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OECD Council Meetings at Ministerial Level

Paris, 27 June 2000


1. The OECD Council at Ministerial level met on 26-27 June 2000, under the chairmanship of the Honourable Mr Peter Costello, Treasurer of the Commonwealth of Australia, assisted by the vice-chairs from Canada, Mr Pierre Pettigrew, Minister for International Trade and Mr Jim Peterson, Secretary of State (International Financial Institutions), and from Finland, Mr Kimmo Sasi, Minister for Foreign Trade. Consultations were held with the Business and Industry Advisory Committee (BIAC) and the Trade Union Advisory Committee (TUAC) to the OECD.

2. Ministers welcomed the participation of the Slovak Republic in their meeting as an observer. They recognised the willingness and ability of the Slovak Republic to join the OECD. They agreed that the accession procedure of the Slovak Republic should be completed as soon as possible.

3. OECD countries are undergoing the most profound transition in decades, to an increasingly knowledge-based and interdependent world. Globalisation and the impact of rapid advances in technologies are presenting new opportunities and new challenges to all countries, regions, societies and citizens. Fast changing information and communications technologies (ICT) are transforming markets, including financial markets, and require new methods of organising work, business and trade to harness the benefits of globalisation. However, Ministers recognised the serious concerns felt by many at the economic and technological changes underway, and the importance of addressing these concerns locally, nationally and internationally.

4. Globalisation presents governance with new questions. Governance, at all levels, establishes the conditions whereby individuals singly and collectively seek to meet their aspirations in society. Good, effective public governance helps to strengthen democracy and human rights, promote economic prosperity and social cohesion, reduce poverty, enhance environmental protection and the sustainable use of natural resources, and deepen confidence in government and public administration. Building trust in public institutions is a keystone of good governance. OECD's report Public Trust: Ethics Measures in OECD Countries provides a comprehensive overview of ethics management measures in all Member countries. Enhanced openness, transparency and accountability, through strengthened processes of consultation and a better understanding of the changing relations among government and civil society, are fundamental elements of governance. Information and communications technologies provide important new ways for governments to interact with citizens.

Sustainable Development and Social Cohesion

5. Achieving sustainable development remains a major overarching goal of OECD governments. In 2001, OECD's Policy Report on Sustainable Development will be complemented by the analysis of the Growth Study and the Environmental Outlook and Strategy to provide a mutually supportive and consistent policy framework for better integrating economic, social and environmental considerations. Climate change, conservation of biodiversity and sustainable management of natural resources remain among the most serious global policy challenges, and OECD will continue to advise governments on how best to meet their commitments under the Kyoto Protocol. OECD will make a significant contribution towards advancing the international agenda on sustainable development for the "Rio+10" meeting in 2002, and will have a key role in advising governments with policy analysis and recommendations.

6. OECD economies are adjusting to a wide range of changes, with profound effects on work and society. Enhanced social cohesion, bolstered by full employment, will facilitate this adjustment. Policies to enrich human and social capital are needed to enhance the ability of economies and individuals to adapt to these changes, and to ensure that the benefits extend to all groups in society, particularly the disadvantaged. OECD's work in the following areas will assist governments to promote social inclusion:

Economic perspectives

7. The world economy is developing more favourably than it has for some time. Nearly all OECD countries are enjoying stronger rates of growth -- overall the fastest pace since 1988 -- with low inflation and falling unemployment. Outside the OECD area, many emerging market and transition economies are recovering vigorously from the 1997-98 crises and should continue to see rapid growth; key factors have been macro- and microeconomic reforms in those economies, strong growth in trading partners, particularly the United States, and the maintenance of open world markets. However, considerable uncertainty surrounds prospects for commodity and financial markets and their implications for the world economy; the durability of growth in some countries remains in question. A number of least developed countries are not yet benefiting from globalisation.

8. The United States is undergoing the longest period of expansion on record. Productivity growth has accelerated, unemployment has declined considerably and real incomes have grown across the board. New technologies and structural changes have raised the economy's non-inflationary growth potential. Notwithstanding some recent signs of slowdown, demand may still be running ahead of supply with the risk of increasing inflation. The current account deficit has risen sharply, primarily reflecting the relative strength of the US economy. The challenge for monetary authorities is to maintain a sustainable pace of demand growth consistent with low inflation. Fiscal policy should not be relaxed and national saving should be increased.

