Paris, 17 May 2001
1. The OECD Council at Ministerial level met on 16-17 May 2001, under the chairmanship of Prime Minister Poul Nyrup Rasmussen, Mr. Mogens Lykketoft, Minister of Foreign Affairs, and Ms Marianne Jelved, Minister for Economic Affairs and for Nordic Co-operation of Denmark, assisted by the vice-chairs from Japan, Mr. Takeo Hiranuma, Minister of Economy, Trade and Industry, Mr. Heizo Takenaka, Minister of Economic and Fiscal Policy, Mr. Shigeo Uetake, Senior Vice-Minister for Foreign Affairs, Mr. Hisashi Kazama, Senior Vice-Minister of the Environment and from the Slovak Republic, Mrs Brigita Schmögnerová, Minister of Finance, Prof. László Miklós, Minister of Environment, and Mr. Peter Brno, State Secretary, Ministry of Economy. Consultations were held with the Business and Industry Advisory Committee (BIAC) and the Trade Union Advisory Committee (TUAC) to the OECD.
2. We welcome the accession of the Slovak Republic to the OECD. Slovakias accession completes more than a decade of progress on reform that accelerated with the launching in 1991 of OECDs Partners in Transition Programme with the Czech and Slovak Republics, Hungary and Poland.
3. Our societies, as well as those of all other countries, face major transitions. We look to OECD to continue its pathfinder role of identifying and evaluating emerging policy issues and developing new policy concepts and approaches in areas where the Organisation has comparative advantage. OECD contributes to deeper international understanding, a more stable international economic system and enhanced prosperity worldwide, through its unique and indispensable intergovernmental process of analysis, dialogue and policy development.
4. We are committed to shaping globalisation to the benefit of all, and ensuring that the poorest are not left behind. We recognise the need, nationally and internationally, to bring greater coherence across the range of policies that impact on the achievement of this goal. Trade, investment and development policies, in particular, have a vital contribution to make to sustainable development and poverty reduction: strengthening the coherence among these policy areas deserves special attention. We look to OECD to assist us in this task.
OECD and the Wider World
5. OECDs co-operation and dialogue with countries in all regions of the world is a powerful instrument for advancing economic, environmental and social progress towards a more peaceful world. This process is open to the range of partners outside the Organisations membership who share our commitment to the development of a rules- and values-based open world economy. We endorse the Organisations programmes
of co-operation with countries outside OECD and welcome the growing interest among Non Members in participating in OECDs work. OECD remains open, on the basis of mutual interest, to membership by countries sharing the same values while being selective and pursuing the Organisations tradition of high standards for membership as well as efficiency and relevance to its Members. We value the bridges OECD can build with non-Member countries in common pursuit of reform and their successful integration into the international economic system.
6. Our discussions with Ministers from Brazil, China, Indonesia, Mali, Romania, Russia, Singapore and South Africa at our Council Meeting this year are a contribution to strengthened confidence in the multilateral trading system and a step toward the launch of new WTO negotiations in Doha in November this year.
7. OECDs enhanced co-operation with its long-standing partners BIAC and TUAC has been complemented over the last year by strengthened co-operative activities with NGOs and other representatives of civil society. This continuing dialogue builds trust in public institutions and promotes public understanding of the benefits and challenges of global economic and social change. We welcome OECD Forum 2001 as an effective multi-stakeholder dialogue providing valuable input to our work.
8. The world economy has slowed significantly since we last met in June 2000. Growth in the OECD area is now projected to decline to around 2 per cent in 2001, half the rate achieved last year. In addition, some large current account imbalances persist. However, the foundations are in place for a return to stronger growth, and inflation is expected to remain low. Macroeconomic policies and structural reforms should aim to enhance productivity growth and increase employment over the long term.
9. The United States economy has experienced a significant slowdown. Long-term fundamentals remain strong. Monetary policy should continue to aim at sustained non-inflationary growth. Fiscal policy should focus in the medium term on economic efficiency and fiscal soundness, including encouragement of higher private savings.
10. In Japan, prospects for a self-sustained recovery in the short term are uncertain while prices continue to decline and government debt is increasing. Monetary policy needs to provide ample liquidity until consumer price inflation stays at or above zero. The fiscal policy in place has been geared to aid recovery, but a credible medium-term strategy for fiscal consolidation and structural reforms must be developed without delay. We welcome the Japanese authorities strong intent to resolve balance sheet problems in the financial and corporate sectors and to enhance structural reform in securities and real-estate markets. Vigorous implementation of this strong intent is essential and regulatory reform should be quickened.
