2022, across the OECD as a whole, total government spending was
estimated to be close to 43% of the gross domestic product (GDP),
about 2.5% higher than the 2017-2019 average. The public debt/GDP
ratio is estimated to have increased by almost 6% over the same
period. The recent increases in public-sector wages and welfare
benefits to reflect high inflation have introduced further pressure
on public spending. Medium- and long-term trends such as population
ageing and the rising relative price of services will continue to
put additional pressure on government spending on pensions, public
health and long-term care.
6. The enlarged Assembly is further worried that the compounding
effects of the Covid-19 pandemic, global conflicts, the climate
crisis and rising inequalities have reversed global progress on
poverty reduction. The number of people living in extreme poverty,
which had markedly fallen for almost twenty-five years, is now on the
rise. In 2020, 700 million people were living in extreme poverty
and nearly half of the world was living with less than US$6.85 a
day. With a full-scale military invasion of the sovereign territory
of Ukraine and the destruction of traditional food supply chains,
the Russian Federation has put at least 70 million people worldwide
on the brink of starvation. The Human Development Index value is
declining for the first time on record, with nine out of 10 countries
globally registering a backslide in health, education and standard
of living. In this framework, democracies are under unprecedented
levels of pressure from inside and outside. The polarisation of
political discourse, geopolitical tensions, rising inequalities,
public health and economic crises, and creeping foreign interference
in democratic processes – all also fuelled by mis- and disinformation
– have tested citizens’ trust in public institutions and are driving
many governments to strengthen and protect democratic values and
processes. The enlarged Assembly urges the OECD to put forward strong
policy measures to help its member States and developing countries
reverse the backslide in poverty reduction and human development.
7. Inflation pressures emerged in nearly all OECD economies at
an unusually early stage during the recovery from the pandemic in
2021, pushed up by supply bottlenecks and a rapid rebound in the
demand for goods. With the Russian Federation’s war of aggression
against Ukraine in February 2022 disrupting food and energy markets
and the Russian Federation intentionally weaponising food and energy
supplies, inflation around the globe has increased to levels that
many economies had not experienced since the 1970s. High inflation
has generated a cost-of-living crisis, eroding households’ real
disposable income and living standards and slowing consumer spending
growth, with strong distributional effects. Low-income households
and rural households are typically hit the hardest by higher food
and energy prices given the composition of their spending. Nominal
wages have not kept up with inflation and real wages have declined
in virtually every OECD country. The Covid-19 crisis affected the
economic well-being of vulnerable groups, such as youth and children from
disadvantaged households, much more than other groups. Low-skilled
workers and low-income families are also more likely to be hit in
the current environment of high inflation, economic slowdown and
the Russian Federation’s war of aggression against Ukraine.
8. In this framework, the enlarged Assembly recalls its
Resolution 1899 (2012) “The activities of the Organisation for Economic Co-operation
and Development (OECD) in 2011-2012”, where it noted the urgent need
for policies which promote cohesion of our societies and tackle
social inequalities, in line with the suggestions of the International
Labour Organization (ILO),
inter alia in
the fields of youth employment, education, public health, training
and adequate pensions. The enlarged Assembly once more urges the
OECD to intensify its work in these areas and to seek synergies
with relevant international partners, notably the European Union
and the ILO, in order to improve public response on fiscal, labour
and social challenges. In the medium to long term, governments would
need budget frameworks to ensure fiscally responsible spending levels,
by reallocating resources from low-valued areas to those where they
are most socially needed, as encapsulated in the OECD Spending Better
Framework.
9. The enlarged Assembly notes that, in 2021, the inaugural OECD
Survey on the Drivers of Trust in Public Institutions (Trust Survey)
of 22 OECD countries found that four in 10 respondents trusted and
four did not trust their national government. Fewer than one third
of respondents, cross-nationally, thought the political system in
their country allowed them to have a say in government decision
making, and a similar share believed that the government would adopt
opinions expressed in a public consultation. Young people, those
with low levels of education and low incomes on average trust government
less than other groups do. These trends demonstrate the need for
OECD countries to reinforce their democratic governance systems,
through measures that strengthen citizens’ participation in the
political process and confront the spread of mis- and disinformation,
which can discourage democratic engagement, distort policy debates
and undermine societal resilience. In this vein, the enlarged Assembly
welcomes the OECD Declaration on Building Trust and Reinforcing
Democracy, adopted by the ministers in November 2022 during the
Ministerial Meeting of the OECD Public Governance Committee, which
includes commitments and actions to strengthen trust and democracy.
It also welcomes the biennial OECD Trust Survey, which monitors
public perceptions of competence and values of public institutions
and their relationship with levels of trust in the country.
10. The enlarged Assembly is also extremely worried that, in view
of the current extreme poverty rise trend referred to in paragraph
6 above, a projected 575 million people will still be living in
extreme poverty and only one third of countries will have halved
their national poverty levels by 2030, pushing the United Nations Sustainable
Development Goal (SDG) 1 to “end poverty in all its forms everywhere”
out of reach. As low- and middle-income countries simultaneously
face growing financing needs, spiralling debt and declining available financing
for sustainable development, notably in terms of government revenues,
their SDG financing gap reached US$3.9 trillion in 2020, a 56% jump
from 2019. In this framework, the Community of Practice on Poverty
and Inequalities (CoP-PI) of the Development Assistance Committee
(DAC), a platform developed by the OECD to support DAC members in
maximising their development co-operation’s focus, is a useful tool.