9. In the Euro area, and elsewhere in Europe, growth and employment prospects in the near term are better than at any time since the late 1980s. Unemployment has fallen steadily without generating inflation in the area as a whole. There is a limited risk, however, that despite recent positive supply-side developments in labour, product and financial markets, inflationary pressures may emerge. Monetary policy should continue to focus on price stability, in order to contribute to the maintenance of favourable conditions for a lasting, non-inflationary economic expansion. Given current output prospects, any easing in fiscal policy in Euro countries should be avoided and unanticipated higher revenues should be used to lower public debt. In those countries where tax burdens are high, tax reductions should be directed at enhancing supply capacity and accompanied by cuts in spending, thus preventing deterioration in underlying fiscal positions. The goal now is to transform the current expansion into a long-lasting one. Further progress on structural reforms would assist European economies to move onto a path of higher sustained growth, by raising productivity and employment and by deriving greater benefits from innovation and the potential offered by new technologies.

10. In Japan, the economy is showing positive indications of recovery, but its durability is uncertain. Policy should aim at sustaining the recovery in the short-term without compromising the long-term health of the economy. Accommodative monetary conditions should be maintained. Fiscal consolidation is not appropriate in the short run but a credible medium-term strategy needs to be drawn up and implemented to address high and rapidly growing gross public debt levels once the economy is on a full recovery path led by private demand. The speedy implementation of comprehensive structural reforms, including continuation of ongoing reform of the banking sector, and corporate restructuring, are needed to foster dynamism in the economy. Regulatory reform continues to be important for the economy.

The "new economy" and the sources of growth

11. OECD has begun a major study on the sources of growth to be completed in 2001, in particular to identify whether a "new economy" is taking shape and how policies need to adjust. There have been wide differences in growth performance between Member countries in recent years. Better performance has been most striking in the United States with GDP growth per capita moving ahead of the OECD average. Other OECD economies (notably Australia, Denmark, Ireland, the Netherlands and Norway) are identified in the First Report on the OECD Growth Project as having achieved rising trend growth in GDP per capita in the 1990s compared with the 1980s. These countries were relatively successful in mobilising potential labour resources over the 1990s. Some recent OECD Members, including Poland, have also sustained vigorous economic growth over that period. The recent performance of some other OECD economies has also been very good. The causes of these better performances differ, but strong records of economic reforms are a common factor.

12. There is increasing evidence of the role played by innovation, research, knowledge and information and communications technology (ICT) as drivers of productivity, employment and growth. Evidence of a "new economy" is clearest in the US, with its strong non-inflationary growth linked to a rising influence of ICT and strong growth in labour productivity in the late 1990s. Signs of positive effects from growing ICT investment have increasingly emerged through the 1990s in many other OECD countries.

13. OECD's work will assist Member countries to deepen their understanding of the strong economic performance in these countries, the emerging role of ICT and the potential for a "new economy", and thus better shape their policies. Ministers stressed that sound growth- and stability-oriented macroeconomic policies, open and flexible domestic and international markets, and regulatory and administrative frameworks that encourage entrepreneurship are vital to good economic performance. All countries in OECD and beyond have the potential, within their own social contexts, to participate in the opportunities offered by the "new economy" dynamic. The risk of a "digital divide", both within and between countries, especially access to technology for developing countries, must be seriously considered.

14. Electronic commerce is rapidly increasing its impact on productivity and growth. International co-operation to formulate coherent policy approaches to this global phenomenon is essential. Consumer trust in electronic commerce is vital if its potential is to be fully realised. OECD Guidelines on Consumer Protection adopted in December 1999 are a significant contribution to this process; follow-up work on implementation is needed. OECD will co-sponsor a conference in December 2000 on alternative dispute resolution mechanisms applicable to online commerce. Greater confidence in authentication and privacy protection is also required. OECD will pursue its work in these areas, and engage with the private sector and other stakeholders to develop effective policy responses to other urgent Internet security issues such as hacking and viruses. OECD will hold a conference in January 2001 on the key electronic commerce policy issues, including the dangers of a "digital divide", in which a broad range of economies outside the OECD area, business, labour and civil society interests will participate.