11. Growth in Europe will slow this year, but prospects are favourable. Economic fundamentals remain good and unemployment will continue to decline. Further structural reforms that increase the efficient operation of labour, product and financial markets are needed to strengthen long-term growth and reduce unemployment on a durable basis. In the euro area, with upside risks to price stability diminishing, scope for an easing of monetary policy emerged. Fiscal tightening over some years has created room for the tax cuts being implemented in most European countries. These will support demand and improve incentives for work and investment and thus supply-side conditions. Tax cuts in these countries need to be accompanied by firm control over public expenditure: population ageing will impose a large burden on public finances and will require the strengthening of pensions systems and further reductions in public debt in most countries. The introduction of euro notes and coins on 1 January 2002 will give a further impetus to economic integration, with potentially important benefits for both the euro area and the global economy.
Sustainable Development: integrating economic, environmental and social objectives
12. Sustainable development is an overarching goal of OECD governments and the OECD. The three dimensions of sustainable development -- enhancing economic growth, promoting human and social development, and protecting the environment -- are interdependent objectives requiring concerted international action by OECD, transition and developing countries, based on their common and differentiated responsibilities, to deliver essential public goods of a global nature. We recognise that OECD countries bear a special responsibility for leadership on sustainable development worldwide, historically and because of the weight they continue to have in the global economy and environment. We recognise the urgency of the challenge and the gap between policy design and implementation. We are committed to closing this gap and will work energetically with countries outside the OECDs membership to achieve our joint sustainable development goals.
13. We agree that real progress must be made, nationally and internationally, in order to succeed at the World Summit on Sustainable Development in Johannesburg in September 2002. We will ensure that sustainable development strategies are put in place in all our countries by the time of the World Summit. OECDs Roundtable on Sustainable Development should strengthen its role as a forum for international dialogue among stakeholders. We endorse OECDs Environmental Strategy for the First Decade of the 21st Century (1), and look to OECD to support and monitor its implementation. We welcome IEA Ministers Communiqué (2) on the place of energy in a sustainable future.
14. OECDs report Policies to Enhance Sustainable Development outlines a policy framework for better integrating economic, environmental and social objectives, and decoupling economic growth from a range of environmental pressures. The report emphasises the need for sound analysis based on strong science that considers the full range of policy instruments and associated costs and benefits. We endorse the policy recommendations derived from it:
15. OECD will continue to assist governments by:
OECD will report progress to us in 2002, in particular on the use of sustainable development indicators, with a view to contributing to the forthcoming Johannesburg Summit.
The Social Dimension of Sustainable Development
16. Deepened social cohesion is a central objective for sustainable development. We are thus committed to fighting the causes of poverty and social exclusion: persistently low incomes, lack of opportunities to work and to learn, and lack of access to good quality public services affect particular groups and areas and prevent progress toward sustainable development. Extending opportunities for work and good careers, to all those who can work, is a key element in any strategy to combat poverty and social exclusion. OECD unemployment has declined significantly in recent years, but more needs to be done to reduce long-term unemployment and benefit dependency within the context of an adequate social safety net. We welcome OECDs work on employment-oriented social policies to help tackle social inequalities, facilitate adjustment to rapid economic restructuring, and improve growth prospects. The recent UK/OECD Ministerial Conference Opportunity for All (3), in London on 9-10 October 2000, demonstrated how concerted action across different parts of government can successfully tackle deprivation.
17. The consequences of population ageing remain a major concern for OECD economies. OECDs review of retirement income systems shows that countries are putting in place reforms, but more needs to be done to strengthen them and make "active ageing" a reality. Further reforms are needed to encourage continued labour force participation of older workers and to achieve a better balance, taking account of national context, among various forms of pensions, to support the fundamental goal of ensuring adequate incomes in old age. We welcome OECDs work on active ageing, including its contribution to the Turin Charter (4). We must urgently address the barriers against hiring, retraining and retention of older workers, and we look forward to OECDs work on this topic.
18. Health is vital to sustainable development. Health systems are an important element in social cohesion and represent the largest service sector in many OECD countries. Their efficiency, effectiveness and equity consequences, their impact on public finances, and their ability to meet the challenges of medical advances, ageing populations and rising expectations require creative policy approaches. OECDs Health Project will provide policy guidance on these matters, and we look forward to the Ottawa Conference in November 2001 on improving the performance of health systems.
