Oecd Annual Report

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ISBN 92-64-19717-6 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT 01 2002 06 1 P OECD ANNUAL REPORT

THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD) ANNUAL REPORT is prepared by the Public Affairs Division, Public Affairs and Communications Directorate. It is published under the responsibility of the Secretary-General of the OECD. Pictures: all pictures are © OECD except: p. 14 top right: Greg Teckless/Health Canada/OECD; bottom left: John Harrington Photography/HKETO/OECD; p. 44 Dubai Press Club/OECD; p. 46 UK Embassy Bangkok. Publications: Book titles in italics are available for sale via the OECD online bookshop: www.oecd.org/bookshop. O E C D A N N U A L R E P O R T

PREFACE 5 UNTYING AID 49 ABOUT THE OECD 7 DEVELOPMENT CENTRE 51 THE CHANGING FACE OF THE OECD 9 SAHEL AND WEST AFRICA CLUB 52 FINANCIAL REFORM 9 CO-OPERATIVE RELATIONS WITH NON-MEMBERS 53 NEW ANNEX AT LA DÉFENSE 10 CHINA 54 OECD IN 2001: SELECTED EVENTS 11 THE BALTIC REGION 55 ECONOMIC GROWTH AND STABILITY 15 STATISTICS 57 THE OECD GROWTH PROJECT 16 STATISTICS – NEW PUBLICATIONS 58 OECD ECONOMIC SURVEYS 17 PUBLIC AFFAIRS AND COMMUNICATIONS 60 BRAZIL 18 FORUM 2001 61 PRIVATE PENSIONS 19 NEW WEBSITE 62 TERRITORIAL REVIEWS 21 POLICY BRIEFS 63 EMPLOYMENT AND SOCIAL COHESION 22 BUSINESS AND INDUSTRY ADVISORY COMMITTEE TO THE OECD (BIAC) 64 HUMAN CAPITAL 23 TRADE UNION ADVISORY COMMITTEE THE OECD HEALTH PROJECT 24 TO THE OECD (TUAC) 64 TRADE AND INTERNATIONAL INVESTMENT 27 EXECUTIVE DIRECTORATE 68 TRADE IN SERVICES 28 HOW THE OECD WORKS 70 AGRICULTURAL TRADE 30 THE INTERNATIONAL FIGHT AGAINST MONEY REGIONAL TRADE AGREEMENTS 31 LAUNDERING AND TERRORIST FINANCING: THE FATF 75 SUSTAINABLE DEVELOPMENT 32 NUCLEAR ENERGY AGENCY 76 SUSTAINABLE DEVELOPMENT INDICATORS 33 INTERNATIONAL ENERGY AGENCY 78 THE OECD ENVIRONMENTAL STRATEGY 34 EUROPEAN CONFERENCE OF MINISTERS SUSTAINABLE DEVELOPMENT ROUNDTABLE 36 OF TRANSPORT 80

GOVERNANCE 38 OECD ORGANISATION CHART 82 REGULATORY REFORM 39 OECD DIRECTORY 84 HARMFUL TAX PRACTICES 41 OECD COUNCIL MEETING AT MINISTERIAL LEVEL COMMUNIQUÉ: TOWARDS A SUSTAINABLE FUTURE 85 BEST USE OF NEW TECHNOLOGIES 44 THE OECD SECRETARIAT 94 E-GOVERNMENT 45 AMBASSADORS, PERMANENT REPRESENTATIVES BIOTECHNOLOGY 46 TO THE OECD 95 DEVELOPMENT 48 OECD MEMBER COUNTRIES 97 O E C D A N N U A L R E P O R T

PREFACE

Donald J. Johnston OECD Secretary-General

We may look back on the year 2001 as growth of electronic commerce have a turning point in modern economic been the key elements of the expan- and political history. The hype of the sion of e-business and the digital “new economy” came back down to economy. The use of ICT can boost earth. Major international meetings productivity right across the spec- were marred by violent anti- trum of industries. However, one of globalisation protests. The tragic our key findings is that these terrorist attacks of 11 September improvements depend on com- inflicted a severe shock to the world. bining new uses of ICT with organi- But then, a broad-based alliance was sational change, effective utilisation formed to fight terrorism and its root of human capital, and strong causes. And the world’s major trading policies for innovation and entre- nations put aside differences to launch preneurship. a new round of trade negotiations. One challenge of the “new economy” Donald J. Johnston In this new context, the OECD was is how to make sure that all countries OECD Secretary-General called upon once again to help tackle – developed and less developed the economic, social and governance alike – use these new technologies challenges of a globalised world and benefit from them. ICT does making; and reaping the full benefits economy. This Annual Report docu- have the potential to contribute to of international trade and investments our activities in 2001, a few of the challenge of development for the ment. which I would like to highlight here. 1.2 billion people who survive on less than US$1 per day and the While many of the required policy New economy – a reality further 1.6 billion on less than US$2. options are well known, their actual check The OECD is exploring ways to implementation in OECD member ensure that ICT can be used to help countries has fallen short. The chal- The long expansion in many achieve the development objectives lenge before us now is to develop a countries during the 1990s generated for all countries that we have been real constituency for our shared a lot of hype about the “new pursuing for over half a century, and future and close the gap between economy”. The present economic not lead to a “digital divide”. lofty rhetoric and actions. slowdown has served as a timely reality check when it comes to some Sustainable development OECD countries bear a special of the more exuberant behaviour and responsibility for leadership on sus- policy statements that were made. The OECD’s report on sustainable tainable development worldwide, development, submitted to minis- historically and because of the If we look beyond the hype to the ters in 2001, proposes a comprehen- weight they have in the global fundamentals – as the OECD did in sive strategy for achieving sustain- economy and environment. That is its two-year study on the sources of able development, which combines why ministers of all 30 member coun- economic growth presented to min- economic, social and environmental tries pledged in May 2001 to have isters in May 2001 – the evidence development. The report lays out sustainable development strategies does suggest that something new is four broad areas for action: making in place by the time of the World taking place. Investments in infor- markets work for sustainable devel- Summit on Sustainable Develop- mation and communications techno- opment; harnessing science and ment in Johannesburg in September logies (ICT), connectivity and the technology; strengthening decision- 2002.

5 O E C D A N N U A L R E P O R T

The Environmental Strategy adopted and should provide a major driving The tragic terrorist attacks of 11 Sep- by OECD environment ministers in force for development based on a tember renewed our conviction in May committed them to specific partnership between the developing the importance of international co- national actions over the next and developed world. But open operation among governments and decade to tackle problems such as trade is not enough. We need to be peoples. In this regard, the OECD is climate change and to ensure that sure that development efforts are contributing to the fight against continued economic growth is not efficient and effective. OECD mem- terrorism both in terms of managing accompanied by continued damage bers reached a landmark agreement the aftermath of the 11 September to the environment. in 2001 on untying aid to the least events and in reducing the risk of developed countries that will help future attacks. We must also not Human capital is another key increase value for money and forget that desperate poverty and element in achieving sustainable improve developing country owner- lack of opportunities are a breeding development in an era of knowledge- ship of the development process. ground for social instability and can based economies and societies. This OECD countries also reaffirmed sup- lead to support for terrorist activities. means literacy in the broad sense – port for the international develop- problem-solving, team-building and ment goals (Millennium Develop- Placing the world on a path of sus- creativity. The results of the OECD’s ment Goals), setting clear targets for tainable development – economi- “PISA study” provided a snapshot of progress in areas such as education, cally, socially and environmentally – comparative educational achieve- clean water and health care. is probably one of our best guaran- ments in OECD countries and how tees of safe and secure societies. But they measure up to the needs of a I like to think of the OECD as a group it will not happen by itself. Franklin knowledge economy. Good health is of democratic reformers with a global D. Roosevelt once said, “We must lay also important, but funding health responsibility. But in this era of hold of the fact that economic laws care faces new challenges in coming globalisation, with a vast array of are not made by nature. They are years as the population in OECD stakeholders and interest groups, the made by human beings” and this is countries ages, placing new demands OECD cannot and does not work equally true of policies for sustain- on our systems. That is why we have alone. We share our expertise and able development, and safe and launched an OECD health project to exchange views with more than 70 secure societies. The OECD is com- look at how governments can meet states from all corners of the globe – a mitted to working towards these these new demands. A major confer- highlight of 2001 was when trade min- objectives. ence in Ottawa in November 2001 isters from several non-member coun- tackled the crucial issue of how we tries joined the OECD ministerial measure the results. meeting in May. And business, labour, non-governmental organisations and Building partnerships other civil society groups now partici- for global development pate in a wide range of OECD activities, most notably the OECD Forum. Open trade and investment are a These groups make an important con- proven pathway out of poverty and tribution to the substantive work of the despair, and the new global round of OECD and help strengthen public sup- multilateral trade negotiations can port for policy reform.

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ABOUT THE OECD

www.oecd.org/about/

The Organisation for Economic Co- to enable governments to respond development, ensuring that eco- operation and Development (OECD) to, new developments and concerns. nomic and social development are groups 30 member countries in a These include misuse of the interna- not achieved at the expense of ram- unique forum to discuss, develop tional financial system by terrorists pant environmental degradation. and fine-tune economic and social and other criminals, the “new Other aims include creating jobs for policies. It helps member govern- economy”, electronic commerce, bio- everyone, social equity and achiev- ments identify good practice in technology and food safety and sus- ing clean and effective governance. managing their own economies, as tainable development. well as aiding members and non- The OECD provides a setting where members to draw up ground rules for The OECD’s work includes efforts to governments can compare policy the 21st century globalised economy. foster prosperity and fight poverty experiences, seek answers to com- through economic growth, financial mon problems, identify good prac- Perhaps best known for its regular stability, trade and investment, tech- tice and work to co-ordinate domes- reports on the economies of its mem- nology, innovation, entrepreneur- tic and international policies. It is a ber countries, the OECD is also at the ship and development co-operation. forum where peer pressure can act forefront of efforts to understand, and It is helping to foster sustainable as a powerful incentive to improve

First meeting of the OECD Ministerial Council, 17 November 1961.

7 O E C D A N N U A L R E P O R T

policy and implement “soft law” – OECD countries produce almost 60% take part in work on issues from trade non-binding instruments such as the of the world’s goods and services, but and environment to biotechnology OECD Guidelines for Multinational the organisation is by no means an and food safety. Enterprises – and can on occasion exclusive club. A vital aspect of its lead to formal agreements or treaties. work is to share its expertise and the The OECD was created in its present lessons it has learnt, good and bad, form in 1961, but its origins date back For 40 years, the organisation has with the public and with non- to 1947 when, as the Organisation for been one of the world’s largest and member countries. The OECD now European Economic Co-operation most reliable sources of comparable involves in its work some 70 non- (OEEC), it oversaw the launch of the statistical, economic and social data. member countries, notably Brazil, Marshall Plan for the reconstruction OECD databases span areas as China and Russia, as well as least of war-torn Europe. The core of origi- diverse as national accounts, eco- developed countries from Africa and nal members has expanded from nomic indicators, the labour force, elsewhere, and non-members are Europe and North America to include trade, employment, migration, invited to subscribe to OECD agree- Japan, Finland, Australia, New education, energy, health, industry, ments and treaties such as the anti- Zealand, Mexico, the Czech Repub- taxation, tourism and the environ- bribery convention. Business, labour lic, Hungary, Poland, Korea and the ment. and civil society representatives also Slovak Republic.

OECD in the world

OECD share of world GDP (PPP): 59% OECD share of world official development assistance: 95% OECD share of world trade: 76% OECD contribution to world CO2 emissions: 54.6% OECD share of world population: 18.5% OECD share of world energy production: 38.8% OECD GDP growth 2001: 0.7% OECD share of world energy consumption: 53.9%

8 O E C D A N N U A L R E P O R T

THE CHANGING FACE OF THE OECD

The OECD is responding to the in real terms, administrative costs the completion of the organisation’s changing needs of a rapidly-evolving reduced by up to 23% and staff first project on this theme and on the globalised economy by continuing numbers cut by 15%. There was a theme of the “new economy”. The reform of its internal organisation and return to budget stability in 2000. At OECD also created a new website working methods. In 2001 this the same time the organisation organised around the main themes included pioneering reform of the launched a major financial manage- of its work, from ageing and agricul- organisation’s accounting procedures ment reform programme and ture to taxation and transport (see box in line with new international stand- decided to create a pension reserve p. 62). This way of working meets the ards (see box below). The OECD was fund. needs of member governments keen to be the first to implement having to cope with a host of rapidly these standards as part of the organi- Other major developments in 2001 emerging new issues, whether the sation’s long-standing programme of included the decision to pursue work economic and social implications of reform. Between 1996 and 1999 the on key overarching themes such as events such as the 11 September ter- OECD budget was cut by around 18% sustainable development following rorist attacks in the United States or

FINANCIAL REFORM

The OECD is the first organisation in the world to pre- The IPSAS standards for international organisations took pare and publish its financial statements in accordance effect for annual financial statements covering periods with International Public Sector Accounting Standards beginning on or after 1 July 2001. But the OECD chose to (IPSAS), certified by independent auditors. The full set implement them early, starting with the year ended of statements, based on the accrual method, is available 31 December 2000, because it believes that these in a separate report from the OECD budget and finance standards are the best available anywhere for its type of service. The accounts are presented in euros and include activity. The certification by independent auditors statements of financial position, financial performance, PriceWaterhouseCoopers also contributes to good gov- changes in net assets/equity and cash flows. ernance and credibility with the international community.

The International Federation of Accountants (IFAC) The OECD budget is divided into two sections. Part I released the world’s first authoritative set of financial covers the bulk of OECD activities and accounts for 80% reporting standards for public sector entities in May 2000. of the total budget. It is funded by contributions from all These IPSAS standards are derived from the International 30 member countries, based essentially on the relative Accounting Standards (IAS) developed for the private size of their economies, and ranging from 0.1% to just sector, but adapted for use at all levels of government under 25% of the total. Part II covers specific programmes worldwide. This move to global convergence recognises with more limited participation and whose funding is that public and private sector accounting disclosure and agreed between the participating countries. governance share the same fundamental goals of accu- racy, transparency, timeliness and relevance. The OECD Budget and financial management reform continued in is in the public sector and must have the accounting 2001, including a decision to implement a biennial language and reporting most appropriate to its needs. budget process from January 2003. A review of the budget The IPSAS standards provide a common accounting cycle was carried out. The programme of work is now pre- language for countries each with different national sented on the basis of themes of activity and a priority- accounting standards. setting mechanism was implemented.