15. Small and medium sized enterprises are central to the vitality of our economies. Ministers welcomed the Bologna Charter adopted at the Conference on 14-15 June 2000 which sets out the need for a policy environment that will enable SMEs to flourish and thus contribute to employment, social cohesion, and local development. OECD will work to deepen Member countries' understanding of the issues set out in the Charter and their policy implications, and will share the results of this work with countries outside the Organisation.

Maintaining momentum in trade liberalisation

16. The rules-based multilateral trading system provides the best framework for global growth and prosperity. To this end, enhanced multilateral liberalisation, based on strengthened multilateral rules and combined with well-designed domestic institutions and policies, will help realise the promise of a "new economy" and support poverty reduction and sustainable development. Ministers are determined to work towards the launch as soon as possible of an ambitious, balanced and broad-based WTO round of multilateral negotiations reflecting the needs and aspirations of all WTO Members. The lessons of the WTO Ministerial meeting in Seattle are clear. Ministers agreed that strong political will and greater flexibility on all sides are needed if we are to build consensus for a new Round; more must be done to address the particular and varied concerns of developing countries and there must be a broader engagement with our societies to establish a constructive dialogue on the benefits and challenges of trade liberalisation. In that respect, Ministers stressed the need to accelerate the on-going process in WTO to improve its functioning.

17. Ministers reaffirmed their commitment to constructive negotiations under the built-in agenda and will work together to seek progress in these negotiations. Beyond this built-in agenda on agriculture and services the new Round should also strengthen further the WTO system and open up opportunities for a more inclusive range of interests for all WTO members to be addressed in a manner responsive to the challenges of the 21st century. Ministers reaffirmed their commitment to continue preparatory work to this end.

18. The interests and concerns of developing countries are a particular priority in the preparations for and conduct of a new Round. The recently agreed short-term confidence-building measures regarding implementation of Uruguay Round undertakings, increased market access for the least developed countries and technical assistance for enhanced capacity building must be pursued expeditiously. Ministers recognised the need to go further in this area. They welcomed the work of OECD on trade and development issues.

19. Ministers welcomed the expansion of WTO membership and progress in accessions, including that of China, and thus the fuller integration of new members into the multilateral trading system.

20. Public interest in globalisation has focussed on the multilateral system. Enhanced openness and transparency of that system is central to the task of demonstrating the benefits that flow from open markets. Public understanding of the linkages and complementarities between trade liberalisation and the range of issues arising in other policy areas must be deepened if the multilateral trading system is to be strengthened and gain broad public support. Enhanced co-operation among relevant international bodies -- such as the WTO, IMF, World Bank, UNCTAD, ILO, WHO, UNEP -- and OECD is essential. OECD's analytical work in support of the multilateral trading system, including its work on investment, trade and environment, trade and core labour standards, and trade and competition, together with its contributions to international understanding of governance issues, remains relevant.

21. Ministers strongly regretted the failure of the Participants to the Export Credit Arrangement to reach agreement on an Understanding covering agriculture as mandated in the Uruguay Round. They called for the negotiations to be resumed and successfully concluded by end of July if possible and by the end of 2000 at the latest. The work on the financing issues of the Export Credit Arrangement should examine its disciplines in relation to commercial practices and to their consistent application, taking into account, inter alia, recent developments in the WTO. Good progress has been made in the OECD's Export Credit Group on strengthening common approaches on environment and export credits. Ministers urged completion of the Work Plan by the end of 2001, and requested a report on progress at their next meeting. The Export Credit Group should also strengthen measures towards ensuring that export credit support to Heavily Indebted Poor Countries (HIPCs) is not used for unproductive purposes.

22. Ministers noted with concern that the OECD Shipbuilding Agreement had not yet come into force and that the industry continued to face serious difficulties in certain regions. OECD will continue its work on shipbuilding, including to improve transparency, particularly in view of the need to establish normal competitive conditions in the industry. OECD will enhance contacts with major non-OECD shipbuilding countries.