19. Migration is an increasingly pressing issue, for immigrant and emigrant countries, their governments and the general public. It raises a host of social, economic, development and foreign policy challenges and opportunities. OECD is a key reference point for the monitoring of migration trends and policies. We look to OECD to deepen and extend its analysis of the economic and social impacts of migration in both host and origin countries, including the international mobility of workers at different skill levels.
Growth, Technology and Human Capital
20. At their May 1999 meeting, Ministers asked OECD to analyse the causes underlying differences in growth performance in OECD countries and identify factors, institutions and policies that could enhance longer-term growth prospects. We welcome the report The New Economy: Beyond the Hype and endorse its main conclusions. New technology, in particular ICT, is only one factor behind divergences in growth patterns over the past decade. Other factors include the use and quality of labour and greater efficiency in the combination of labour and capital. Seizing new growth opportunities requires a set of mutually reinforcing policies:
21. The work of the Growth Project is central to our concerns about improving growth performance. OECD will continue its analysis, to enhance understanding of the roles of ICT, human and social capital, and the factors that promote a successful, competitive business environment, including at local and regional levels, and will strengthen its benchmarking and peer review of structural reform. OECD will also deepen its work on the relationship between growth and sustainable development. OECD will report to us in 2003.
22. Good progress has been made in fulfilling the 1998 OECD Ministerial Declarations on Privacy, Authentication and Consumer Protection in relation to electronic commerce. Work will continue in these areas to deepen trust in e-commerce. An efficient, effective and transparent fiscal framework for e-commerce is also essential: implementation of the Ottawa Taxation Framework Conditions is advancing (6), and will be the subject of a global conference, Tax Administration in an Electronic World, to be held in Montreal in June 2001.
23. A "digital divide" has arisen within and among OECD Member countries as well as between the developed and the developing world, and will widen if countries do not or cannot respond adequately to the new technological opportunities. OECD work shows pro-competitive policies and appropriate regulatory structures are essential elements for bridging this divide. We welcome the results of the Dubai Conference on these issues held in January 2001. We encourage OECD to continue to build co-operation with transition and developing countries and with other international bodies, including through its important contribution to the G8 DOT Force initiative to implement the Okinawa Charter. We look forward to the OECD Global Forum on the digital economy in 2002.
24. Economic and social disparities between regions are increasing and prospects for prosperity are uneven. OECDs Territorial Reviews (7) will make an important contribution to the regional and local dimensions of our policies.
25. We welcome the success of the two conferences held in November 2000: Gender Mainstreaming: Competitiveness and Growth and Women Entrepreneurs in SMEs. We look to OECD to further integrate gender analysis into its work, and take steps to improve gender balance within the Organisation.
26. Strengthening effective and coherent public governance remains a priority on the policy agenda. The effective performance of democratic institutions, including legislatures, and the fight against corruption, are central elements of good governance. Enhanced openness, transparency, and accountability must become guiding principles for governments within OECDs membership and beyond. OECD should continue to make a vital contribution through its dialogue on public governance with Non Members. We welcome the conclusions of the Third Global Forum on E-Government held in Naples in March 2001 and ask OECD to explore further the challenges and opportunities of e-government.
27. There is increasing public debate about the comparative benefits and costs of regulation and deregulation in Member countries. OECDs continuing analysis of regulatory reform shows that carefully designed policies enhance regulatory quality, strengthen consumer choice and reduce prices; the reviews of regulatory reform in Member countries (8) provide substantial multidisciplinary guidance on regulatory management. We welcome OECDs Recommendation on Structural Separation of Regulated Industries which, while recognising industry and country differences, provides guidance on competition-enhancing reform of public utilities. We support OECDs work to develop principles and best practices for the regulation of private pensions.
28. Fighting corruption remains a high priority. Further progress in the ratification of the Bribery Convention has been made: 32 countries have deposited instruments but implementing legislation is lacking or deficient in some. Monitoring implementation of the Convention and the related Recommendations, including the effective elimination of tax deductibility for bribes, must be rigorously pursued and reinforced. OECD will move ahead on related issues: bribery acts in relation with foreign political parties; advantages promised or given to any person in anticipation of that person becoming a foreign public official; bribery of foreign public officials as a predicate offence for money laundering legislation; and the role of foreign subsidiaries and of off-shore centres in bribery transactions. We encourage efforts to engage a broad range of countries outside OECD in the fight against corruption, including regional initiatives, and support accession to the Convention by qualified states.
