The OECD and the world economy
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly
debate on 1 October 2008 (32nd and 33rd Sittings) (see Doc. 11687, report of the Committee on Economic Affairs and Development,
rapporteur: Mrs Lilliehöök; Doc. 11719, contribution by the Social, Health and Family Affairs Committee,
rapporteur: Mrs Roseira; Doc.
11697, contribution by the Committee on Culture, Science and
Education, rapporteur: Mr Daems; Doc. 11712, contribution by the Committee on the Environment, Agriculture
and Local and Regional Affairs, rapporteur: Mr Vis). Text adopted by the Assembly on
1 October 2008 (33rd Sitting).
- Thesaurus
1. The enlarged
Parliamentary Assembly, made up of delegations of the Organisation
for Economic Co-operation and Development (OECD) and Council of
Europe member states, as well as the European Parliament, has examined
and debated the ongoing activities and work programme of the OECD,
notably as they relate to the world economic situation, in the light
of the OECD’s Annual Report 2008, the report by the Assembly’s Committee
on Economic Affairs and Development and contributions from other
Assembly committees in the fields of the environment and agriculture,
education and science, migration, health and social policy.
2. In view of the difficulties that have beset most of the advanced
economies in 2007 and 2008, overall performance has been better
than expected so far, according to the OECD. It believes that one
reason for this is that its calls for structural reforms have borne
fruit and, if pursued, should continue to help sustain stability. Moreover,
the interventions of central banks have helped maintain liquidity.
Nevertheless, in mid 2008, the global economic situation was still
characterised by financial market turbulence, the slump in housing
markets and soaring commodity prices. As a result, according to
the OECD’s June 2008 Economic Outlook,
most OECD economies can expect “several quarters of weak growth”,
while headline inflation (including food and energy) is set to remain
high “for some time to come”. However, the OECD is conscious of
the risky nature of forecasting in a “particularly unsettled” economic
climate. Policy makers are advised to take account of the possible
effects of developments in non-OECD countries and in financial markets,
higher energy and credit costs and other inflationary pressures.
3. The financial crisis that has continued to shake the global
economy since the OECD’s mid-year assessment was published shows
how uncertain the outlook remains. Some of the world’s most powerful financial
institutions have been toppled or remain vulnerable not only to
the effects of the subprime mortgage debacle but also to further
shocks connected with the wide and complex range of financial instruments
invented and marketed by these same institutions in recent years.
Confidence in the ability of governments to safeguard citizens’
essential economic and financial interests through adequate regulation
has been undermined. Moreover, although the actions of governments
and central banks in seeking to prevent systemic collapse appear
to have struck the right balance so far, their increasing involvement
in rescuing private financial institutions at the taxpayers’ expense
has been questioned. Thus there remains a pressing need for greater regulation
of financial markets. The enlarged Assembly urges the OECD, as well
as other institutions such as the International Monetary Fund (IMF)
and the European Commission, to quickly step up their work on this issue
with a view to avoiding future financial turmoil.
4. In this context, the enlarged Assembly welcomes the OECD’s
financial education project and related development of guidelines
and good practices designed to improve the quality of financial
understanding among consumers faced with increasingly complex financial
markets and products.
5. The OECD advises against the introduction of measures to compensate
for soaring food and energy prices, arguing that supply and demand
in these markets can be best balanced through “the right price signals”. Rather,
the impact on those with low incomes is better offset, according
to the OECD, “through an appropriately designed tax and social transfer
system”. The enlarged Assembly urges member governments to avoid measures
that lead to market distortions. In accordance with the OECD Economic
Outlook report and in the light of the current state of the world
economy, it is essential to adopt measures that endeavour to stimulate food
supply in the medium term and seek to improve basic infrastructure
(transport, energy and irrigation) and investment in technology
for the agricultural sector.
6. Nevertheless, the enlarged Assembly is conscious that economic
and financial instability can in turn threaten political stability,
not least in the poorest countries of the world where food shortages
have led to demonstrations and even rioting. It may also increase
uncontrolled migration pressures. For economic and demographic reasons,
international migration is set to continue. Thus the enlarged Assembly
appeals to the OECD countries to step up their assistance to the
hardest hit countries in the short term; to exercise leadership offering
new approaches so as to define, manage and develop migration in
accordance with the interests of the home and receiving countries;
to avoid disruption to relief supplies to traditional humanitarian constituencies
of conflict- and disaster-affected populations; to intensify their
co-ordinated technical assistance with a view to improving farm
productivity in these countries as a matter of urgency; to create
a better environment for agricultural investment; and to ensure
that they live up to their Official Development Assistance (ODA)
commitments.