23. Support to farmers in the OECD area as a whole, as measured by the Producer Support Estimate, has returned to the high levels of a decade ago. Low world commodity prices and the resulting pressure on farm incomes have led many countries to introduce new measures or to provide additional support to farmers. In many cases measures have been implemented in ways inconsistent with the principles of agricultural policy reform, whereas in some other cases countries have introduced decoupled support measures consistent with these principles. Ministers reaffirmed, in conformity with Article 20 of the Uruguay Round Agreement on Agriculture, their commitment to the long-term objective of substantial, progressive reductions in support and protection, resulting in fundamental reform. Ministers agreed to continue their efforts to implement the broad set of shared goals and policy principles for agricultural policy reform, and recognised: the multifunctional characteristics of agriculture, and the need to ensure that policies should be targeted, transparent and cost-effective, maximise benefits, and avoid distorting production and trade. Food safety, food security, viability of rural areas and protection of the environment, as well as the economic efficiency of the agro-food sector, are common concerns. Policies to address these concerns need to respect the principles and criteria, noted above, as agreed in OECD. OECD work is of great value for the reform of agricultural policies and as support for on-going WTO trade negotiations.

24. Effective and sustainable management of fisheries resources and the relationship between resource management and trade are important areas for international action. Over exploited fish stocks must be rebuilt to sustainable levels. Policies should address the causes of overfishing and short-term social and economic adjustment costs without distorting trade or detracting from the global objective of sustainable resource use. OECD's recent study, Transition to Responsible Fisheries, together with new work initiated on fisheries market liberalisation, the costs of managing fisheries and fisheries sustainability indicators, including government financial transfers issues, will be valuable contributions to policy development. Aquaculture issues should be an integral part of this work.


25. There is an increasingly common governance agenda in OECD and non-OECD economies. Approaches to governance must adapt if the benefits of globalisation are to be fully realised and shared, and take account of each country's circumstances. Ministers called on OECD to continue to make its vital contribution to policy-making and implementation on governance issues, in dialogue with economies outside the Organisation's membership through its developing Governance Outreach Initiative, in partnership with other international and regional organisations, and in broad and open consultation with civil society. OECD will report progress on its Governance Outreach Initiative in 2001.

26. Ministers welcomed the updated Guidelines for Multinational Enterprises adopted by OECD governments together with those of Argentina, Brazil, Chile and the Slovak Republic. The Guidelines provide a robust set of recommendations for responsible corporate behaviour worldwide consistent with existing legislation. They are part of the OECD Declaration on International Investment and Multinational Enterprises which provides a balanced framework to improve the international investment climate and encourage the positive contributions multinational enterprises can make to economic, social and environmental goals. The Guidelines have been developed in constructive dialogue with the business community, labour representatives and non-governmental organisations and represent an important step in addressing some of the public concerns over globalisation. Effective implementation will depend upon the responsibility and good faith of all concerned: governments, business and labour organisations and other interested parties all have a role to play.

27. OECD will continue its analytical work in the field of investment policy, including work on maximising the benefits of investment liberalisation, its social and environmental dimensions and on harmful forms of policy-based competition to attract investment. OECD will encourage non-Members to adhere to the Declaration on International Investment and Multinational Enterprises.

28. OECD has made important progress towards eliminating harmful tax practices. As a follow-up to the 1998 Council Recommendation on Harmful Tax Competition, 47 potentially harmful preferential tax regimes of OECD Member countries have been identified. Ministers having approved the 1998 Report reconfirmed the commitments of their countries to remove by April 2003, following development of further guidance on the application of the 1998 criteria, any features of their preferential tax regimes found to be actually harmful. On tax havens, the OECD initiated a review of a number of jurisdictions. Ministers welcomed the commitment by six jurisdictions* to eliminate harmful tax practices, and they are not identified in the Report** issued today, even if they presently meet the tax haven criteria. Of the remaining jurisdictions, 35 have been identified as having met the technical criteria for being tax havens. The OECD will develop by 31 July 2001 a List of Unco-operative Tax Havens. This list would be used as the basis for the development of defensive measures as foreseen in the 1998 Report. The OECD will assist co-operative jurisdictions to meet international standards as they move away from using harmful tax practices, and will initiate a dialogue with non-Member economies to eliminate such practices.

29. Electronic commerce raises new issues for tax policy and administration. Business, consumers and governments need a predictable environment if the full potential of e-commerce is to be exploited. Ministers confirmed the lead role of OECD to achieve the successful resolution of these issues: progress has been made toward implementing the Ottawa Taxation Framework Conditions for E-Commerce. Ministers welcomed the constructive contribution by business and countries outside the Organisation's membership to this work and looked forward to a progress report at the next meeting on both the direct and indirect tax issues raised by electronic commerce. OECD will co-sponsor a global conference in 2001 on "Tax Administrations in an Electronic World".