9 O E C D A N N U A L R E P O R T

growing concerns over biotechnology OECD has a co-operative relation- A highlight of the organisation’s co- and food safety. A key event for staff ship with some 70 countries and operation with civil society in 2001 in 2001 was the finalisation of plans non-members are increasingly was the second OECD Forum, which to relocate many of those working at invited to subscribe to OECD enabled the views of academics, the Paris headquarters site to allow agreements. In areas such as elimi- business, labour and civil society essential refurbishing and renova- nating harmful tax practices and participants on sustainable develop- tion of the main headquarters build- combating terrorist and other illicit ment and the new economy to feed ing (see box below). use of global financial systems, the into the discussions at the annual OECD is working with non-member ministerial meeting immediately The organisation has also trans- economies to find solutions accept- afterwards. formed its relationship with non- able to all. The Centre for Co- members, recognising that in a operation with Non-Members The guiding principles of all these globalised economy developments (CCNM), established in 1998, is the reforms are greater responsiveness in key areas from climate change to focal point for these relationships. to member country needs, ensuring information technology are truly It manages multi-country pro- efficiency and cost effectiveness and global and cannot be dealt with by grammes linked to core themes of a commitment on the part of the one group of countries. During 2001 OECD work such as trade and the secretariat to professional and mana- the OECD revamped its Sahel Club environment, as well as individual gerial excellence. Continued reform to reflect the fact that it now also country programmes with major efforts will seek to further improve encompasses work with countries non-member economies such as priority setting to make best use of from West Africa (see box p. 52). The Brazil, China and Russia. available resources.

NEW ANNEX AT LA DÉFENSE

The OECD has signed a lease on office space in the Tour Europe at La Défense in northwest Paris, which will allow more than 700 OECD staff to be transferred from the organisation’s La Muette headquarters site, once essential installation work has been completed.

This major move will empty some 20 000 m2 of office space and marks the launch of a multi-year programme to redevelop the office and conference facilities at the OECD headquarters. Renovation is required primarily for the main office building which contains asbestos, is poorly adapted to modern fire safety regulations and no longer corresponds to the OECD’s functional needs.

Overall planning for work at the headquarters site, including renovation of the main building and the A view of the Tour Europe. Chateau de La Muette, and construction of new permanent conference facilities, is already well advanced. Once Preparations for the move will take place in 2002 and the Council has approved details of the redevelopment then many OECD directorates will be transferred from programme and its budget, the next step in 2002 will be the main building to Tour Europe. Completion of reno- an international architectural and engineering design vation, and the final return of all staff from Tour Europe competition. to La Muette, is envisaged in 2008.

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OECD IN 2001: SELECTED EVENTS

John Martin, OECD Director for Education, Employment, Labour and Social Affairs, with Edelgard Bulmahn, German Minister for Education and Research, who chaired the ministerial session.

Ricardo Lagos Escobar, President of Chile, receives OECD Secretary-General Donald Johnston, at the Chilean Embassy in Paris.

(left to right) Anita Bay Bundegaard, Danish Minister for Meeting of the OECD Education Committee at Development Co-operation, Baroness Amos, Minister, Ministerial level, 2-4 April Spokesperson on International Development, House of Lords, UK, and Heidemarie Wieczorek-Zeul, German Visit by Chilean president, 19 April Minister for Economic Co-operation and Development. High-level meeting of the Development Assistance Committee, 25-26 April

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(left to right) Long Yongtu, Vice Minister, Chinese Chief Trade Negotiator, Seiichi Kondo, OECD Deputy Secretary- General, Donald Johnston, OECD Secretary-General, and Donald Evans, United States Secretary of Commerce, at the session with non-member countries during the OECD ministerial meeting. (left to right) Nino Chkobadze, Georgian Minister of Environment and Natural Resources Protection, Boris Yatskevich, Russian Minister of Natural Resources, and Wang Xinfang, Chinese Vice-Minister, State Environmen- tal Protection Agency, at the working lunch with non- members during the OECD ministerial meeting.

OECD Council at Ministerial level 16-17 May

Robert Priddle, IEA Executive Director, with Christian Meeting of the Environment Policy Committee at Pierret, Secretary of State for Industry, French Ministry Ministerial level, 16 May for Economy, Finance and Industry. International Energy Agency Governing Board at Ministerial level, 16 May

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Poul Nyrup Rasmussen, Danish Prime Minister, with OECD Secretary-General Donald Johnston, at the OECD Forum session on sustainable development during the OECD ministerial meeting.

The World Economy, A Millennial Perspective

This pioneering effort to quantify the economic performance of nations over the very long term provides a comprehensive view of the growth and levels of world population since the year 1000. In this period, world population rose 22-fold, per capita GDP 13-fold and world GDP nearly 300-fold. In the year 1000, the rich countries of today were poorer than Asia and Africa. The book identifies the forces which explain the success of the rich countries, and explores the obstacles which hindered advance in regions which lagged behind.

General view of the members of the OECD Forum panel: OECD Council at Ministerial level chaired by “The transition to sustainable development: Are we Denmark, 16-17 May making progress in decoupling economic growth from environmental degradation?” OECD Forum 2001 on Sustainable Development and the New Economy, 14-16 May

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Hugo Chavez-Frias, Venezuelan President, pays a visit to OECD Secretary-General Donald Johnston. (left to right), standing, Bernard Kouchner, French Minister of Health, John Hutton, UK Minister of State for Health, Edward J. Sondyk, spokesman for the US Secretary of Health and Human Services, Julio Frenk Mora, Mexican Minister of Health; seated, Allan Rock, Canadian Minister of Health, and OECD Secretary-General Donald Johnston, at the Ottawa health conference.

Visit by Venezuelan president, 9 October

Conference on Measuring and Improving Health Systems Performance in OECD Countries, hosted by the Canadian government in Ottawa, Clarie Lo, Commissioner for Narcotics of Hong Kong, 5-7 November China, Chairperson of the FATF, with Paul H. O’Neill, US Secretary of the Treasury. Financial Action Task Force on Money Laundering, Extraordinary plenary meeting on Financing of Terrorism, Washington DC, 29-30 October

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ECONOMIC GROWTH AND STABILITY

www.oecd.org/eco [email protected]

The OECD conducts comprehensive ommendations from this analysis is working on a synthesis of the policy analysis and monitoring of economic included a call to governments to implications of ageing. Country- growth and stability, with the aim of sustain their commitment to an open related special studies are also contributing to better economic global trading system, free competi- occasionally carried out, such as one policy-making. This process tion and strict limits on state inter- in 2001 on the economic aspects of includes broad-based evaluation of vention in the case of market failure, the integration of the new German macroeconomic policies and trends, as well as pursuing efforts to increase Länder. Previous OECD-wide analyti- as well as key structural polices, in the effectiveness of anti-poverty cal work on environmental sustain- OECD member countries and policies. The OECD also started to ability is being used as the basis of selected non-member economies. look at area-wide aspects of trans- discussion for indicators to be used Structural analysis across several missions of economic fluctuations, in peer reviews of country policies countries is also conducted on key including possible new international (see box p. 33). The work on the growth topics. The results of this work are linkages, a higher degree of synchro- project (see box p. 16) is also being presented in several publication nisation, as well as potentially higher followed up, notably the micro- series: OECD Economic Surveys cover business costs that may arise in an economic evidence of firm dynamics individual countries and the euro environment of heightened and productivity, the changing nature area, the six-monthly Economic Out- insecurity. of the business cycle, and the role look reviews all OECD members and played by barriers to trade and selected non-members, OECD Eco- Structural issues investment. nomic Studies and economics department working papers cover general Three structural issues featured Role of financial markets issues and there are occasional prominently in reviews of individual www.oecd.org/finance special publications. countries in 2001: taxation, environ- [email protected] mentally sustainable growth and effi- Calculating risks for the cient public expenditure. The OECD Financial markets have a key role to economic outlook also published a synthesis of coun- play in economic growth and stabil- try assessments on tax reforms and ity. The OECD covers the whole range In 2001, the OECD analysed and on environmental sustainability and of financial issues related to banking, evaluated risks for the short-term growth outlook, notably the sharp weakening of the global economy exacerbated in the wake of the 11 September terrorist attacks in the United States. OECD experts studied the synchronised nature of the current cycle and uncertainties over prospects for business and consumer confidence as well as the volatility in equity markets and the sustainability of private savings and investment balances. They also looked at the potentially destabilising over- At a meeting in Paris with Japanese Prime Minister Junichiro Koizumi (left), borrowing of the private sector OECD Secretary-General Donald J. Johnston (right) expressed support for a observed in selected large and small Japanese economic reform programme announced in June 2001. overheating economies. Policy rec- 15 O E C D A N N U A L R E P O R T

THE OECD GROWTH PROJECT

www.oecd.org/growth [email protected]

The OECD Growth Project was launched at the request to see beyond these short-term developments and to of OECD ministers in 1999 to study the causes of growth identify appropriate policy lessons to boost economic disparities between countries and identify factors and growth. policies that could strengthen long-term growth performance. At that time, growth was high virtually everywhere The report, based on a very large body of analytical work, and in some countries was seen to be clearly driven by concludes that: information and communication technology (ICT). But when the final report was delivered to ministers in 2001 • Growth patterns diverge across OECD countries, the international economy was in a marked slowdown, reflecting differences in the way they use the labour driven in large part by weakening in the ICT sector. The pool, the dynamism of capital formation and the report entitled The New Economy: Beyond the Hype, attempts effectiveness with which they combine capital and labour.

• Notwithstanding the cyclical slowdown, ICT investment and use are important drivers of growth, which can be facilitated by healthy competition in telecommunications and technology, by improving skills and by a sound regulatory framework for ICT use.

• Stronger innovation and technology diffusion can be achieved by giving greater priority to fundamental research, improving the effectiveness of public research and development funding, and promoting the flow of knowledge between science and industry.

• Human capital is a fundamental engine of growth and education and training policies are crucial. Reaping the full benefit of investment in human capital calls for labour market institutions and regulations to adapt to the changing nature of work. In 2000 commentators everywhere were hailing the boom in some western economies as the dawn of a new • Entrepreneurship has always been an important economy. In 2001, with a slowdown biting in the US determinant of growth but becomes even more crucial economy, dot.coms folding and information and at times of rapid technological change. Open, com- communications technology firms feeling the pinch petitive financial markets that facilitate access to globally, the headline writers swung the other way, capital for innovators and the avoidance of burden- saying that it was all a myth. This book looks past the some administrative regulations help to stimulate elation and gloom to help policy-makers think and act entrepreneurship. with the facts. It explores the causes of the discrepancy in economic performance in the OECD area and shows But such policies will only be fully effective when that, while technology has had a pervasive and combined with sound economic fundamentals, including profound effect on economies and societies, it was not healthy public finances, low and stable inflation, effective the only reason for fast growth. financial systems, well-functioning labour and product markets, and open trade and investment policies.

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securities and institutional investors community through special meetings Committee is contributing substan- (insurance companies, pension funds and the participation of private rep- tially to the OECD project on health, and investment companies) and resentatives. The core analytical work through its private health insurance exercises surveillance over develop- on financial markets focused on the component. ments, reform measures and changes theory and practice of consolidated in structural and regulatory condi- financial supervision, trends and pros- The OECD also developed a world tions in financial markets and insti- pects in electronic finance, and trends taxonomy of pensions systems in tutions. Its key aims are to promote and recent structural changes in OECD 2001 and analysed the governance, liberalisation in financial services public debt markets. Policy analysis supervision and investment regula- and the development of interna- in the insurance sector focused on tion of pension funds. It discussed tional financial best practices investment regulation of the two main new guidelines for governance of (including statistics). The OECD also groups of institutional investors in the pension funds. It discussed in depth works to foster the integration of non- OECD area (insurance companies and the International Accounting Stand- member countries into the global pension funds), e-insurance, policy ards Board (IASB) draft standards for financial system. holders’ protection funds and issues insurance accounting. The Working related to risk management. Major Party on Government Debt Manage- Monitoring of financial markets was achievements included an agreement ment dealt with risk management particularly active in 2001, notably on new obligations for the insurance practices, investor relations and elec- with special meetings of the Commit- items of the OECD Code on trade in tronic trading systems. Work on tee on Financial Markets and the invisibles, endorsement at a world- financial statistics was expanded to Insurance Committee to discuss the wide level of the OECD 15 principles cover international direct invest- impact of the events of 11 Septem- for the regulation of private pensions ment, funded pension schemes and ber on financial and insurance (see box p. 19) and an agreement on a privatisation. Co-operation with markets. Activities also included in- draft decision on exchange of informa- international organisations was depth discussions with the financial tion in reinsurance. The Insurance enlarged with concrete joint projects

OECD ECONOMIC SURVEYS

www.oecd.org/macroeconomics/about/Country_Surveys/Members [email protected]

Member countries regularly review each other’s economic countries – usually 10 or so – have been covered under a situation and policies as part of the OECD’s multilateral particular topic, it is possible to synthesise their experience surveillance. “Peer pressure” is a key ingredient of the pro- and draw general lessons for future policy. cess, with country representatives analysing and question- ing the economic policies of the country being “examined” The special topics evolve over time. The first set covered and indicating where it might do better in the light of their ageing, taxation and environmentally sustainable growth, own and other international experience. The Economic and for which synthesis reports are now available. Most recently, Development Review Committee (EDRC) reviews each public expenditure has been added, and frameworks for OECD country every 12 to 18 months and the final report is migration and for product market competition and economic agreed by all 30 members. performance are being developed. Work is also underway on indicators for sustainable development (see box p. 33). The surveys cover both macroeconomic and structural issues, such as how labour, product and financial markets operate as The OECD carries out occasional reviews of non-member well as the role and functions of the public sector. Each survey economies in the context of co-operation programmes. The usually includes a special, in-depth structural topic. In order first Economic Survey of Brazil was published in 2001 (see box to get the greatest synergy from this work, countries are asked p. 18) and the fourth Economic Survey of Russia is being pub- to choose the special topic from a limited list of three or four lished in 2002. A major OECD study, China in the World where the OECD has already presented an analytical frame- Economy: the Domestic Policy Challenges was published in 2002, work based on cross-country evidence. Once enough including a Chinese-language version.