7. In particular, the enlarged Assembly considers that migration
has played, and will play, an important role for the economies of
OECD countries, as well as for economic development in the migrants’
countries of origin. A precondition is, however, that migrants are
well integrated in their host society and in the work environment. To
this end, migrants and members of their families must learn the
language of the host country as well as its history, and they must
learn to respect and take part in the promotion of its basic democratic
values and laws, including in terms of human rights.
8. The enlarged Assembly once again stresses the importance of
removing barriers to international trade in agricultural and industrial
goods as well as in services, with a view in particular to improving
access for the products of the developing countries to the markets
of the developed economies. Thus, while it regrets the failure of
the World Trade Organization (WTO) ministerial negotiations in July
2008, it considers that progress achieved so far in the Doha Round
should be safeguarded and that efforts to relaunch the negotiations
should be redoubled, with a view to reaching a positive outcome
beneficial to all parties. The enlarged Assembly notes that according
to the Copenhagen Consensus 2008 agreed by a group of the world’s
top economists, conclusion of the Doha Round could realistically
increase global income by US$3 000 billion per year, over 80% of
which would go to the developing world, representing exceptionally
high cost-benefit value. However, the enlarged Assembly notes that
the possible outcomes of the Doha Round remain highly contested,
with a wide variance in estimates of benefits and losses for developing
countries. To ensure that developing countries can maximise their
potential gains from trade, they must not be forced into premature
market opening, and must retain sufficient leeway in policy making
to safeguard sensitive sectors of their economies. The enlarged Assembly
also welcomes the OECD-WTO’s joint efforts to promote “aid for trade”
– donor projects geared to increasing the capacity of developing
countries to take better advantage of trade opportunities. Aid for
trade must be aimed at helping developing countries build their
production capacity with an eye to their successful integration
into the global economy, and must not be made conditional on trade
liberalisation commitments.
9. The enlarged Assembly notes the growing impact of Sovereign
Wealth Funds, government investment vehicles intended as a means
of investing foreign exchange reserves. It welcomes the OECD’s Declaration
on Sovereign Wealth Funds and Recipient Country Policies, the work
of the IMF on voluntary best practices for Sovereign Wealth Funds
and that of the European Union, as important steps towards one possible
manner of resolving the tension between the need for recipient country
governments to maintain an open, transparent global investment climate
and their legitimate concerns over national security.
10. The enlarged Assembly also notes the impact of hedge funds
and private equity and calls upon the OECD member states to include
investment firms, including partnerships and limited partnerships,
insurance companies, credit institutions and conventional funds,
in their firmer regulation of the financial sector. Investment firms
should be required to comply with capital requirements. The OECD
member states should ensure that appropriate capital requirements
are risk based, not entity based, for all financial institutions.
11. Despite slower global growth prospects, energy prices have
continued to rise, reflecting the weakness of the US dollar in which
oil and gas are priced, geopolitical uncertainty, security concerns,
growing demand in the emerging economies, chronic underinvestment
in production and distribution, and long-term demand projections.
According to the International Energy Agency, if governments maintain
existing policies, the world’s energy needs will increase by over
50% by 2030. The key to reducing energy demand lies in increased energy
efficiency, while diversification of energy sources will also be
essential. The enlarged Assembly calls on governments to accelerate
the development of innovative energy technologies to achieve energy
efficiency and to address global challenges of energy-related issues
such as clean energy, climate change and sustainable development.
At the same time, the enlarged Assembly also calls on governments
systematically to take account of the environmental impact of all
energy-related measures. It also urges the OECD to step up its research
in particular on the economic and environmental impact of biofuels
and to carefully consider all side effects of their development.
The enlarged Assembly urges member states to strengthen institutions
and mechanisms for national and regional dialogue in the field of
energy in order to increase international co-operation in the energy
sector for sustainable development.
12. The enlarged Assembly welcomes the OECD’s work on education
and encourages the OECD to pursue its studies on the efficiency
of teaching and learning processes in order to formulate proposals
to reverse the existing trend of increased educational expenditure
with no improvement in education results. Improving the efficiency
of learning processes is essential in order to tackle the current
insufficiency in adult competences and to ensure the sustainability
of adequate lifelong learning and continuing education systems.
Within the OECD studies on education, specific attention should
be dedicated to e-education and Internet learning in order to reduce
the ever-widening digital and, in consequence, generational education
gap. The enlarged Assembly encourages education authorities in Council
of Europe member states to look urgently into the available means
to reduce inefficiency in their national primary and secondary education
systems, as well as to increase investment in higher education,
as addressed by the OECD report Economic
Policy Reforms: Going for Growth 2008.
13. The problem of climate change requires the broadest possible
co-operation among states as well as their participation in shaping
an effective and appropriate international response, in accordance
with their respective responsibilities, abilities and social and
economic conditions. The world will be faced with an enormous economic,
social and environmental cost if no progress is made in framing
policies to adapt to, and mitigate the effects of, climate change.
In this regard, the OECD countries have a historic responsibility.