30. The fight against corruption is a high priority. Considerable progress has been made in the ratification, implementation and monitoring of the Bribery Convention which came into force in February 1999. Twenty-three countries have completed their internal process, 21 of which have had their implementing legislation reviewed by the Working Group on Bribery. Ministers commended these countries and urged that deficiencies identified in current implementing legislation be remedied as soon as possible. Ministers were encouraged that a number of countries are on the verge of completing their internal process and it is urgent that all signatories ratify and implement the Convention. Ministers called on the Working Group to begin monitoring of enforcement of the implementing legislation as soon as possible. Anti-bribery legislation must now be effectively applied in practice, and work advanced on further issues relating to corruption***. To strengthen the fight against corruption, bribery of foreign public officials should be made a serious crime triggering the application of money laundering legislation. OECD will continue to seek to engage countries outside its membership in its work. Work should continue regarding the potential anti-corruption effects of international trade rules pursuant to the 1999 Ministerial mandate.

31. The Financial Action Task Force has also made significant advances in spreading the anti-money laundering message throughout the world, notably in its report on improving the policies of non-co-operative countries and territories.

32. Hard core cartels are a multi-billion dollar drain on the world economy. Governments need to demonstrate to consumers around the world that they will be protected effectively against such abuse. OECD's 1998 Recommendation has been a catalyst for tougher anti-cartel laws and new enforcement programmes; more countries now need to join this effort. Bilateral and multilateral law enforcement co-operation needs to be enhanced and efforts undertaken to eliminate unjustified obstacles to appropriately safeguarded information exchange between and among countries.

33. Further progress on regulatory reform is necessary in Member countries. High quality regulation, in open and competitive markets, will remove inefficiencies without jeopardising high standards in areas such as health and safety, and the environment. The multidisciplinary work of the OECD on regulatory reform and the current reviews of progress in Member countries are a valuable contribution to promoting good regulatory practices, and should continue with other Member countries.

34. OECD and the World Bank have successfully initiated joint activities to promote corporate governance reform worldwide, using the OECD Principles of Corporate Governance as a framework for dialogue. The two institutions will further their efforts over the coming years through a series of white papers addressing specific corporate governance issues in Russia, Latin America and Asia. In order to further promote financial stability and corporate transparency, the OECD will conduct analytical work on the misuse of corporate entities.

35. Corporations are responding to public concerns through adoption of codes of conduct. More analytical work is needed to understand the implications of this development.

36. Biotechnology is of growing importance to our societies because of its far-reaching consequences for, inter alia, human health and healthcare, agro-food production and sustainable development. Deepened international understanding and co-operation in managing the benefits and risks are necessary if the potential economic, environmental and social benefits are to be realised and new regulatory issues resolved. Public confidence, in particular, needs to be retained and enhanced through transparent policies. OECD will continue to contribute to this process of understanding across the broad range of biotechnology issues, and will seek to engage countries outside its membership in this work. Ministers invited OECD to consider holding a conference in 2001 to address the environmental impacts of genetically modified organisms.

37. Food safety is a fundamental objective for all governments. Ministers affirmed their commitment to a science-based and rules-based approach. How precaution should be applied to food safety in circumstances of scientific uncertainty is being discussed to promote understanding of the various view points on the subject and to achieve greater global consensus on this issue, in particular in the Codex Alimentarius Commission. OECD has undertaken substantial work on biotechnology and other aspects of food safety, including work requested by the G8, contributing to international understanding on different policy approaches. Consultation with interested parties, notably with NGOs and the Edinburgh Conference on GM foods in February this year, has been very successful. The OECD will continue to undertake analytical work and to play an effective role in international policy dialogue on food safety, maintaining its engagement with civil society and seeking to share its work in this area with countries outside the Organisation's membership. Drawing on its comparative advantages, the work of the OECD will effectively complement, without duplication, the activities of other international organisations, in particular the FAO and WHO.