29. We note the work undertaken on harmful tax practices and look forward to the conclusions of the OECD project.
The corporate world: governance and responsibility
30. We welcome the work of OECD in co-operation with the World Bank and in particular the successful corporate governance roundtables that have been held during the past year in Asia, Latin America, Russia, and Eurasia. These roundtables are playing an important role in strengthening corporate governance worldwide and will assist OECD in preparation of the first assessment of the OECD Corporate Governance Principles in 2005. We look forward to analytical work and the exchange of information among Member countries on their corporate governance experiences in the preparation for that assessment. We also welcome OECDs Report on the Misuse of Corporate Vehicles (9) for Illicit Purposes, which will contribute to efforts to combat corruption and money laundering.
31. Private initiatives for corporate responsibility are also increasing: we invite OECD to build on this positive development in support of effective implementation of the OECD Guidelines for Multinational Enterprises. We reaffirm our commitment to the Guidelines and the need for all stakeholders to pursue the ongoing constructive dialogue that underpinned the review of the Guidelines in 2000. We support further agreed analytical work in the field of corporate responsibility and expect the forthcoming Annual Meeting of National Contact Points to enhance further the implementation of the Guidelines.
32. International investment is an important engine for global sustainable growth and the integration of Non Members into the world economy. The OECD Global Forum on Investment in November 2001 and the UN High Level Conference on Financing for Development, to be held in Mexico in 2002, will benefit from OECDs analytical work on foreign direct investment. We welcome the intention of Estonia, Israel, Latvia, Lithuania, Singapore, Slovenia and Venezuela to adhere to the Declaration on International Investment and Multinational Enterprises, and encourage other countries to do the same.
The Multilateral Trading System
33. We are committed to the launch of a new global round of multilateral trade negotiations at the WTO Ministerial Conference in Doha in November. We will engage constructively with all countries within the WTO to this end. Progress is being made in the "built-in agenda" negotiations on services and agriculture. We recognise that efforts to strengthen the multilateral trading system require both broad-based and balanced negotiations and the strengthening of the WTO as a rules-based institution. The broader framework of a new round will contribute to moving forward the "built-in agenda" and will offer the prospect of a wider distribution of the benefits sought by all participants. We renew our commitment to the strengthening of the multilateral trading system and our rejection of protectionist pressures.
34. All WTO Members will have to find their concerns and interests reflected in the final result, and negotiations will need to be conducted in a transparent manner. We must aim for trade liberalisation and strengthened WTO rules responding to the needs of the 21st century and our shared goal of sustainable development. The links between trade liberalisation and environment, as well as the sustainable use of natural resources, will need to be carefully clarified. All WTO Members will need to be creative and flexible in addressing areas and modalities of negotiation. Trade and labour as well as other social development issues raise concerns that must be addressed through dialogue that takes into account the expertise of all relevant international institutions, including the WTO.
35. A new round is essential for developing countries given the need to stimulate their economic growth, alleviate poverty and promote their integration into the multilateral trading system. We recognise that they have a particular interest in a number of areas, including agriculture and textiles and clothing. Some progress has been made to date on Uruguay Round implementation issues and we urge all WTO members to seek ways to address developing country requests and concerns, and to build confidence as preparations for Doha proceed. We welcome recent initiatives by OECD Members to liberalise preferential market access for the least developed countries, and the moves to incorporate trade into poverty reduction strategy programmes. Enhanced capacity building and technical assistance are also vital, if developing countries are to benefit from more open markets. We support the recently revised Integrated Framework Initiative.
36. Taking into account the strong interest of civil society regarding globalisation and the process of trade and investment liberalisation, we are committed to transparency and to increased and sustained communication with the public. We are convinced that progressive multilateral liberalisation and strengthening of the rules, in the context of an effective and predictable governance framework and greater coherence among international organisations, and when combined with mutually supportive environmental and social policies, are fundamental for sustainable development and a major driving force for innovation, growth and enhanced human welfare worldwide. WTO-consistent preferential trade agreements can complement but cannot substitute for coherent multilateral rules and progressive multilateral liberalisation.
37. We consider that OECD has a major role to play in continuing efforts to strengthen the multilateral trading system, and build understanding of what is at stake for countries at all levels of development. OECD will continue to build bridges, through its analytical work and its non-negotiating policy dialogue, among its membership and beyond. We welcome ongoing efforts in OECD to promote greater coherence between trade and development co-operation policies. We look forward to a progress report in 2002.