17 O E C D A N N U A L R E P O R T

such as a new foreign direct invest- Financial publications in 2001 electronics to business services. The ment (FDI) survey with the Interna- included the flagship thrice-yearly OECD helps governments formulate tional Monetary Fund (IMF), work on publication Financial Market Trends and policies to foster the development privatisation statistics with the World statistical yearbooks – for instance, of industries and enterprises, Bank and on private pension statis- on institutional investors, inter- whether large or small firms and at tics with Eurostat. The insurance national direct investment, bank local, national and international statistics database was expanded to profitability, or insurance statistics. levels. cover statistics on private health There were also two issues of a new insurance, which should complement series on private pensions, the third Entrepreneurship is particularly the organisation’s health database. in a series on insurance policy issues important in times of innovative (Insurance Regulation, Liberalisa- change (see box p. 16). In recent years, Outreach activities on financial tion, and Financial Convergence) and new firms have contributed to pro- markets were particularly intensive a study on insurance regulation in ductivity growth in emerging indus- and included meetings on a broad Latin America and Asia. Last but not tries and to innovation in areas such range of topics such as capital least, a 2 500-page insurance and pri- as information and communications markets reform, housing finance, vate pensions compendium for technology (ICT) and biotechnology. government securities markets, emerging economies was circulated A wide range of factors that may institutional investors, insurance to world insurance and pensions limit entrepreneurship can be regulation and supervision, private supervisors. addressed by government policy, pension reform and financial statis- such as regulations and fiscal pro- tics. The regions and countries cov- Industry and growth visions that inhibit the develop- ered included Asia, Latin America, www.oecd.org/enterprise ment of high-risk capital markets. In transition economies in Europe and [email protected] some countries, bankruptcy and the Baltic States (see chapter on relations insolvency provisions are overly with non-members, p. 53). There were Work on industry examines how eco- stringent and eliminate the possi- also special meetings in China and nomic developments affect parti- bility for entrepreneurs to have a Brazil. cular sectors, ranging from steel to second chance.

BRAZIL

www.oecd.org/ccnm/brazil [email protected]

The first OECD Economic Survey of non- ing and a new fiscal responsibility law affecting all levels of member Brazil was published in June 2001. government. It provided a comprehensive review of the Brazilian economy and the key challenges The core issue for Brazil is whether it has indeed crossed a to stabilisation and sustainable growth. threshold to sustained growth. The Economic Survey’s answer The survey also identified possible areas is a cautious and conditional “yes”. It is cautious because of for future co-operation between the OECD Brazil’s vulnerability to external shocks, deriving from its and Brazil (see chapter on relations with non- heavy reliance on inflows of foreign capital, high external debt members, p. 53). and large current account deficit. It is conditional because macroeconomic stability depends on further progress in struc- Since the early 1990s an ambitious structural reform pro- tural reform, including the fiscal relationship between the gramme, including privatisation, deregulation and phasing federal government and the states, the civil servants’ pen- out restrictions to foreign trade and investment, has trans- sion system and regulatory reform in the financial sector and formed the Brazilian economy. The introduction of a new in product markets. The Survey discusses the links between currency in 1995 enabled it to achieve a significant break growth and structural change in agriculture, energy and social with a legacy of high inflation. The macroeconomic policy policies and stresses that the reform process must be socially framework was further strengthened in 1999/2000 through acceptable, especially in a democratic society with such high measures such as a floating exchange rate, inflation target- levels of income inequality. 18 O E C D A N N U A L R E P O R T

PRIVATE PENSIONS

www.oecd.org/daf [email protected]

Population ageing has raised the profile of private tices in the area of private pension systems. The OECD pension arrangements all over the world. Given the has also begun to develop a template for World Bank important social and economic role of such pension plans, and International Monetary Fund (IMF) teams to assess appropriate governance and administration is crucial to implementation of the private pension principles. ensure that they deliver on their promises. Governments play a key role by ensuring that an appropriate regulatory and supervisory oversight of pension plans and pension funds is in place.

In April 2001, the International Network of Pensions Regu- lators and Supervisors (INPRS, www.inprs.org), grouping more than 140 regulatory and supervisory institutions from over 65 countries, endorsed the OECD Fifteen Prin- ciples for the Regulation of Private Occupational Pension Plans. The principles are designed to safeguard the interests of beneficiaries and ensure the efficient run- ning of such plans. They cover areas ranging from supervision to investment policy and set out the basic objectives that the regulatory and supervisory framework of any private pension system must contain. These objectives come under two broad categories:

• The protection of beneficiaries’ rights, including protection against discrimination in access to pension This book covers administrative issues related to private pension systems. It looks at these questions in plans, protection against inflation, protection of general as well as examining in detail experience and vested rights to pension contributions, and the practices in a number of countries in Europe, the Asia- portability of pension rights. Pacific region and America.

• The financial security of pension promises and of the pension funds themselves – which includes regulations to protect pension plans against fraud and mis- In addition to national regulatory and supervisory bodies, management by pension fund managers and admin- INPRS members include international organisations such istrators, as well as regulations to protect pension as the OECD (which services the Network), the World promises against the sponsor’s insolvency. Bank, the IMF, the European Commission, the Latin American Association of Pension Fund Supervisors (AIOS) The principles are oriented towards occupational pension and the International Social Security Association, as well plans but are applicable to any form of private pension as regional INPRS networks for the Asia/Pacific area and plan, whether defined benefit, defined contribution, or Central and Eastern Europe. some hybrid of the two. The principles need to be applied in a regulatory and supervisory framework that is trans- OECD ministers at their annual meeting in May 2001 parent, dynamic, consistent, and effectively enforced. expressed support for the OECD’s work to develop principles and best practices for the regulation of private The endorsement by the INPRS was the first time that an pensions. This work will be conducted in close co- international body of this sort has agreed on best prac- operation with the INPRS.

19 O E C D A N N U A L R E P O R T

The performance and policy implica- levels expected to fall as a result of tions of industrial globalisation, the events of 11 September and the trends in cross-border mergers and likelihood that this trend will con- acquisitions and other types of inter- tinue in the longer term. This raises nationalisation were studied in 2001, concern that government support as well as the challenges facing small may grow and trade disputes will pro- and medium-sized enterprises. liferate. OECD members and non- members between them accounting Steel for 95% of the world’s shipbuilding www.oecd.org/enterprise/steel industry met to discuss these issues [email protected] in December and to consider ways to bring about a more level playing Steel prices remained low in 2001, field in shipbuilding. Recognising with over-capacity concerns height- that the views of the shipbuilding ened by weakening demand and in- industry will be crucial in any agree- creasing trade tensions. Members of ment to bring about more competi- the OECD’s Steel Committee – tive market conditions, the OECD Globalisation is accelerating the representing 81% of world steel internationalisation of industry decided to hold a consultation with production and 86% of world steel and reshaping industrial struc- the industry in March 2002. The trade – agreed on the need to tackle ture, especially through cross- OECD also regularly produces statis- border mergers and acquisitions excess and inefficient steel capacity, tics covering 95% of world shipbuild- (M&As) and strategic alliances with a goal of promoting free and ing activities. They cover production which have become common paths open trade in steel. A high-level facilities and labour force in both to internationalising business meeting of government representa- member countries and economies operations, research and markets. tives in September agreed to con- such as Brazil, China, Chinese Taipei, An overwhelming share of foreign sult with steel producers in indi- Croatia and Romania. direct investment (FDI) is now in vidual countries on restructuring the form of M&As rather than efforts and a second meeting in Tourism investment in setting up new December reviewed the results and businesses. Strategic alliances are www.oecd.org/sti/tourism agreed that all governments must also a powerful mechanism for [email protected] encourage a market-based reduc- industrial restructuring on a global basis. This book presents tion of inefficient excess capacity in The 11 September terrorist attacks the latest trends and drivers of the near term. Governments also and their aftermath hit the tourist globalisation in major OECD agreed to look further at possible industry hard, compounding an eco- countries and their implications solutions for financing the closure of nomic downturn that was already for industrial performance and steel facilities, which had emerged underway. A meeting of travel and government policies. It analyses as a principal factor deterring many tourism policy experts the following regional as well as sectoral firms from full restructuring. Meet- month recommended that govern- trends, including telecommunica- ings in 2002 will look at ways to ments undertake detailed national tions, automobiles, steel, pharma- further reduce excess capacity assessments of the impact on their ceuticals, airlines and financial through market forces, identify best national tourist industries. But the services. It also assesses the practice in restructuring and look at experts said that long-term prospects increasing number of alliances for business-to-business (B2B) and ways to help meet the social and for the industry in OECD countries, business-to-consumer (B2C) environmental costs of closures. which between them account for electronic commerce, and about two-thirds of the global indus- globalisation of small and Shipbuilding try, remained positive. Work on tour- medium-sized enterprises (SMEs). www.oecd.org/enterprise/ ism more generally aims to enhance shipbuilding the capacity of OECD governments [email protected] to adjust their policies and actions to support sustainable growth in tour- The outlook for the shipbuilding in- ism, and to better integrate tourism dustry is not encouraging, with order policy issues with other policy areas.

20 O E C D A N N U A L R E P O R T

TERRITORIAL REVIEWS

www.oecd.org/territorial [email protected]

How and why does economic performance differ within a country? What are the prospects for a certain territory? Governments attach increasing importance to such questions and in response the OECD is reviewing how member countries implement territorial policy at national level through territorial policy reviews launched three years ago. These reviews contribute to the OECD’s task of multilateral evaluation of member country policies aimed at achieving sound economic expansion while enhancing social cohesion and promoting environmentally sustainable development.

Territorial reviews focus on policies to support economic and social development and to reduce territorial disparities by promoting local competitive advantages and unused potential for growth. They also look at ways to improve the efficiency of governance with special reference to fiscal federalism and to partnerships between Territorial development is the newest policy field in the different areas of government such as central and regional OECD. It responds to the two most important trends of the 1990s, globalisation and sustainability, by helping authorities, or between sub-national authorities. all the territories within countries – their cities and regions – to enhance and exploit their assets and The OECD has developed a framework and methodol- endowments. Working within an increasingly decen- ogy for the reviews, which set out first to identify the tralised governance, the public and private sectors as nature and scale of territorial challenges and assess terri- well as civil society are concerned to prepare territories torial policies and governance, then develop specific for the future. recommendations and seek to disseminate best practices through a peer review process exercised by the Territorial Development Policy Committee. (TDPC). Austria and Melbourne in Australia, and are due to be completed in 2002. The first cross-border regional review, Italy, Hungary and Korea, then Canada, Switzerland and of Oresund in Denmark/Sweden, is also due to be com- Mexico were the first countries to entrust the Committee pleted in 2002 and others are expected to follow. with an examination of their policies. Regional reviews have been completed for Teruel in Spain, Tzoumerka in The reviews have helped member countries and regions Greece, Comarca Centrales Valencianas in Spain, to better address territorial development issues, to en- Bergamo in Italy, Champagne-Ardennes in France, Sienna hance co-operation between the various administrative in Italy and Morevska-Trebova in the Czech Republic. levels involved and to improve the efficiency of their Reviews are underway for Helsinki in Finland, Vienna in development policies and institutional framework.

21 O E C D A N N U A L R E P O R T

EMPLOYMENT AND SOCIAL COHESION

www.oecd.org/els [email protected]

The 2001 ministerial communiqué Innovations in Labour Market Policies: the But emphasis on employment poli- (see p. 85) stressed that “social cohe- Australian Way. The 2002 edition of cies is not enough. They need to be sion is a central objective of sustain- the OECD Employment Outlook will better integrated with social policies able development”. This is why examine a key element of the to reduce social exclusion, as the OECD countries are increasingly employment strategy: the impact on latest edition of the Employment Out- committed to fighting social exclu- employment of the interaction look recommends. This encompasses sion by enhancing employment and between product market competi- reforms of taxes and social benefits ensuring adequate opportunities to tion and labour market policies. It to make work pay, efforts to upgrade learn. OECD education ministers also will also address whether temporary skills and effective ways of helping stressed when they met in April 2001 jobs, interim work and other “atypical” people keep their jobs. Countries are that “sustainable development and employment contracts – a major source increasingly aware that employment social cohesion depend critically on of job creation in some countries – are and welfare policies need to be the competencies of all of our popu- a stepping stone to better jobs or “activated” by making benefits more lation”. In this respect, equitable whether there is a risk that people get employment-oriented. access to learning opportunities is a major policy concern. A wide range of OECD work addresses these issues, with the objective of finding a balance between efficiency and equity.