The enlarged Assembly urges the international community and especially
Council of Europe member States to strengthen international assistance
and solidarity, ensuring that support during short-term crises is
coupled with a maintained focus and accelerated progress in pursuit
of long-term development goals and a fairer global economic order,
particularly in support of the world’s poorest and most vulnerable
countries.
11. In the same vein, the enlarged Assembly notes that the slowdown
of international migration witnessed during the Covid-19 pandemic
has been reversed, due to a strong bounce back in economic and administrative activity,
the reopening of borders and the Russian Federation’s war of aggression
against Ukraine, which triggered a refugee and humanitarian crisis
at a scale unseen in Europe since the Second World War. There are
also concerns that climate change could spur large-scale movements
of people. According to some projections, natural disasters will
displace hundreds of millions of people in the coming decades. The
impact of climate change on human mobility is difficult to isolate.
Climate change is only one of several, often compounded, factors
that influence migration and displacement, which include declining
or volatile agricultural incomes, shrinking livelihoods, conflicts
over natural resources and rising food insecurity.
12. The enlarged Assembly is concerned about natural disasters
but also about man-made disasters, such as the deliberate destruction
of the Kakhovka Dam by the Russian Federation on 6 June 2023, which
risks causing extensive damage to the ecosystem, threatens food
security and leads to the displacement of hundreds of thousands
of people.
13. The polycrises of the last years have forced the re-examination
of climate policy design and implementation, bringing new challenges
as well as opportunities. Climate change mitigation will require
a fundamental, massive and rapid transformation of our economies
and energy supply. Strong policies to reduce emissions, improved
technologies and large-scale investment will be crucial. The substantial
changes implied by a resilient transition to net-zero emissions
cannot be seen in isolation from rapidly changing wider circumstances
– whether from social, economic or environmental perspectives. Holistic
policies should serve simultaneously the environment and social
justice.
14. However, the enlarged Assembly notes that increased long-term
climate ambition has not been met with commensurate credible action
in the short term. A rapid acceleration in action is still needed
if climate goals are to be reached. Avoiding the worst effects of
climate change means reducing emissions globally by 45% from 2010
levels by 2030, and to net-zero emissions by 2050, according to
the Intergovernmental Panel on Climate Change (IPCC). The urgency
of the climate crisis is amplified by the growing risks of crossing
climate tipping points. At a certain level of warming, these elements
of the global climate system may pass points of no return that would
result in irreversible and often abrupt changes to our environment,
including potentially severe regional or local hazards. The enlarged
Assembly fully supports initiatives such as the creation of the Inclusive
Forum on Carbon Mitigation Approaches, a recent OECD initiative
designed to reduce carbon emissions through better data and information
sharing, evidence-based mutual learning and inclusive multilateral
dialogue. Especially useful are also the OECD’s other two flagship
initiatives on climate and economic resilience: Net Zero+: Climate
and Economic Resilience in a Changing World and the International Programme
for Action on Climate. The enlarged Assembly welcomes the OECD’s
firm commitment to the fight against climate change and poverty
by its hosting the Secretariat of the Paris Pact for People and
the Planet, which will be responsible for implementing the ambitious
road map drawn up at the Summit for a New Global Financing Pact
in Paris in June 2023. The enormous damage caused to the environment
as a result of the war of aggression of the Russian Federation against
Ukraine also requires the creation of an international mechanism
for providing compensation and holding the aggressor accountable
for the damage caused to the environment. The Register of Damage
Caused by the Aggression of the Russian Federation against Ukraine created
under the auspices of the Council of Europe should become one of
the key elements of this mechanism.
15. In this context, the enlarged Assembly stresses the need for
States and enterprises to recommit towards the achievement of the
SDGs. It welcomes the 2023 edition of the OECD
Guidelines for multinational enterprises on responsible business
conduct, in particular as regards enhanced environmental
and social responsibility and due diligence in gathering and using
personal data. The enlarged Assembly commends the OECD for its work
in this area and encourages it to further co-operate with relevant
actors in order to strengthen business compliance with the appropriate
national norms and international standards.
16. The 2021 enlarged Assembly debate found the role of the OECD
to be instrumental in facilitating discussions and providing solutions
in complex multinational negotiations on fiscal justice. So far,
the delineation of policies in two pillars, the programme of work,
the January 2020 statement as well as the latest publication
Tax Challenges Arising from Digitalisation
– Economic Impact Assessment, which came out in October
2020, and the OECD/G20 Inclusive Framework on BEPS Cover Statement
on the Reports on the Blueprints of Pillar One and Pillar Two have
provided a concrete basis for discussion. The enlarged Assembly considers
that maintaining momentum and finding solutions to the remaining
issues through the OECD/G20 Inclusive Framework is paramount for
all countries and institutions involved in the process. As already
stated in
Resolution
2370 (2021), the absence of implementation of the two-pillar solution
would put the world at a greater risk of a proliferation of unco-ordinated
and unilateral tax measures (such as digital services taxes) and could
result in an increase in damaging tax and trade disputes.