38. Export credit policy can contribute positively to sustainable development and should be coherent with its objectives. We welcome the substantial progress achieved in the Export Credit Working Party towards agreement on a Recommendation on Common Approaches on Environment and Export Credits and encourage the Working Party to finalise this work as soon as possible and before the end of 2001, as we requested last year. We also welcome the Working Party's Action Statement on Bribery and Export Credits and its work on unproductive expenditure in Heavily Indebted Poor Countries, together with the readiness of a number of Members to voluntarily extend the latter to other low-income countries. We urge the Working Party to finalise the Statement of Principles on Unproductive Expenditure and Export Credits and to continue to promote enhanced transparency in this field. We strongly regret that it has not been possible for all Participants to the Export Credit Arrangement to reach full consensus on the draft Export Credit Understanding on Agriculture, and call for urgent conclusion of this Understanding. We encourage further work on the financing provisions of the Export Credit Arrangement in the light of, inter alia, recent developments in the WTO. We ask OECD to continue to work on the export credit provisions of the 1994 Understanding on Shipbuilding with a view to implementing these before the end of 2001.
39. We ask OECD to redouble its efforts to explore solutions to bring about normal competitive conditions in shipbuilding, and encourage shipbuilding countries outside the OECD to participate in this work.
Agriculture and Fisheries
40. Agriculture and fisheries are key sectors for sustainable development and the multilateral trading system.
41. Food safety continues to be a high priority for consumers and governments. We agree that a science-based and rules-based approach must remain the basis for policy at both the national and international levels. In cases where the scientific evidence is insufficient and precaution is applied to address risks to food safety, measures taken should be subject to review and on-going risk analysis, consistent with the WTO Agreement on the Application of Sanitary and Phytosanitary Measures. In co-operation with other international organisations, and in light of its recognised areas of expertise, OECDs programme of work will contribute to analysis and policy dialogue on wider issues of food safety.
Life Sciences and Biotechnology
42. The life sciences and biotechnology are increasingly relevant for the improvement of the quality of life, human health and the quality of the environment. These advances also pose important ethical, social, economic and safety challenges for individuals and societies. We stress the importance of biological diversity -- its study, preservation and sustainable use, and the equitable sharing of benefits from the use of genetic resources -- and of making biodiversity data available to all. We welcome OECDs contributions in these areas, notably on Biological Resource Centers, and the establishment of the Global Biodiversity Information Facility (GBIF) endorsed by the OECD Science Ministers' meeting in June 1999. We also look forward to progress in OECDs work on issues arising from the mapping of the human genome.
43. We welcome the forthcoming conferences which will deepen international understanding of biotechnology issues: the joint UK/OECD Conference New Biotechnology, Food and Crops: Science, Safety and Society to be held in Bangkok in July 2001, and The Environmental Impacts of Living Modified Organisms to be hosted by the United States in November.
44. The International Development Goals (12) are at the heart of development policy and provide a key common reference point. OECDs new Guidelines on Poverty Reduction and its guidance on Sustainable Development Strategies, Conflict Prevention and Trade Capacity Development (13) are important contributions to the achievement of these goals. We are committed to providing effective ODA consistent with our support for the International Development Goals. We welcome the growing recognition of the importance of closer harmonisation of donor procedures and practices.
45. We welcome the Recommendation on Untying Aid to the Least Developed Countries which was adopted to contribute to aid effectiveness, increase value for money in aid procurement, improve developing country ownership of the development process, and promote more equitable effort-sharing among aid donors. This agreement is especially welcome at the time of the Third United Nations Conference on the Least Developed Countries currently taking place in Brussels.
46. Development issues arise in a very broad range of governments policies and actions, and therefore also within the work of the Organisation. The Illustrative Checklist on Policy Coherence for Poverty Reduction is a useful tool to help OECD governments in this area. We also encourage the Organisation to deepen its work on policy coherence and development and look forward to proposals in this regard.
47. We congratulate Donald Johnston on his reappointment as Secretary-General. We welcome the progress he has made in modernising the Organisation, and ask him to take forward the reform agenda -- on financial and management reform, on further prioritisation of the Organisations work, and on enhancing the Organisations capacity to address the increasingly complex and interconnected issues of globalisation -- to equip OECD to respond to the policy challenges of the next decade and beyond. We recognise the major challenge of renovating the Organisations Headquarters in an efficient and cost-effective manner, and we are fully committed to the success of this project.
Source: OECD Press Release. Copyright OECD 2001. Reproduced by permission of the Organisation for Economic Co-operationand Development.
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