The enlarged Assembly welcomes the OECD’s recent work on the economics
of climate change and also strongly encourages the OECD to focus
its scientific studies on the new global challenges such as world
food safety, large-scale genetic technology applications and above
all the potential dramatic effect of global climate change on the
access to basic needs such as food, energy and specifically water.
The urgent challenge today is to ensure continuing economic growth
in order to sustain equitable economic and social progress while
reducing to a minimum its deleterious impact on the environment.
The OECD emphasises the importance of using market instruments such
as carbon taxes, carbon-trading schemes, and removal of energy subsidies
as key to addressing climate change, together with other instruments
such as investment in clean technologies. According to the OECD Environmental Outlook to 2030,
released in March 2008, global greenhouse gas emissions can be stabilised
at 450 parts per million at a cost of 0.5% of world GDP in 2030
and 2.5% of GDP in 2050. While new cost estimates by the OECD to
be released later this year are likely to be higher, estimates for
the cost of inaction are also being revised up, thus it is still
economically rational to act sooner rather than later. The world’s
GDP is likely to double by 2030 and to treble by 2050. This will
require the development of existing efficient technologies, the
immediate introduction of innovative technology-based efficiency
policies and a global emissions price starting at just over US$2
per emission tonne rising to US$150 per tonne in 2050. The enlarged
Assembly urges governments to give serious consideration to the
OECD’s recommendations in this respect.
14. The enlarged Assembly welcomes the steady, painstaking work
behind the success of the OECD’s Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions,
to which all 30 OECD member states and 7 other governments are parties.
Like the Council of Europe, the OECD sees corruption as the leading
contemporary threat to good governance, accountability and sustainable
economic development. The enlarged Assembly therefore congratulates
the OECD for having broadened the scope of its activities in this
field, including the development of a range of anti-corruption tools
and recommendations relating to taxation, company ethics, export
credits and development aid. The enlarged Assembly calls for the adoption
of preventive measures to include codes of conduct for public officials
and rules on conflicts of interest, training to promote compliance
and sanctions in the event of failure to comply.
15. The enlarged Assembly notes that negotiations are proceeding
between the OECD and the countries listed as candidates for membership
(Chile, Estonia, Israel, the Russian Federation and Slovenia) and
that the OECD is strengthening its relations with the Enhanced Engagement
countries (Brazil, India, Indonesia, the People’s Republic of China
and South Africa), as well as countries of strategic interest to
the OECD in South-East Asia. It would urge the OECD to reserve membership
for those countries which fully respect democracy, human rights
and international law.
16. Finally, the enlarged Assembly decides to modify its Rules
of Procedure (as per the appendix hereto), last amended through
Resolution 1467 (2005) on the OECD and the world economy, to bring them into
line with the relevant provisions of the Assembly’s Rules which
have been updated several times since then.
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
the enlarged debates of the Parliamentary Assembly on the activities
of the OECD were adopted in 1992 and amended in 1994 and 2005. They
appear on pages 218 to 231 of the 2008 edition of the Rules of Procedure
of the Assembly.
2. The Rules of Procedure of the Assembly have been modified
several times since 2005, with new provisions, for example, on gender
balance and speaking time.
3. In line with the above, the Rules of Procedure for the enlarged
Assembly are modified as follows:
- Part
II.2, add “and take account as far as possible of the need for gender
balance”;
- Part V.5, in the second sentence, replace the phrase “8
minutes to introduce a debate and 4 minutes to sum it up” by the
phrase “13 minutes to introduce the report and to reply to the debate”;
- Part VI.3, in the last sentence, replace the phrase “two
hours before the beginning of the debate” by the phrase “one hour
before the scheduled end of the sitting preceding that in which
the debate is to begin”;
- Part VI.5, replace the words “its author” by the words
“one of its authors or another member speaking in its favour”;
- Part VI.5, replace the words “1 minute” by the words “30 seconds”;
- Part VI.6, replace the words “its author and one speaker
against” by the words “one of its authors or another member speaking
in its favour, one speaker against, and the Rapporteur or Chairperson
of the Committee on Economic Affairs and Development”;
- Part VII, in the last sentence, replace the words “one
minute” by the words “30 seconds”;
- Part VIII.2, in the first sentence, replace the word “thirty”
by the word “sixty”;
- Part IX.1, in footnote 1, replace the words “prepared
in good time for presentation to the enlarged meeting of the Committee
on Economic Affairs and Development to be held on the eve of the
enlarged debate” by the words “submitted in writing in both official
languages to the Head of the Secretariat of the Committee on Economic
Affairs and Development at least seventeen hours before the scheduled
start of the enlarged meeting of that committee held on the eve
of the enlarged debate, e.g. by 3.30 on Monday if the enlarged committee
meeting is held on Tuesday at 8.30 a.m.”.