Enhancing employment opportunities www.oecd.org/employment [email protected]

Despite recent reductions in structural unemployment in the OECD area, creating greater employment opportunities remains a major policy priority. The “activation” of labour market policies is one way to achieve this and a Policy Brief published in Dr. Seymour Papert, USA, 2001 Nobel Economics Prize winner, with Han 2001 on “Labour Market Policies that Wan-Sang, Deputy Prime Minister, Minister of Education and Human Work” provides a range of good prac- Resources Development, Korea, at a forum on Information and Communication Technology and Education, held before the meeting of OECD Education tices in this respect. Some countries Ministers in April 2001. are strengthening the complemen- tarities between private and public employment services as part of ef- trapped in these contracts. Looking To shed further light on how to make forts to help the unemployed find further ahead, the OECD is carrying out social policies more employment- jobs. The Australian experience of a major review of policies to improve oriented, the OECD is reviewing poli- subcontracting employment services employment prospects of older cies to reconcile work with family to private and community organisa- workers to help meet concerns about responsibilities and examining poli- tions provides an interesting innova- the socio-economic impact of popula- cies to help bring disabled people tion in this area, examined in 2001 in tion ageing. of working age into the labour force. 22 O E C D A N N U A L R E P O R T

HUMAN CAPITAL

www.oecd.org/els/education [email protected]

Education, training and informal learning all contribute to the development of “human capital” – the skills and attri- butes necessary to human achievement both inside and outside the workplace. The OECD growth project (see box p. 16) helped to clarify the contribution of human capital to economic growth in OECD countries, showing that for each additional year of education among those in the labour force, GDP rises by about 6%. An OECD report published in 2001, The Well-being of Nations: The Role of Human and Social Capital, found that better-educated people tend to be healthier, happier and more effective at educating their own children. Human capital also helps to support “social” capital, in the sense that civic and political participation tend to increase with education. Childhood and compulsory schooling clearly represent a critical phase in human capital formation. The OECD-led Programme of International Student Assessment (PISA) survey provides the first direct test-based assessment of In a rapidly changing world, the success of nations, the mathematical, scientific and reading literacy skills of 15- communities and individuals may be linked, more than year-olds. The 2000 survey covered 32 countries including ever before, to how they adapt to change, how they learn most OECD countries and some non-OECD countries such and how they share knowledge. The evidence suggests that as Brazil and Russia. A first report, Knowledge and Skills for Life: human and social capital can be of key importance in First Results from PISA 2000, was published at the end of 2001. contributing to positive outcomes, including higher The report shows considerable differences in levels of income, life satisfaction and social cohesion. This report knowledge and skills between students, schools and helps clarify the concepts of human and social capital and countries. It also found that the socio-economic background evaluates their impact on economic growth and well-being. of students and schools affects student performance to differing degrees. Further reports will use these data to explore it suggested, have improved equity without significant school and social background factors in depth, particularly evidence of large adverse effects. Some further work build- the capacity of schooling to enhance knowledge and skills ing on this exercise is envisaged for 2002. and overcome disadvantages of social background. Further rounds of the survey will concentrate on specific areas, Rigorous measurement of the outcomes of human capital focusing on mathematical skills in 2003 and scientific skills investment among adults remains a challenge, particularly in 2006. The survey will also be extended to at least 15 other in respect of the “softer” skills such as problem-solving and non-OECD countries, including China and Indonesia. teamworking which may be critical to performance in the workplace. The OECD collaborated in the International Adult Education and training after compulsory schooling are also Literacy Survey (IALS) in the mid- and late 1990s, and is now extremely important – roughly half of public expenditure playing an active role in the new Adult Literacy and Lifeskills on education and training in OECD countries is devoted to survey (ALL). The ALL survey, currently in the pilot phase, the post-compulsory phase. A special chapter in the has developed and built on the competency measures used December 2001 issue of the OECD Economic Outlook on in IALS – particularly through its development of a measure “Investment in human capital through post-compulsory edu- of problem-solving skill. The OECD will continue to under- cation and training” found that the economic returns on take development work on the measurement of adult skills. investment in upper secondary and tertiary education were strikingly high in many OECD countries, and explored the Much human capital is developed, maintained and potential reasons. It noted that subsidies for post- exploited in the workplace. Employment policy – including compulsory education tend to benefit those from more privi- enterprise training policies and programmes to assist leged backgrounds and whose income and employment unemployed workers back into work – therefore also plays prospects are good. Carefully handled subsidy reductions, a large role in the development of human capital. 23 O E C D A N N U A L R E P O R T

THE OECD HEALTH PROJECT

www.oecd.org/health [email protected]

The OECD embarked on a three-year Health Project in project on excessive waiting times for surgery; reviews 2001 to help member governments deal with the grow- of emerging technologies; work on private health insur- ing challenges that face health policy and health care ance; a project on care of frail elderly people, including systems. Health systems are an important element in the social implications of dementia; and a series of over- social cohesion and represent the largest service sector all assessments of health systems. in many OECD countries. Their efficiency and equitable distribution, their impact on public finances, and their A synthesis report, to be presented to the 2004 minister- ability to meet the challenges of medical advances, ial meeting, will provide concrete information to national ageing populations and rising expectations require crea- policy-makers, helping them to improve their systems’ tive policy approaches. The Health Project will provide performance and make difficult resource allocation policy guidance on these matters. The project focuses decisions. on measuring and analysing the performance of health care systems in member countries as well as the factors OECD publications on health during 2001 included the affecting performance. It will ultimately address the pub- best-selling OECD Health Data, which included over lic policy dilemma of deciding what level of resources 1 200 data series and graphic illustrations of how health should be devoted to health care as well as how these care systems work, all on a CD-ROM, and Health at a Glance resources should be financed and allocated. which presents in a book charts of the variations and trends in key indicators from OECD Health Data, with a One of the early contributions of the Health Project was commentary on each. a major conference in Ottawa in November 2001, sponsored by the Canadian government, on Measuring and Improving Health Systems Performance in OECD Coun- tries. The conference was designed to allow countries to share their different experiences of how the key actors in health systems can best work together in this area. Ministers from several OECD countries agreed that international comparisons can help identify best practices and that measuring performance is a key element in improving health care systems. A volume of proceed- ings is in preparation, including a report of the discussion that took place at the Ministerial Roundtable during the meeting. Preliminary synthesis results from the Age- ing-Related Diseases project were presented at the conference as an illustration of the way that international comparison and analysis can assist national policy- making. The Ageing-Related Diseases project is analysing treatments, costs and outcomes in relation to health policy and economic incentives for major conditions Science and technology improve human health but the affecting older populations across a sample of OECD pressure for faster and larger improvements is building with the ageing of the population of many OECD countries. A final report is expected in 2002. countries and increased demands for health care. A fundamental starting point for better understanding of Other components of the Health Project will include the impact of innovation on health is the measurement of projects on the measurement of performance including R&D. This book looks in detail at measurement practices equity, the micro-efficiency of resource use, including across 10 OECD member countries internationally. methods of paying physicians, nurses and hospitals; a 24 O E C D A N N U A L R E P O R T

Investing in human bodied in workers (see box p. 23). This and social capital will be followed up with research on www.oecd.org/els/education policies to improve incentives to in- [email protected] vest in human capital, as well as the role of labour-management institu- Ensuring adequate investment in tions vis-à-vis these investments. workers’ skills and competencies is The main results of this work will be an important plank of lifelong learn- presented at a meeting of the ing strategy. Unfortunately, as the Employment, Labour and Social 2001 Education Policy Analysis shows, Affairs Committee in 2002 and sub- the unskilled and other vulnerable sequently published. groups do not receive enough training. To shed light on how to improve Recent research has highlighted the the situation, a review of adult learn- importance of “social capital” – pri- ing policies due to be published in marily social networks and mutual 2002, will examine good practices in trust – in many kinds of social and this area. The final report on the economic endeavour. In 2001 the This study of the material well- being of older people in nine OECD Growth Project, The New Eco- OECD published a major report, The OECD countries uses a wealth of nomy: Beyond the Hype, also empha- Well-being of Nations: The Role of Human new data to shed light on the sised the growth-enhancing role of and Social Capital, describing evidence challenges that face policy- the skills and competencies em- of the many benefits of social capi- makers as they anticipate the tal, as well as those of human capi- coming retirement of the baby- tal. The OECD intends to work with boom generation. In all the member countries to improve the countries surveyed, policies have measurement of social capital, been fundamentally successful: enhance international comparability, older people at all income levels tend to maintain or even increase and share and learn from policy their material standards of living experience. once they stop working, but demography and changing labour Migration market patterns make reforms to www.oecd.org/migration these systems imperative. [email protected] Economic migration by people seek- International migration is an integral ing jobs may be at the heart of the part of the globalisation of the world immigration debate at the start of the economy. Migration flows help boost new millennium but the persistence economic exchanges and movement of illegal immigration and a sharp rise of human capital between OECD in the number of asylum seekers members and with non-member make it a priority to boost co- countries. The 2001 edition of the operation between the destination annual Trends in International Migration countries and the migrants’ countries The book analyses the social, confirmed the global upward trend of origin if the flow is to be better economic, and educational in migration flows, showing an managed. Integration of migrants trends of the 21st century, drawing on an extensive increase in the number of source into the host societies and their international body of statistical countries of migrants as well as an labour markets also remains a key and research evidence. It also increase in the number of destina- objective of migration policies. presents six possible scenarios tions and a growing trend of female for school systems over the next migration. The latest issue of the The report also includes a special 10-20 years. report also found a significant chapter on student mobility, which is increase in the share of immigrants increasing alongside requirements in the population of a number of for higher levels of education, for OECD countries. more specialised knowledge and for 25 O E C D A N N U A L R E P O R T

command of foreign languages. Inter- ease skilled labour shortages at Social issues nationalisation of education offers home. Several OECD member coun- www.oecd.org/social/ host countries the possibility of tries have eased regulations for en- [email protected] qualified workers from abroad to try to their labour markets of foreign students at the end of their training. The focus of much OECD work on At the same time, greater co- social issues is ensuring coherence operation is needed between the between labour market and social host countries and the students’ policies.Two major projects in 2002 countries of origin to limit the risk of will address this area: one on recon- a “brain drain” and ensure a more ciling work and family responsibili- equitable sharing of the advantages ties and one on policies for the dis- of international mobility. An OECD abled. seminar on international labour mobility in June 2001 offered a The reviews of work and family poli- chance to measure the scale and cies will look at how countries have characteristics of these flows and to addressed the goals of allowing analyse their impact on the eco- parents to pursue their careers, while nomies of several host countries and supporting their role in fostering the countries of origin. The meeting also development of their children. examined various ways of adapting Reviews of the Netherlands, migration policies to make it easier Denmark and Australia will be final- This book shows that the migration for qualified workers to move around ised in 2002 and new reviews will flows within and from the Central to the equal benefit of both host begin for Switzerland, Spain, Japan and Eastern European countries countries and countries of origin. The and Ireland. (CEECs) are much more complex than a straightforward flow towards OECD plans to look at this issue in the European Union and North more depth in 2002-2003 and to look A review of policies for disabled America. It analyses the important closely at the relationship between people of working age in 20 member role the CEECs may play as “buffer human capital movements and countries will also be finalised in zone” between the current EU sustainable development in non- 2002. This project explores how coun- member states and the other member countries. tries have addressed the twin but countries of Southern and Eastern potentially contradictory goals of Europe and reveals what the Studies of the economic impact of ensuring that disabled citizens are prospective enlargement of the EU migration and its links with domes- not excluded from employment and implies in terms of CEECs’ migration policies on such subjects as border tic developments and policies in social life but that they have income control, the control of flows, labour individual member countries will security if their earnings potential is migration, family-linked migrations, form part of a number of OECD Eco- restricted. This project will try to refugees and asylum seekers. nomic Surveys in 2002-2004 and a syn- deduce best practices in addressing thesis of the results will be prepared. these issues.

26 O E C D A N N U A L R E P O R T

TRADE AND INTERNATIONAL INVESTMENT

www.oecd.org/trade [email protected]

Trade and investment liberalisation November 2001 covered three fronts: in the framework of the multilateral has been a powerful stimulus to eco- strengthening support for free trade, trading system. The study acknow- nomic growth and a significant factor building bridges and helping to ledges the crucial importance of in integrating an expanding number develop modalities for negotiations. development co-operation and of countries into the world economy. capacity building to support devel- OECD work on trade helps forestall Strengthening support oping countries in reaping the the trade tensions and conflicts that for free trade benefits of trade and investment can emerge under the pressure of liberalisation. The OECD has also ever-intensifying competition. A key The OECD recognises the need to developed a series of guidelines to objective is to support member strengthen support for trade liberali- address these challenges and to help countries’ moves to strengthen the sation and to address the concerns member countries implement assist- multilateral trading system and of citizens and developing countries ance programmes effectively. This facilitate broad-based multilateral about a more liberal trading regime. trade and development work was the trade negotiations under the aus- Work in 2001 covered areas such as subject of a brainstorming session at pices of the World Trade Organiza- services (see box p. 28), agriculture (see the OECD in April 2001, attended by tion (WTO). The OECD provides box p. 30), regional trade agreements WTO Director-General Mike Moore, analysis that underpins these (see box p. 31) and the relationship and of a roundtable in Santiago in efforts, measuring the impact of between trade and development. June 2001. multilateral trade agreements and The Development Dimensions of Trade assessing the likely outcomes of seeks to foster a better under- Building bridges further liberalisation. standing of the positive links between trade, growth and develop- The OECD also helps bridge the gap Work in the run-up to the WTO ment and to establish why develop- between countries’ positions on ministerial meeting in Qatar in ing country interests are best served particularly sensitive trade-related subjects. OECD work in 2001 helped clarify the debate over international trade and core labour standards, notably through presentations to the International Labour Organization (ILO) and to the WTO Secretariat and a workshop of the OECD Global Forum on Trade on the study Inter- national Trade and Core Labour Standards. This found that countries with low core standards do not enjoy better export performance than high- standard countries. In the area of trade and environment, considerable (Left to right) Luis de la Calle, Mexican Deputy Minister of Economy, Shigeo attention was devoted to the OECD’s Uetake, Japanese Senior Vice-Minister for Foreign Affairs, Takeo Hiranuma, work on sustainable development Japanese Minister of Economy, Trade and Industry, and Mauro Fabris, (see chapter p. 32). Analytical work is Italian Secretary of State, Industry, External Trade and Tourism, at the also proceeding on issues related to trade ministers’ working lunch during the OECD Ministerial Council. the environmental effects of trade liberalisation. In the area of trade and investment, analytical work con- 27 O E C D A N N U A L R E P O R T

TRADE IN SERVICES

www.oecd.org/ech [email protected]