17. The enlarged Assembly considers it essential that the community
of OECD member countries and accession candidate countries remains
committed to shared values, as reiterated in the 2023 Ministerial Council
Statement, as well as to multilateralism and unity in addressing
global challenges. On the basis of the co-operation agreement between
the OECD and the Council of Europe, the two organisations should
continue working together in the field of artificial intelligence
(AI). In this connection, the enlarged Assembly welcomes the fact
that the OECD hosts the Secretariat of the Global Partnership on
Artificial Intelligence (GPAI) that promotes AI based on the human
rights and democratic values shared by its members. The role of collaborating
institutions, such as the Council of Europe, should be to support
building consensus among its members, while offering a helping hand
in bridging diplomatic divides. The enlarged Assembly also invites
the OECD to provide the participants of the enlarged debate, between
now and the next debate, with information regarding its policy initiatives
on the issues to which this Resolution refers. Holistic policies
taking account not only of fiscal and economic challenges but of
all aspects of countries’ realities and aspirations for development, including
environmental challenges, labour and social policies, hold the key
for an efficient response, with a focus on leaving no one behind.
The enlarged Assembly underlines the importance of ensuring the
indivisibility of rights and encourages the OECD to build its policy
advice to member countries on this basis, in particular as regards
measures needed to guarantee economic and social rights and protect
the right to a safe, clean, healthy and sustainable environment.
18. The enlarged Assembly welcomes the two new members of the
OECD, Colombia and Costa Rica. It decides that 12 seats and votes
will be allocated to the delegation of Colombia, and four seats
and votes will be allocated to the delegation of Costa Rica, to
participate in the debates of the enlarged Assembly.
19. The enlarged Assembly reiterates its belief that full respect
for democracy, human rights and the rule of law, including international
law, should constitute an essential criterion for judging whether
a candidate country should be invited to join the OECD. In this
context, it welcomes the adoption of “Accession Roadmaps” for candidate
countries to OECD membership: Brazil, Bulgaria, Croatia, Peru and
Romania, as well as the opening of an initial accession dialogue
with Ukraine, which has made an application to join the OECD. The
enlarged Assembly encourages the OECD to continue further enlargement
and to invite countries meeting membership criteria to accession
negotiations.
20. The enlarged Assembly also welcomes the OECD’s increased global
outreach, including its close work with some of the world’s largest
economies: Brazil, China, India, Indonesia and South Africa, who
are key OECD partners, and its collaboration with many other countries
at a regional level, notably through regional initiatives, covering
Africa, Eurasia, Latin America and the Caribbean, the Middle East
and North Africa, South East Asia and South-East Europe.
21. Lastly, the enlarged Assembly resolves to amend the Rules
of Procedure for enlarged debates of the Parliamentary Assembly
on the activities of the OECD (see appendix) to take account of
the OECD enlargement, as well as various changes in the Parliamentary
Assembly’s Rules of Procedure.
Appendix – Modification
of the Rules of Procedure for enlarged debates of the Parliamentary
Assembly on the activities of the OECD
1. The Rules
of Procedure for enlarged debates of the Parliamentary Assembly
on the activities of the OECD are modified as follows:
1.1 in Section I on “General Principles”,
replace paragraph 2 with the following paragraph:
“These debates shall be public
and shall usually take place every two years on the occasion of
a part-session of the Parliamentary Assembly. They shall be based
on a report presented by the Committee on Political Affairs and
Democracy and focused on specific themes to be defined by the rapporteur
in collaboration with the OECD.”
1.2 in Section II on “Participants”, paragraph 2, replace
the words “Appendix 1” with
the words “the appendix”.
1.3 in Section V on “Right to speak”, replace paragraph 5
with the following paragraph:
“Speakers
in a debate may speak for not more than three minutes. The rapporteur
shall have ten minutes to introduce the report and to reply to the
debate. However, if circumstances so require, the occupant of the
Chair may reduce these speaking times.”
1.4 in Section IX on “Procedure in committee and examination
of the report in reply to the OECD activity report”, replace paragraph
2 with the following paragraph:
“At
meetings of the Parliamentary Assembly committee in question, delegations
of the national parliaments of the OECD member States which are
not members of the Council of Europe shall be allocated the following
number of votes:
- Japan, Mexico
and United States of America: 4 votes
- Canada, Colombia and Republic of Korea: 3 votes
- Australia and Chile: 2 votes
- Costa Rica, Israel and New Zealand: 1 vote.
1.5 in the appendix on “Apportionment of seats and votes”,
replace paragraph 2 with the following paragraph:
“The Parliaments of the following
States shall have the number of seats and votes specified below (maximum
18):
- Australia 8
- Canada 12
- Chile 7
- Colombia 12
- Costa Rica 4
- Israel 3
- Japan 18
- Republic of Korea 12
- Mexico 18
- New Zealand 4
- United States of America 18»