Development Co-operation

38. Development co-operation has a crucial role to play in promoting the inclusion of developing countries in the process of globalisation in order to sustain growth and reduce poverty. The Development Assistance Committee Policy Statement Partnership for Poverty Reduction signals the key importance of comprehensive country-level development frameworks integrating anti-poverty strategies. The internationally-agreed development goals set for 2015 for poverty reduction and social and environmental progress provide a reference point and performance monitoring tool for both international action and domestic development strategies. Real advances have been made in most regions during the 1990s, but many countries, particularly the poorest, will not achieve the goals without major domestic efforts and international support. Commitment to respect for human rights, including gender equality and the empowerment of women, is an integral part of development co-operation, and vital for sustainable poverty reduction.

39. Poverty reduction strategies and partnership are the basis for the significantly increased debt reduction effort for HIPC countries agreed last year. Member countries' contributions to finance agreed multilateral debt reduction, based on the principle of fair burden sharing, should be made as soon as possible to avoid delay in implementation. Resources freed by debt reduction and foreign assistance must be used effectively for development and poverty reduction, and unproductive expenditure avoided. OECD will develop guidelines on poverty reduction as well as further guidance on implementing partnership principles in ways that improve public governance in partner countries. Improved policy coherence within OECD countries is also necessary if developing countries are to take full advantage of the opportunities of globalisation: OECD will develop a Checklist on Policy Coherence to assist its Member countries in this area. The OECD will also deepen its analytical work on the linkages between trade liberalisation, economic growth and poverty reduction.

40. Aid flows to developing countries have increased significantly for the second year running. OECD governments welcome this development. They will work to ensure that this recovery continues and will increase their efforts to make additional funds available. In doing so, most Members are guided by the 0.7 per cent ODA/GNP target. OECD governments will seek to mobilise private domestic and external resources as recommended in the new Development Finance Agenda. Ministers regretted that DAC members were so far not in a position to reach a consensus on a recommendation on untying aid to the least developed countries as mandated by the DAC High Level Meeting in 1998. In order to increase the effectiveness of aid, Ministers urged that discussions continue aimed at reaching agreement as soon as possible.

Co-operation with Non-Members

41. Ministers endorsed OECD's continuing programme of co-operation with non-Member economies. They welcomed the Special Dialogue conducted at high levels, and recognised the important contribution that such meetings make to the enrichment of policy dialogue, and to mutual understanding on global issues, between the OECD countries and non-Members. The global reach of the OECD programme of co-operation with non-Members reflects the growing interdependence of the world economy. The Organisation must deepen and extend its relations with non-OECD economies, in the fields where it has a comparative advantage, toward the development of a rules- and values-based world economy. Furthermore, Ministers reiterated that OECD must remain open, on the basis of mutual interest, to membership by countries sharing the same values, while being selective and pursuing the Organisation's tradition of high standards for membership as well as efficiency and relevance to its Members.

42. Building a democratic, peaceful and prosperous South Eastern Europe requires a strong determination by the countries in the region to reform their economies and societies, and a sustained commitment by OECD countries to co-operate with them. Ministers pledged the continuing active support of their countries to OECD's efficient work in South Eastern Europe, particularly its contribution to the design and implementation of the Stability Pact's Compact for Reform, Investment, Integrity and Growth, and Anti-corruption Initiative.

* * *

43. Progress has been made toward the financial stability of the Organisation, in particular through the decision to establish a pension fund for its staff. Ministers encouraged the Organisation to strengthen its current work on priorities and financial and management reform. The implementation of a long-term strategy for OECD's headquarters site is essential to the Organisation's effective and efficient functioning.

44. Ministers welcomed the OECD Forum 2000, which marks a major step forward in the Organisation's openness toward economies outside its membership and to civil society. In this context, they asked the Secretary-General to develop options for strengthening the process and structure of its consultation and dialogue with civil society.

Bermuda, Cayman Islands, Cyprus, Malta, Mauritius, and San Marino
** Progress in Identifying and Eliminating Harmful Tax Practice
*** Bribery acts in relation with foreign political parties; advantages promised or given in anticipation of a person becoming a foreign official; bribery as a predicate offence for money laundering; and the role of foreign subsidiaries and offshore centres in bribery transactions.

Source: OECD Press Release. Copyright OECD 2000. Reproduced by permission of the Organisation for Economic Co-operationand Development.

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