The General Agreement on Trade in service suppliers in selected regional trade agreements Services (GATS) was one of the major and available statistics (both trade in services and achievements of the Uruguay Round labour market/immigration). It also covers the eco- of multilateral trade negotiations, nomic effects of temporary foreign workers on host and establishing a structure and framework origin countries as well as the issues surrounding and of rules for global trade in services and barriers to such trade, and how these might be for commitments to liberalise that addressed in negotiations. trade. While little actual liberalisation was achieved in those negotiations, • Domestic regulation: This project, undertaken with the GATS established a framework for future rounds. the World Bank, concerns the relationship between a Negotiations under this “built-in-agenda” began on country’s right to regulate in pursuit of a range of social 1 January 2000 and were given renewed momentum at and economic objectives and good regulatory prac- the World Trade Organization ministerial meeting in Qatar tice in relation to the liberalisation of trade in serv- in November 2001 when ministers undertook to start the ices. The project is examining how improved domes- market access phase. They agreed dates of 30 June 2002 tic regulation is necessary for successful trade for initial liberalisation requests and 30 March 2003 for liberalisation and how GATS rules can promote regu- liberalisation offers. latory reform and efficiency without unduly limiting regulatory freedom. It is also looking at how to pro- Against this backdrop, OECD work on trade in services is mote greater regulatory transparency and whether currently addressing four core questions. possible new disciplines should apply to all sectors, or be developed on a sectoral basis, as well as how • Making the case for continued services trade liber- the GATS can best promote the adoption of interna- alisation: The OECD in 2001 completed a study, Open tional standards to facilitate services trade. The Services Markets Matter, as a resource for governments project aims to produce cutting-edge policy analysis in consultations with domestic stakeholders. The on what is widely seen as the most complex aspect of study focuses on three main areas, starting with the ongoing GATS negotiations. The results will be pre- economy-wide benefits of trade and investment lib- sented in a joint publication with the World Bank eralisation in services in both developed and towards the end of 2002. developing countries, identifying practical examples and drawing on available empirical research. It also • Request-Offer Template: This project aims to enable deals with criticism of the GATS, including charges WTO members, in particular developing countries, to that the GATS threatens the provision of essential make a success of the market access stage of the GATS public services and governments’ legitimate right to negotiations. It outlines best practice and lessons regulate service activities, and key negotiating chal- learnt in consultation with domestic stakeholders and lenges, especially for developing countries. A Policy necessary intragovernmental co-ordination as well as Brief summarising the study’s main findings was made providing a practical checklist for negotiators of the available at the WTO ministerial meeting in Qatar. The measures and policies that may affect the value of a full study will be published in 2002. liberalisation offer.

• Labour mobility: The GATS also covers the temporary Trade in Services: Negotiating Issues and Approaches, published movement of people across borders to deliver services in 2001, brought together a number of studies completed such as technical training. This issue is increasingly under the services project during 1999-2000. Ongoing important to globally active firms and is a key area of work on services is discussed each year in a meeting of export interest for many developing countries. Ongoing services experts which includes senior services negotia- work is focused on approaches to the movement of tors from selected non-OECD members. 28 O E C D A N N U A L R E P O R T

tinues on the effects of trade agreements are foreseen through ongoing resulting in a Sector Understanding ments on governments’ ability to use discussion and review. The OECD that is under consideration by investment incentives. OECD bridge- Working Party on Export Credits and members for adoption and imple- building activities in all these areas Credit Guarantees also adopted a mentation in 2002. have benefited from extensive dia- statement of principles designed to logue with non-member countries. ensure that officially supported Agriculture export credits are not provided for www.oecd.org/agr Negotiating methods unproductive expenditure. This [email protected] means non-essential capital goods The OECD is also helping to develop and projects that do not contribute The OECD carries out a wide-ranging broader consensus on the modalities to the social and/or economic devel- programme of analytical work on the for multilateral trade negotiations. A opment of HIPCs but increase their impact of domestic agricultural CD-ROM, Tariffs and Trade, was devel- external debt burdens. policy reform and agricultural trade oped to help trade negotiators liberalisation on OECD and non- formulate their objectives and stra- The participants to the Arrangement OECD countries (see box p. 30). A high- tegies on customs tariffs and the on Guidelines for Officially Sup- level meeting in September 2001 on OECD also produced a study, Trade ported Export Credits also negoti- Effective Policies for Agriculture and in Services: Negotiating Issues and ated an Understanding on export Food: Domestic and International Approaches. OECD work on labour credits for agricultural products which Dimensions included dialogue with mobility and the General Agreement most could agree and considered the civil society organisations and recog- on Trade in Services (GATS) was pre- impact on the Arrangement of recent nised the need for greater civil sented to the WTO in December. developments in the WTO. Finally, society involvement as well as the much progress was made in negotia- need to integrate non-member Export credits tions to revise the 1981 Understand- country interests into the OECD www.oecd.org/trade/xcred ing on Export Credits for Ships, policy debate. [email protected] Trade and competition Governments provide official export www.oecd.org/regreform/ credits to help national exporters competition competing for overseas sales. OECD [email protected] work on export credits seeks to build international consensus on rules and The OECD carries out analytical work guidelines that will eliminate trade on trade and competition issues in distortions and reduce the potential co-operation with international for subsidies. In 2001, this work organisations, particularly the WTO focused on the environment, unpro- and the United Nations Conference ductive expenditure in the Heavily on Trade and Development Indebted Poor Countries (HIPCs), (UNCTAD) and suggests various agriculture and developments in the options to resolve them. Since the WTO. renewal in 2000 of its two-year man- date, the OECD Joint Group on Trade Discussions on export credits and the and Competition has worked on the environment progressed and by the relationship between intellectual end of 2001 most OECD members This book retraces the Com- property rights and trade and compe- decided to implement unilaterally a munity’s external liberalisation tition policies, as well as on the de- set of common approaches to screen efforts, discusses the repercussions velopment dimension of trade and and review the potential environ- of internal liberalisation on foreign competition policies. Key topics for mental impact of projects benefiting competitors and aims to clarify and study included the effect of parallel from official support. This represents to quantify the economic effects of trade in goods protected by the first common “greening” of offi- the EU’s trade policies. intellectual property rights, the trade cially supported export credits; it is and competition aspects of electronic an important first step and improve- commerce, with a roundtable held in

29 O E C D A N N U A L R E P O R T

AGRICULTURAL TRADE

www.oecd.org/agriculture/trade [email protected]

The OECD is carrying out an recently published studies as well as ongoing work on extensive programme of work on agricultural trade issues. the impact of domestic agricultural policy reform and trade lib- The Agricultural Market Access Database or AMAD eralisation, which supports on- (www.amad.org) is also an important resource for agri- going multilateral negotiations cultural trade policy research. This co-operative effort on trade in agriculture that were between the OECD and a number of other international given new momentum at the organisations and national agencies was updated in WTO ministerial meeting in 2001. Qatar in November 2001. A key element of the OECD work Much of the work on agricultural trade deals with the con- involves monitoring and evaluating trade and trade cerns of non-OECD economies. Two reports in 2001 policy developments under the Uruguay Round agri- looked at the concerns of emerging and transition eco- culture agreement and estimating the likely impact of nomies. “Uruguay Round Agreement on Agriculture: the further liberalisation. OECD experts are also analysing Policy Concerns of Emerging and Transition Economies” issues arising at the interface of domestic and trade poli- examined how they would be affected by reforms in cies, in particular the environment and the multi- market access, export competition and domestic support, functionality of agriculture, with a view to helping gov- while Agricultural Policies in Emerging and Transition Economies ernments design policies that do not have unintended 2001 investigated the implications of increases in the use consequences for trade. of non-tariff measures. The OECD is now analysing the links between agricultural trade reform worldwide and The trade-related work is underpinned by two annual absolute poverty in emerging and developing eco- publications, Agricultural Policies in OECD Countries: Moni- nomies. State Trading Enterprises in Agriculture was issued in toring and Evaluation which contains comprehensive esti- 2001 and work is continuing to determine the impact of mates of support and protection in agriculture and the state trading enterprises on domestic and international Agricultural Outlook which analyses topical trade issues markets. The OECD is also working on the likely effects against the background of the medium-term outlook for on food security in non-member economies of further markets and trade. The OECD published an in-depth trade liberalisation in OECD countries over the medium evaluation of the implementation of the Uruguay Round term, with a report on due for release in 2002. agreement on agriculture in the run-up to the Qatar WTO meeting, The Uruguay Round Agreement on Agriculture: An The OECD has also started work to quantify the effects Evaluation of its Implementation in OECD Countries, and will on agricultural production and trade of domestic policy continue to monitor the agreement and its impact. An measures whose primary aim is to decouple economic analysis of the likely impact on domestic and inter- growth from environmental degradation, following a con- national markets of further improvements in market ceptual framework defined in 2000 in “Decoupling: A access will be published in 2002. This report comple- Conceptual Overview”. Non-trade concerns have also ments two studies produced in 2001 – “A Forward-looking become a major issue in ongoing multilateral negotia- Analysis of Export Subsidies in Agriculture” and “An tions. Multifunctionality: Towards an Analytical Framework sets Analysis of Officially Supported Export Credits in Agri- out to evaluate the multifunctionality of agriculture – its culture.” A report on the rationale and implications of contribution beyond food production in areas such as future domestic and agricultural trade policy reform is preserving rural lifestyles and environment – including due for release in 2002. It will synthesise results from the domestic and trade policy implications.

30 O E C D A N N U A L R E P O R T

May 2001, and the potential relevance monitoring rules to promote interna- mendations by the 35 signatory gov- of “special and differential treatment” tional co-operation as well as through ernments to multinational enter- for developing countries in reference consultations with representatives of prises on their conduct in such areas to trade and competition. non-member economies, business, as labour, environment, consumer labour and other groups. protection and the fight against cor- International investment ruption, are not binding on enter- www.oecd.org/daf/investment A key area of current work is an in- prises, but governments are commit- [email protected] depth survey of the benefits and ted to promoting their observance. costs of foreign direct investment The report gave an account of what The OECD promotes co-operation (FDI) for development and a broad governments have been doing to among governments concerning analysis of incentives- and rules- implement the guidelines and pro- capital movements, international based competition to attract FDI. vided a comparative analysis of the investment and trade in services (see Results of the survey are due to be guidelines and other global instru- box p. 28). It aims to improve the published in 2002. ments for corporate responsibility. foreign investment climate and Other work in 2001 looked at the encourage the positive contribution The first annual report on implemen- challenges posed by local conflicts of multinational enterprises to eco- tation of the revised OECD Guide- and widespread human rights nomic and social progress while lines for Multinational Enterprises abuses. Future work will include helping to minimise and resolve diffi- was also published in 2001 and na- analysis of corporate responsibility culties that may arise from their tional contact points in participating in the supply chain and exchanges operations. It does this by carrying countries held their first annual of experiences on measures to pro- out analysis and developing and meeting. The Guidelines, recom- mote the MNE Guidelines.

REGIONAL TRADE AGREEMENTS

www.oecd.org/ech [email protected]

Regional trade agreements (RTAs) have increased cipating countries and trading arrangements as a whole, sharply in recent years, sparking lively debate as to but the variation in simulated economic gains is wide whether they push countries further down the road of depending on the model used. trade liberalisation or act as a brake on multilateral trade efforts. An OECD study in 2001,“Regional Integration: Given the large and increasing number of studies in this Observed Trade and Other Economic Effects” found that area, the OECD is developing a database to facilitate a results from empirical evidence so far have not proved more comprehensive analysis of the effects of RTAs. more conclusive than theory, which sees RTAs as entailing both benefits and disadvantages. The study Analytical work was initiated in 2002 with a view to deep- found that while some RTAs significantly boosted trade ening understanding of the symbiotic relationship within the regional trading bloc, others did not. There between RTAs and the multilateral trading system. This was also some evidence that trade with countries out- work aims to answer the question of whether, and to what side the RTA is smaller than it otherwise might have extent, RTAs take trade liberalisation beyond the levels been in at least some of the agreements considered, agreed in the WTO. It will also look at whether, and how but the picture is mixed and it is not possible to con- far, rules and provisions in RTAs go beyond what has been clude whether this is a major problem. The study also achieved in the WTO or what might be possible and found that RTAs have been welfare-improving for parti- desirable multilaterally.

31 O E C D A N N U A L R E P O R T

SUSTAINABLE DEVELOPMENT

www.oecd.org/sustainabledevelopment/ [email protected]

For development to be sustainable, affiliate organisations such as the nar on Improving Governance for societies must invest in physical, International Energy Agency (IEA), Sustainable Development in human, social and environmental the OECD Nuclear Energy Agency November, international experts dis- capital. Preserving adequate stocks (NEA), the European Conference of cussed the challenges of policy of such capital is essential to ensure Ministers of Transport (ECMT), and coherence drawing on a number of that the capacity of future genera- the OECD Development Centre. concrete experiences (Governance for tions to meet their own needs is not Sustainable Development. Five OECD Case diminished, whether by exhausting OECD ministers for economics, Studies – Canada, Germany, Japan, resources, destroying the environ- finance and environment endorsed Netherlands and United Kingdom). ment or creating untenable social the key recommendations at a joint and economic conditions. OECD meeting in Paris in May 2001 and Environment countries committed themselves to firmly established sustainable devel- www.oecd.org/environment/ achieving sustainable development opment as a priority. They asked the [email protected] almost a decade ago at the 1992 UN organisation to intensify its work on Conference on Environment and De- indicators to be used in future peer OECD environment ministers met in velopment (UNCED) in Rio. Yet as reviews (see box p. 33) and to under- Paris in May to discuss how to ensure leaders prepare themselves for a take further work on overcoming that economic growth is not accom- World Summit on Sustainable Devel- obstacles to reform, on the social panied by increased environmental opment (WSSD) in Johannesburg in dimension of sustainable develop- degradation. They considered why September 2002, progress in protect- ment, and on ways to improve policy such decoupling is necessary, how to ing the environment and reducing integration and coherence. At a semi- achieve it and how to measure poverty worldwide falls short of what progress. The ministers adopted an is needed.

This was the conclusion of a three- year project on sustainable development launched by ministers in 1998. The final report entitled Sustainable Development – Critical Issues was presented to OECD ministers in May 2001. It spelled out the organisation’s approach to sustainable development and identified some of the conceptual and practical barriers to progress. A companion volume, Poli- cies to Enhance Sustainable Development, offered concrete policy recommendations to make markets work for sustainable development, for strengthening decision-making, for harnessing science and technology and for managing links to the global Laurent Fabius, French Minister of the Economy, Finance and Industry, and economy. The reports drew on Dominique Voynet, French Environment Minister, at the session on sustainable multidisciplinary work involving development during the OECD Ministerial Council. experts across the OECD as well as 32 O E C D A N N U A L R E P O R T

SUSTAINABLE DEVELOPMENT INDICATORS

www.oecd.org/sustainabledevelopment/ [email protected]

The desire for sustainable development implies a need to be able to measure progress towards achieving it. Realising this, OECD ministers at their annual meeting in May 2001 asked the organisation to develop indicators of sustainable development and to use these in its regular peer reviews of government policies.

Member countries’ policies are already reviewed by their peers in separate processes covering each of the three dimensions of sustainable development: economic, social and environmental. But progress on sustainable development is not always easy to identify. For example, is it progress if a change in regulations brings environmental improvement at the price of lower material stand- How to meet the needs of today without diminishing the ards of living? This is clearly a value judgement where capacity of future generations to meet theirs is the different people and different governments may have central question posed by this book. OECD countries differing but equally legitimate answers. To avoid pure committed themselves to sustainable development at the value judgements, sustainable development measure- 1992 UN Conference on Environment and Development ment in peer reviews will focus on identifying policies in Rio. Yet almost 10 years later, progress remains which can ensure progress in one dimension with mini- partial and uneven. This report stresses the urgency of mal deterioration in the other two. some of the most pressing challenges and analyses policies designed to address them. All of this has implications for the choice of indicators. The purpose of the indicators is not to compare countries’ progress in this area. This question cannot be answered performance, except insofar as this tells something about in the abstract. It will depend on the specific policy which policies work best. But clearly the peer reviews settings in the country concerned and can only be tackled are aimed at providing policy recommendations. There- for a limited number of policy issues where enough fore the indicators should provide information to judge concrete evidence is available to identify better policies. which policy settings could improve performance in terms of sustainable development. This means that comparable indicators of sufficient quality will only be available for a limited number of Because country reviews in the economic field are more issues. The choice will also be influenced by the need to frequent than environmental or social reviews, sustain- be able to compare discussions and policy recommen- able development will be included in economic reports dations across countries, as indicators suitable for just for all OECD countries before such full coverage in envi- one country are not really viable. So a menu of impor- ronment or social reports. By 2004, economic surveys of tant policy issues will be drawn up from which a few areas all OECD countries should have covered sustainable will be selected for each country peer review, based on development issues. their relevance to that country. The first step in this work will be to establish the menu and the indicators that go OECD peer reviews focus on policies. Country representa- with each policy issue. The second step will consist of tives discuss and criticise each other’s policies and in the actual peer reviews, with the process taking about the process acquire useful input for the domestic policy two years, at least for the full coverage of OECD coun- debate. The basic question to be answered about sus- tries in regular economic surveys. A synthesis of the main tainable development in such reviews will be whether lessons learnt will be prepared for the OECD annual different policy settings could help a country to achieve ministerial meeting in 2004. 33 O E C D A N N U A L R E P O R T

THE OECD ENVIRONMENTAL STRATEGY

www.oecd.org/environment/ [email protected]

OECD environment ministers agreed an ambitious Environ- mental Strategy for the first decade of the 21st century in May 2001 and the annual OECD ministerial council meeting approved it the following day. The development of the strategy had been a key element of the environment work of the organisation over the previous two years, along with the production in April 2001 of the first OECD Environmental Outlook, which provided the analytical underpinning for the strategy.

The strategy outlines five key objectives for realising environmentally sustainable development in OECD member countries: 1. Maintaining the integrity of ecosystems through the efficient management of natural resources, particularly with respect to climate, fresh water and biodiversity. 2. Decoupling environmental pressures from economic growth, particularly in the agriculture, transport and energy sectors. the environment. Finally, irreversible adverse effects of 3. Improving information for decision-making: measuring human activities on ecosystems such as species extinction progress through indicators. should be avoided, and the natural processes capable of maintaining or restoring the integrity of ecosystems such as 4. Enhancing the quality of life: the social and environ- the carbon, nitrogen and water cycles should be safe- mental interface. guarded. 5. Improving governance and co-operation: global environmental interdependence. The Environmental Strategy emphasises that when designing policies for environmental sustainability, coun- The strategy identifies 17 specific challenges and 71 national tries should apply precaution as appropriate in situations actions to be taken by OECD countries to achieve the where there is a lack of scientific certainty. objectives in areas such as greenhouse gas emissions, over- fishing, tropical deforestation, urban air pollution, emissions Following the adoption of the Environmental Strategy, the from motor vehicles and planes, groundwater pollution, OECD is moving to support its implementation by member municipal waste generation and toxic chemicals in the countries. This will include expanding existing work or environment. It also calls for indicators to measure progress developing new activities examining the lowest cost adap- and makes 55 requests for further work in the OECD. tation to climate change, monitoring the extent to which the risks of genetically modified organisms (GMOs) are assessed Several over-arching criteria are necessary for achieving in OECD countries and developing regional implementa- environmentally sustainable development, the report said. tion plans for environmentally sustainable transport. Work For a start, renewable resources such as trees, plants, is also planned on the social aspects of water pricing and animals, water and soil should be used efficiently, and at a assessing the environmental costs and benefits of trade lib- level that is compatible with their regenerative capacity over eralisation. In addition to undertaking specific analytical the long term. Use of non-renewable resources such as min- work of this type as requested in the Strategy, the OECD is erals and fossil fuels should be limited to levels where they looking at changes that might be required to its work on could be replaced by renewable resources or other forms environmental data and indicators and at how environmen- of capital. The release of hazardous or polluting substances tal performance reviews can be used. A new project has into the environment must not exceed its capacity to assi- been launched on the use and development of indicators milate them, and concentrations must be kept below to measure the decoupling of environmental pressures from established critical levels for protecting human health and economic growth, with a report due in 2002.

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Environmental Strategy for the First calculation of “standard baselines” resources and reductions in environ- Decade of the 21st Century (see box for the clean development mecha- mental pollution. “Green” products p. 34) and endorsed OECD Guide- nism, which allows developed and and the right infrastructure for sus- lines for Environmentally Sustain- developing countries to work tainable consumption are also able Transport, as well as the use of together to reduce emissions needed. On the consumption side, key indicators to measure progress through project-specific investments. consumers need to receive consist- towards environmental sustain- ent and clear policy signals to make ability. Ministers are to meet again A prominent message of the Environ- better choices for the environment. in early 2004 to review their coun- mental Outlook and the Environmen- The OECD Control System for waste tries’ performance in implementing tal Strategy is the need for sustain- destined for recovery, created in the Strategy. able consumption and production 1992, was partially harmonised with patterns if decoupling is to be the Basel Convention of the United The OECD also produced its first achieved. The main results of three Nations Environment Programme in Environmental Outlook in 2001, identi- years of work on sustainable con- June 2001, a major step towards a fying the drivers of environmental sumption will be published in 2002. global control system for waste change (the economy, population, They include studies of household movement. globalisation, etc.), the sectors that consumption patterns and their put the greatest pressure on the environment, and the likely resulting impact. The most critical concerns for OECD countries are the unsustainable use of renewable natural resources, the degradation of ecosystems and the disruption of the environmental systems that support human life. The Outlook suggests policy options to address the most pressing problems and analyses their potential environmental and economic effects.

A key policy study published in 2001, Environmentally Related Taxes in OECD Countries: Issues and Strategies, brings together the main findings of two years of work and draws on data from the OECD/EC online database of en- (left to right): Fidele Hien, Minister of Environment and Water, Burkina Faso, vironmentally related taxes. Domestic Siv Fridleifsdottir, Minister of Environment, Iceland, and Maciej Rudnicki, Transferable Permits for Environmental Secretary of State for the Environment, Poland, at a working lunch with non- Management: Design and Implementation members during the OECD environmental ministers’ meeting. examined the practical issues con- nected with such schemes. Two practical handbooks on biodiversity, one effects on food, tourism, energy, Another key element of the Strategy on valuation methods and one on water and waste; case studies of is the interface between social and market creation, were released in policies such as information-based environmental policy issues. In addi- late 2001. Work is also underway on instruments and eco-labelling tion to ongoing work on environment policies and actions to tackle climate schemes; and sustainable consump- and health issues – such as food change, notably work related to tion indicators. The results show the safety and safe use of chemicals – implementation of the Kyoto Proto- need to address both production future work is likely to include links col. OECD analysis covers reporting and consumption patterns. On the between environment and employ- and compliance procedures, green- production side, policies are ment, the effects of environmental house gas emissions trading and the needed to promote efficient use of policies on specific groups in society, 35 O E C D A N N U A L R E P O R T

SUSTAINABLE DEVELOPMENT ROUNDTABLE

www.oecd.org/sustainabledevelopment [email protected]

The OECD roundtable on sustainable development was established in 1998 to address the economic, environmental and social issues commonly grouped under the heading of sustainable development. Its membership was broadened in 2001 and now all OECD ministers can take part according to the subjects under discussion. As a result, ministers dealing with a broad range of subjects have taken part, including finance, economy, labour and development assistance as well as environment. In view of the importance of sustainability to developing countries it was also decided in 2001 to invite the main developing country players on to the roundtable. Other intergovernmental organisations also participated in the Simon Upton, Chairman, OECD roundtable’s work in 2001 including the UN Environment Roundtable on Sustainable Development Programme (UNEP), the UN Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO) and the World Bank as well as NGOs and business groups. modelling problems inherent in measuring sustainability and in September held a meeting on the scientific diffi- Work in 2001 was tailored to help members prepare for culties. This was followed in December by a ministerial the OECD annual ministerial meeting in May, where meeting on measuring sustainability which discussed sustainable development was a major theme ahead of reports from the OECD, the World Bank and the World- the World Summit on Sustainable Development to be wide Fund for Nature on work in progress. held in Johannesburg in 2002. The roundtable held a ministerial-level meeting in January 2001 to discuss the The roundtable also scheduled a ministerial meeting in OECD’s draft policy report on sustainable development. late February 2002 to consider ways to improve synergies between official development assistance and foreign After the May ministerial meeting, the roundtable focused direct investment in developing countries, ahead of a on supporting work related to key ministerial requests, UN conference in Mexico in March on financing for such as developing agreed indicators of sustainable development. Other subjects for discussion in 2002 will development and filling gaps in the statistical and include the relationship between eco-labelling and scientific data. The roundtable in June chaired technical sustainable development and preparations for the discussions for OECD members on statistical and Johannesburg summit.

36 O E C D A N N U A L R E P O R T

access to environmental services, agricultural trade. Further work is and environmental awareness and underway to analyse these issues in communication strategies. more detail. A workshop on organic farming in 2002 will examine the con- Sustainable agriculture ditions under which organic agri- www.oecd.org/agriculture cultural systems are sustainable. [email protected] Fisheries policies have to address the Analysing the impact of agricultural relationship between sustainable reform on the environment is an management of resources and trade integral part of OECD work. A key liberalisation, the causes of unsustain- concern is to identify and analyse able fishing, and the need to avoid environmentally damaging subsi- harmful subsidies. OECD monitoring dies, which OECD countries have of member countries’ fisheries poli- agreed to phase out by 2010. Envi- cies included the publication in 2001 ronmental Indicators for Agriculture – of a new edition of the Review of Fish- Volume 3: Methods and Results pub- eries in OECD Countries: Policies and lished in 2001 takes stock of the Summary Statistics along with its com- impact of agriculture on the environ- panion volume Review of Fisheries in Corporate Social Responsibility ment across OECD countries. OECD Countries: Country Statistics. (CSR) is business’s contribution Special studies are also being carried to sustainable development. Corporate behaviour must not Work is also underway on an inven- out on the costs of fisheries manage- tory of the subsidies and taxes, regu- only ensure returns to share- ment, the effects of market liberali- holders, wages to employees, and lations and co-operative approaches sation on fisheries trade and produc- used by OECD countries to address products and services to custom- tion and fisheries sustainability ers, it must also respond to environmental issues in agriculture. indicators, with reports due to be societal and environmental The inventory, to be completed in completed in 2002. concerns. The struggle between 2002, will help evaluate policies and the forces of global commerce and recommendations on the best mixes Energy the interests of local cultures of policies and market approaches to www.iea.org brings with it new politics. This ensure the least trade-distorting sus- www.nea.fr book provides a comprehensive overview of corporate social tainable agriculture. [email protected] responsibility experiences and [email protected] Links between agriculture, trade and practices at the local level. the environment were the subject of The International Energy Agency two studies released in 2001. Impro- (IEA) (see box p. 78) during 2001 ving the Environmental Performance of continued work on action to curb Agriculture: Policy Options and Market energy-related greenhouse gas Approaches showed that trade liberali- emissions. It submitted its mem- sation will, in general, benefit the bers’ interpretation of their role in environment, but the effects will ensuring sustainable development depend on the state of the environ- at a meeting in April of the UN Com- ment, the impact on production and mission on Sustainable Develop- the regulations in place. “Production ment. Effects of Agri-Environmental Policies: Reconciling Trade and Environmental The Nuclear Energy Agency (NEA) Objectives” indicated that environ- (see box p. 76) presented its report, context of economic, environmental mental standards and agri- Nuclear Energy in a Sustainable and social issues and identifies environmental programmes do not in Development Perspective at the OECD indicators for measuring how the general have a significant effect on Forum 2001 (see box p. 61). The report sector might contribute to sustain- farm competitiveness or international assesses nuclear energy in the able development.

37 O E C D A N N U A L R E P O R T

GOVERNANCE

www.oecd.org/puma [email protected] www.oecd.org/corporate [email protected]

Governments need to rethink their for bribe payments to foreign public role to meet the challenges of officials has been all but eliminated globalisation, decentralisation, new in OECD countries. The OECD is now technologies, and the changing determined to ensure that countries needs and expectations of citizens. enforce laws adopted in line with the The OECD carried out significant convention and use them to pros- work in 2001 on the efficient func- ecute bribery cases. Evaluations of tioning of government and the pro- legislation in Argentina, Italy, Luxem- motion of good governance in both bourg, the Netherlands, New Zea- the public and corporate sectors. land, Poland and Portugal were car- This included areas such as trans- ried out in 2001, bringing the total parency, accountability and fairness number of country examinations to in dealing with citizens. Work also 29. The OECD will review revised UK focused on fighting corruption, citi- legislation in 2002. Enforcement of zen participation in policy-making, legislation in Finland was looked at promoting good practices and en- in 2001 and three countries are due couraging high standards of ethical for examination in 2002, with plans behaviour. to increase this to 5-7 countries per Corporate entities underpin most year thereafter. The private sector, commercial and entrepreneurial Corporate governance is also an trade union associations and civil activities in market-based issue for governments and policy- society are indispensable partners in economies and have contributed makers as they play a central role in the anti-bribery campaign. The immensely to growing prosperity shaping the legal, institutional and OECD is also working with non- worldwide over recent decades. regulatory framework within which member economies to combat Increasingly, however, govern- corporate governance systems are bribery and corruption. ments and regulatory bodies developed. If the framework condi- have realised that they are often misused for money laundering, tions are not in order, the governance Corporate governance bribery and corruption, tax regime is unlikely to be either. www.oecd.org/corporate/ evasion, market fraud, and other [email protected] illicit activities. This report Bribery and corruption suggests ways to prevent and The OECD works with governments www.oecd.org/corruption combat the misuse of corporate and the private sector to improve cor- [email protected] entities and shows that the porate governance by designing corporate entities misused most Fighting corruption is a major policy effective regulatory and institutional frequently are those that provide challenge for developed and devel- frameworks for public policy in the the greatest degree of anonymity oping countries. By October 2001, corporate sector as well as encour- to their beneficial owners. 33 of the original 34 signatories aging private sector practices that (including four non-member coun- facilitate sustainable corporate de- tries) had ratified the OECD Conven- velopment and finance (see trade and tion on Combating Bribery of Foreign international investment chapter, p. 27). Public Officials in International Busi- ness Transactions (as of 15 January Corporate entities (corporations, 2002, Ireland had not yet deposited trusts, foundations and partnerships) its instrument of ratification) and the have contributed immensely to grow- practice of allowing tax deductions ing prosperity worldwide, but are

38 O E C D A N N U A L R E P O R T

REGULATORY REFORM

www.oecd.org/regreform/regref [email protected]

Regulatory reform is increas- multidisciplinary approach with OECD experts and com- ingly a global policy theme. mittees working with the countries under review. The Globalisation, greater struc- OECD is finalising reviews of regulatory reform in Canada, tural interdependence of the UK, Poland and Turkey in 2002 and will launch new economies and business reviews for Germany and Finland. By 2003 nearly two cycles, security concerns and thirds of all OECD countries will have been examined, a general trend towards providing a unique source of statistical information, modernising government knowledge and analytical capacity. mean that policy-makers and parliaments need to revisit Thematic approach and upgrade the framework of regulations as well as the From 2002 the OECD will provide the opportunity for instruments and institutions member countries to exchange experiences, compare used to implement them. Experience in OECD and non- approaches and discuss the reasons for regulatory reform OECD countries demonstrates that clarifying the roles of failures in particular areas. Themes for discussion include the state and the markets can generate substantial bene- the development of objective and efficient instruments fits for consumers, the private sector, the environment to assess a country’s regulatory performance and the and social welfare more generally. Mistakes in the design governance of independent regulators and their relation- or implementation of regulatory systems, which have ship to competition authorities. These debates will also contributed to some recent failures in public infrastruc- look at the challenges of ensuring compliance with new ture network industries such as transport and energy, are regulations, the refinement of statistical indicators to powerful incentives to scrutinise and evaluate past poli- measure regulatory quality, and the impact of regulatory cies to provide better guidance in the future. reform on economic and social welfare.

OECD work on regulatory reform is adjusting to these Dialogue with non-members changing needs and has widened its focus beyond reviews of regulatory performance in OECD countries to The move towards regulatory reform as a permanent pay more attention to emerging themes of the regula- feature of policy is not limited to the OECD. Under the tory reform agenda and to develop stronger links with umbrella of the OECD Global Forum on Governance, co- non-member countries. operation with the Asia-Pacific Economic Co-operation forum (APEC) is moving into its second year in 2002, with Country reviews workshops scheduled in Mexico in the spring and in Korea in the latter part of the year. A regulatory reform Regulatory reform reviews in individual member programme with Russia was launched at a conference in countries consider the regulations that govern competi- Moscow in November 2001. And in the framework of the tion policies, trade and investment, the government Stability Pact for South-East Europe, a regional initiative machinery and selected industries, and produce a set of on regulatory reform was launched at a seminar in Greece detailed policy recommendations for improvement. The in October 2001. Results of these regional efforts will be analysis is carried out using regulatory reform recommen- considered when the Global Forum meets in late 2002 dations drawn up in 1995 and 1997. The reviews follow a to discuss regulatory governance and open markets.

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often misused for illicit activities policy options to combat such prac- number of areas including price from tax evasion and market fraud to tices. A number of roundtables are transparency, portfolio effects in con- terrorism and money laundering. In developing regional White Papers for glomerate mergers, competition 2001, Behind the Corporate Veil: Using policy reform, using the OECD Prin- policy, subsidies and state aid. Sub- Corporate Entities for Illicit Purposes, ciples of Corporate Governance as a jects for best practice debate in 2002 looked at the various ways of misus- basis for dialogue but tailored to par- include merger assessment in ing corporate entities and proposed ticular local needs and issues. A new emerging markets and competition roundtable for South-East Europe in the electricity sector. The results held its first meeting in Bucharest in of such best practice discussions September 2001 and plans to issue are available via the Internet a white paper with detailed reform (www.oecd.org/daf/clp). Reviews of proposals in 2003. The third meeting national competition policies and of the Asian roundtable in Singapore sector-specific regulation were car- in April 2001 focused on expanding ried out for Poland, Canada and the the role of company boards while the UK in 2001. Turkey is being reviewed second meeting of the Latin Ameri- in early 2002. The OECD also can roundtable in Buenos Aires in adopted a set of recommendations March concentrated on the impor- on the restructuring of public utility tance of shareholder rights. A white industries in April 2001. paper for Russia is due to be published in 2002. Taxation www.oecd.org/taxation/ Competition [email protected] www.oecd.org/regreform/ competition Tax systems, particularly inter- [email protected] national taxation arrangements, have not always kept pace with global- Public utility industries, once Domestic competition laws are isation. Most of today’s tax arrange- regarded as monolithic mono- increasingly recognised by countries ments were developed in an era polies, are made up of many at all levels of development as a key when authorities could rely on separate activities, many of component of growth. At the same exchange controls and regulated which can sustain effective time globalisation increases the capital markets for information on competition. Experience shows that introducing competition into importance of international co- cross-border transactions and when these industries leads to operation and convergence in enfor- technological constraints limited the enhanced efficiency and greater cing competition laws, particularly in development of truly global acti- innovation as well as benefits for the case of international mergers. vities. These barriers isolated tax consumers such as lower prices, authorities from the full implications better service and greater A number of bilateral law enforce- of the interaction between national variety. But there is a growing ment co-operation agreements were tax systems. Corporations have been realisation that fundamental signed in 2001 and work on hard core able to globalise, but tax authorities structural changes are often cartels intensified in a new phase of remain constrained by national necessary if the full benefits of the anti-cartel programme endorsed borders. competition are to be achieved for by OECD ministers in 2000. The busi- users and consumers. ness community participated ac- Governments need to demonstrate tively in the work on competition, that national tax systems can focusing particularly on the burden respond to challenges such as imposed on international mergers by whether it is possible to devise a fair the need to submit them for review system of taxing capital and highly- in several jurisdictions. skilled professionals in a world of lib- eralised markets. Other questions Roundtable discussions led to the include how to tax enterprises or identification of best practices in a cross-border savings and to enable

40 O E C D A N N U A L R E P O R T

HARMFUL TAX PRACTICES

www.oecd.org/taxation/ctpa/htp [email protected]

The more open and competitive environment of recent decades has had many positive effects on tax systems, including the reduction of tax rates and broadening of tax bases that have characterised tax reforms over the past 15 years. However, some tax and related practices are anti-competitive and can undercut the gains generated by tax competition. This can occur when governments introduce practices designed to encourage non- compliance with the tax laws of other countries. Ultimately, taxpayer confidence in the integrity and fairness of the tax system, and in government in general, declines as honest taxpayers feel that they shoulder a greater share of the tax burden and that government cannot effectively enforce its own tax laws.

Since 1998, the OECD has provided co-ordinated action so that countries – large and small, rich and poor, OECD and non-OECD – can work together to eliminate harmful tax practices. This is a key element in the OECD’s efforts towards greater international co-operation and trust in systems which result in a lack of transparency or lack of the area of taxation. It is not just about government’s effective exchange of information. The OECD is confident ability to collect taxes that are legally due, but is an inte- that similar commitments will be made by other juris- gral part of the global effort to promote and preserve dictions. integrity and stability in the international financial system and to widen the community of nations that subscribe to The OECD has also intensified its work to help member international standards. countries identify and eliminate harmful aspects of their own preferential tax regimes. Work is underway to iden- The work focuses on geographically mobile activities, tify which of 47 potentially harmful regimes identified in such as financial and other service activities. The OECD 2000 are actually harmful. Member countries are to elimi- has provided guidelines for dealing with harmful prefer- nate harmful aspects of preferential regimes by April ential tax regimes in member countries, sought commit- 2003, although there is a provision that extends that date ments from tax havens that they will abide by the prin- to December 2005 in certain limited cases. ciples of transparency and the effective exchange of information in tax matters and broadened its dialogue The OECD has had discussions with a very large number to seek the co-operation of other non-member eco- of non-OECD economies in Asia, Latin America and else- nomies. where and has held multilateral regional meetings in Africa, Asia and South America. The work with non-OECD In 2001, the OECD received commitments from Aruba, economies will continue so that the problem of harmful Bahrain, Isle of Man, Netherlands Antilles and the tax practices is effectively addressed. In addition, the Seychelles to co-operate in the effort to eliminate harm- OECD continued during the past year to seek the views ful tax practices. Added to previous commitments from of the business and labour communities through discus- Bermuda, Cayman Islands, Cyprus, Malta, Mauritius and sions with the Business and Industry Advisory Commit- San Marino, this gives a total of 11 jurisdictions that have tee and the Trade Union Advisory Committee to the pledged to eliminate by 2006 those aspects of their tax OECD.

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fair tax competition to flourish while tion, the basis for a global network government. Strengthening effec- eliminating unfair competition (see of tax treaties, and its Transfer Pric- tive and coherent public governance box p. 41). And how do taxes fit into ing Guidelines, used when drawing is a priority on the policy agenda. the “new economy”? up legislation in OECD countries and Governments need to create a qual- in an increasing number of non- ity public service that can innovate The OECD helps in setting inter- OECD economies. in response to changing situations national tax standards through instru- and is firmly focused on serving the ments such as its Model Tax Conven- Electronic commerce public interest. Governance is also www.oecd.org/ecommerce/ an issue in territorial development [email protected] (see box p. 21) and in conflict prevention and resolution (see chapter on The global nature of electronic com- development, p. 48). merce is such that no one group of countries can act unilaterally without Strong leadership is essential to an increasing the dangers of double effective public service, and Public taxation. Work is being carried out Sector Leadership for the 21st Century under the Ottawa Taxation Frame- published in 2001 discusses the work Conditions agreed by 30 OECD strategies and practices governments and non-OECD countries in 1998. The are adopting in this area. The OECD most urgent issue is that of consump- is also examining how to make pub- tion taxes, where enterprises need to lic administrations more competitive make immediate decisions. The employers so that they can attract OECD published agreed principles and retain high-quality personnel. It on consumption taxes and e- launched a survey of knowledge commerce in 2001 and expects to management practices in ministries publish model guidelines for their in late 2001. implementation in 2002. Progress is In an era of globalisation, also being made in the application Work on public sector budgeting and decentralisation, and knowledge- of existing tax treaties to e-commerce management included an exami- based economies, governments transactions and an update to the nation of how countries can improve are having to reshape public OECD’s Model Tax Convention in the quality of their public expendi- sector leadership to cope with 2002 will include the outcome of this ture by systematically providing new challenges. This requires work. A conference on Tax Adminis- decision-makers with credible infor- new roles for public sector leaders tration in an Electronic World in Mon- mation on the efficiency and impact and many governments of OECD treal in June 2001 enabled repre- of policies. The OECD also looked at member countries are developing new public sector leadership sentatives from 100 revenue how national budget systems can models. This is the first report to authorities worldwide to share help politicians take more account of examine key leadership issues knowledge and experiences in areas the future consequences of the across OECD member countries, such as electronic tax returns and present situation, such as ageing including the strategies and improving taxpayer service. populations and environmental practices governments are clean-up costs. A searchable data- adopting, and the lessons from Public governance base of budgeting systems and prac- country experiences so far. www.oecd.org/puma tices in OECD countries will be avail- [email protected] able on the Internet in 2002.

Public governance underlies gov- While governments adapt to a chang- ernment efforts to produce and im- ing world, they must avoid losing plement policy, provide efficient public trust. Work in 2001 focused on services and respond to new chal- how to create a public service envi- lenges. Focus on governance not ronment where transparency and ac- only serves to make policies work countability reinforce each other. but ultimately to strengthen trust in Building on its work on promoting

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ethics and fighting corruption in the public sector, the OECD is developing best practices for preventing conflicts of interest and resolving them when they do arise.

Making government more accountable requires better disclosure of how government resources are used. The OECD Journal on Budgeting was launched in early 2001 and included the OECD Best Practices for Budget Transparency. The Journal will appear four times a year.

Greater transparency and policy coherence mean strengthening relations between government and civil Owen Arthur, Barbados Prime Minister & Minister of Finance and Economic society, but also enhancing the role Planning, and Tony Hinton, Australian Permanent Representative to OECD, of the legislature in holding the co-chairs of the OECD-Commonwealth Working Group on Tax Co-operation. executive branch of government accountable. In January 2001, an OECD symposium at the French Senate brought together heads of non-member countries. The OECD when and what governments should parliamentary budget committees to also looked at how governments are communicate to the public in a crisis discuss the role of the legislature in using new technologies to provide situation. Further work on this sub- the budget process, the first event better services to citizens (see box ject in 2002 will contribute to build- of its kind. This is to be an annual p. 45). ing expertise in government policy event. A report on “Parliamentary coherence. Senior officials will meet Relations and Procedures” pub- Governments are also looking for in 2002 to discuss the public-private lished in May 2001 provides a review ways to reduce the burden of govern- sector interface, in particular the of relations between the executive ment formalities on businesses. Busi- changing role of the state. branch, the legislature and civil nesses’ Views of Red Tape presented the society. results of the first comprehensive Work to improve the quality of regu- survey of its effect on small and latory systems and policies in 2001 Work is also underway on improving medium-sized enterprises. Some looked at designing regulations that governance of the more autonomous 8 000 businesses in 11 OECD coun- are “compliance-friendly” – tailored public bodies created during devo- tries answered questions on the to achieve their stated intentions – lution of power from the traditional impact of taxes, environment and and on how to improve the institu- ministry-based vertical structure. employment regulations. tional basis for regulators of various specific sectors such as the telecom- Citizens as Partners: Information, Consul- All governments must anticipate and munications or energy industry. Also tation and Public Participation in Policy- manage a wide variety of risks, in 2001 work was finalised on a review Making offers a comparative review of whether security threats, natural dis- of regulatory policies in OECD coun- OECD country policies and practices asters or risks to public health. A tries ahead of the planned publica- for strengthening government-citizen meeting of senior officials from OECD tion in 2002 of a report on regulatory relations, including the use of infor- governments in Reykjavik in October management and reform drawing on mation and communications tech- 2001, focused on how governments 10 years’ experience and analysis. nologies (ICTs). An accompanying can anticipate, limit and react to risk, The report draws heavily on 16 coun- handbook provides practical guide- and how to strike a balance between try reviews under the regulatory lines for putting these policy lessons an immediate response and the long- reform programme since 1998 (see box into practice in both member and term outlook. It also looked at how, p. 39).

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BEST USE OF NEW TECHNOLOGIES

www.oecd.org/science/ [email protected]

Rapid technological advances The OECD provides policy advice on viruses. It is also studying cyber- present new opportunities and chal- coping with the challenges arising terrorism and the vulnerability of our lenges to government and society in from developments in new science- economies and societies because of all countries and regions. Fast- based industries, notably biotech- a growing dependence on ICTs. This changing information and communi- nology (see box p. 46) and leads in the is part of a wider review of the OECD cations technologies (ICTs) are trans- development of indicators to bench- Guidelines on the Security of Informa- forming markets and require new mark member countries’ innovation tion Systems. Also in 2001 the OECD methods of organising work, busi- performance. reported on the impact of ICT on com- ness and trade to harness the bene- pany law and corporate governance. fit of globalisation. The “dot-com Harnessing ICT Work on ICT for the OECD Growth crash” in 2001 was accompanied by www.oecd.org/ict/ Project (see box p. 16) found that poli- almost as much hype as the “dot-com [email protected] cies to increase competition in the mania” which preceded it and has telecommunications industry are key, caused a much-needed reality check. OECD work in this area covers ICT use as they help lower costs and enhance But while economic slowdown may in areas such as e-commerce, where the uptake of ICT. It also found that have put an end to some over- it is preparing guidance for small the long-term impact of ICT on a parti- exuberant behaviour of markets it and medium-sized enterprises, e- cular economy depends on its use, has scarcely dented the continued government (see box p. 45) and corpo- not whether it is produced in that expansion of the Internet. Nor has it rate governance, as well as how to pro- country. changed the need to address the tect against cyber-crime. Throughout concerns felt by many at the eco- 2001 the OECD worked intensively on Measuring progress nomic and technological changes building consumer trust through effec- that are transforming the global tive authentication and privacy pro- The leading OECD publications in economy. tection, combating hacking and the technological field highlighted the organisation’s strength in innovative quantitative data and analysis. The two-yearly OECD Communications Outlook 2001, released in March, provided definitive comparable data on the performance of the communications sector and mapped the first two years of competition for many OECD countries that fully opened their market in 1998. The accompanying OECD Telecommunications Data- base provides over 100 time series of data of indicators such as network infrastructure, revenues, expenses and investment of operators, trade in telecommunications equipment from 1980. The OECD Science, Tech- His Highness General Sheikh Mohammed Bin Rashid Al Maktoum, Crown Prince nology and Industry Scoreboard: Towards of Dubai and Minister of Defence of the United Arab Emirates, with Donald a Knowledge-based Economy 2001, Johnston, OECD Secretary-General, at the OECD Emerging Market Economy released in September, features Forum on Electronic Commerce jointly organised with Dubai in January 2001. more than 160 internationally 44 O E C D A N N U A L R E P O R T

E-GOVERNMENT

www.oecd.org/puma [email protected]

E-government, in particular the networking potential • What are the prospects for the longer term? What offered by the Internet and related technologies, has the groundwork needs to be laid; what does planning potential to transform the structures and operation of need to take into account now to achieve the desired government, from electronic tax returns to online voting. longer-term outcomes? Ministers from OECD countries endorsed the importance of e-government at their annual meeting in May 2001 and The key factors that will differentiate this project from welcomed work to date, particularly the third Global other work on e-government are the focus on the longer- Forum on E-Government, held in Naples in March 2001 term picture and the grounding of the work in the broader which looked at ways of fostering democracy and devel- debate on good governance and modernisation of pub- opment through e-government. The ministers asked lic administration. OECD experts to further explore the “challenges and opportunities” it offers (see full text of ministerial communiqué, The project is receiving close guidance and review from p. 85). a working group of member state representatives. An associates group comprising government and other As a result, the OECD has launched an e-government experts, private sector firms, academic institutions and project that will look at the longer-term impact of e- civil society organisations will also advise on the government on the structure, operations and capacity of project. public administrations in a number of areas. Starting from the premise that e-government could be a major factor The OECD’s overarching perspective on governance in the adoption of good governance practices, the project activities across all member countries means it is will consider questions such as: uniquely placed to address e-government in the context of modernising government and developing citizen- • How can governments meet future challenges? What centred reforms. The public governance focus will enable are the evolving characteristics, needs and it to address key aspects of e-government such as safe- expectations of society, and how can the greater inte- guarding citizens’ interests, reconciling the search for gration of information and communications techno- better knowledge management with the demand for data logy (ICT) within government increase administra- privacy and responding to pressures for greater trans- tions’ capacity to respond? parency and disclosure at reasonable cost.

• What can we learn from experience so far? What The project will produce research papers, policy briefs, progress has been made with e-government to date; and specific reports, with a flagship report to be final- what are the challenges and dangers in the provision ised by the end of 2002. A major conference to consider of e-government; and what good practice strategies the findings of the e-government project is planned for and solutions are emerging? May 2003.

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BIOTECHNOLOGY

www.oecd.org/biotechnology/ [email protected]

Biotechnology is of growing importance to our societies because of its far-reaching consequences for human health, health care, agro-food production, and sustainable development. Used responsibly, it can contribute to economic and human development in many spheres of modern life.

The completion of decoding the human genome created a worldwide sensation in 2001 and prompted the realisation that the practical applications of biotechnology for human (Left to right) John Prescott, UK Deputy Prime Minister, Suvit health will be far-reaching both in OECD countries and Khunkitti, Thai Deputy Prime Minister, and Kim Hak-su, beyond. Executive Secretary of the UN Economic and Social Commis- sion for Asia and the Pacific (ESCAP), at the Conference on Biotechnology offers a new generation of sustainable indus- New Biotech Food and Crops, held in Bangkok in July 2001. trial technologies that promise to help ensure that industrial development does not go hand in hand with environmental This work has been brought into sharp focus by the recent degradation. It can provide improved food quality and pro- use of biological materials as weapons of terror. Access to duction levels with the potential to contribute significantly materials and information for such purposes clearly needs to food supply and security challenges, perhaps particularly to be controlled, yet this must be balanced against the need in developing countries. And in health care, new diagnostics to ensure continued access for legitimate research, much of and treatments for human diseases, including some of the which is targeted on combating infectious diseases. major scourges of mankind, are being developed. Major events in 2001 included a conference on new bio- Advances in the understanding of genetics, genomics (the tech food and crops, and food safety in Bangkok in July. It branch of genetics that studies organisms in terms of their recommended that all stakeholders commit to greater full DNA sequences or genomes) and informatics (informa- transparency on genetically modified organisms and that tion science) are underpinning the development of second- governments increase their support for independent, pub- generation biotechnologies. licly-funded scientific research into the risks and benefits of genetically modified food and crops. The conference, The OECD has provided a focal point for international dis- organised with the UK government and other international cussion on the various aspects of biotechnology for two organisations, brought together more than 300 participants decades, initially focused on the safety aspects which are from 50 countries including scientists, government officials paramount in harnessing the considerable potential of this and representatives of industry, agriculture, civil society technology. But the OECD is also devoting significant effort and the media. to developing international infrastructure, to measuring performance and to addressing barriers to technology A conference in North Carolina in November, organised with diffusion. In its work on regulatory issues the OECD is the US government, discussed the underlying science for extending debate and consensus to include a growing assessing transgenic organisms in the environment. number of non-member countries. OECD work addresses a range of other policy issues raised Future advances will depend increasingly on reliable access by developments in biotechnology, including ethical ques- to high-quality information and materials. Advances in tions, the potential impact on agricultural markets and of genomics and informatics are generating vast amounts of course food and feed safety. The OECD provides a forum for new information on living processes. To better harness this countries to take a comprehensive look at the scientific, regu- information and resources OECD members and non- latory and other policy issues raised by the increasing pace members are working together under French and Japanese of discovery and innovation in biotechnology. This rounded leadership to develop a global system of Biological approach will continue to be essential if the considerable Resource Centres based on common principles and potential of this technology is to be harnessed and contri- practices of access. bute fully to the knowledge economy in the 21st century.

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comparable indicators focused on impede the flow of knowledge benchmarking all aspects of the between science and industry. A knowledge-based economy. Some special edition of the OECD Science, 60% of the indicators in 2001 covered Technology and Industry Outlook: Drivers new areas such as mobility of human of Growth: Information Technology, Inno- capital, skills in the information vation and Entrepreneurship published economy, diffusion of the Internet in 2001 looked at the impact of infor- and electronic commerce. It also mation technology, innovation and measured the resources devoted to entrepreneurship on economic per- innovation in emerging areas such as formance. It looked at policies to biotechnology, environment, health increase returns from ICT investment, and ICT for the first time. software, telecom reform, raising returns from R&D, industry-science Bridging the digital divide relations, and policies to facilitate the entry of new firms. The report The digital divide and electronic highlights a number of issues, which The 2001 Communications commerce are high priorities for require international solutions that Outlook presents the most OECD activities with non-member can only be implemented through recent comparable data on the economies. A major focus in 2001 was improved international co-operation. performance of the commu- work on bridging the “digital divide” nication sector in OECD to ensure that developing countries, Future studies countries and on their policy frameworks. The data map the and the disadvantaged in the indus- www.oecd.org/futurestudies first two years of competition for trial world, have access to the new [email protected] technologies. The OECD worked with many OECD countries. The 2001 edition analyses major the Digital Opportunities Task Force The OECD’s International Futures changes and trends in the (DOT Force) set up by the G8 that Programme seeks to assess the communications sector and reported to the G8 annual summit in trends shaping the long-term future explores future developments. Genoa in July. The main showcase for by providing early warning of emer- the OECD’s work in this area was a ging issues, pinpointing major devel- conference in Dubai in January on e- opments and possible trend breaks; row’s business and policy environ- commerce and emerging markets, offering analytical appreciation of ment. It covers a broad range of the first event of its type held in a key long-term issues; and promoting topics from demographic develop- non-OECD country. Participants from better dialogue and information- ments and the world economy to the North and South included govern- sharing to help set policy agendas environment, employment and long- ment representatives, business and map strategy. term prospects for particular coun- organisations and civil society as well tries and regions. as other international organisations. Key activities in 2001 included a con- A conference on Exploiting Digital ference in Luxembourg in July on the But forecasting the future is never Opportunities for Poverty Reduction future of money that discussed how easy, and a brochure “Looking Back was held in Paris in March. soon, if ever, hard cash would dis- at Looking Forward: Foresight appear in favour of “virtual payment” through the centuries” offers a salu- Fostering innovation whether by cheque, credit card or tary lesson in the pitfalls of predic- some new method. And would this tions. From pioneering film-maker Research and development (R&D) is put central banks out of business? D. W. Griffith’s confident assertion important for productivity growth. The possible answers and major three years before the release of the The experience of OECD countries themes for discussion will be pub- first “talkie” that “speaking movies suggests that policy can foster an lished in 2002. are impossible” to the IMF’s some- environment conducive to innova- what premature declaration in 1959 tion. OECD work in this area has The Futures Trends series of CD- that “in all likelihood, world inflation found that innovation increasingly ROMs, updated annually, provides is over,” this collection shows that draws on scientific research, but in information on key trends and history abounds in apparently logical many countries, barriers continue to driving forces that will shape tomor- conclusions that never came to pass. 47 O E C D A N N U A L R E P O R T

DEVELOPMENT

www.oecd.org/dac; www.oecd.org/dev [email protected] [email protected]

OECD member countries are major out new directions in a number of stream of development policies as aid donors, accounting for more than areas, including policy coherence well as how firms working with local 95% of total official development among aid donors, partnerships that actors can make positive economic assistance (ODA) which amounted to strengthen local ownership of and social contributions to prevent- $53.7 billion dollars worldwide in poverty reduction programmes and ing violence. The guidelines also 2000. Much of the organisation’s the institutional change in develop- look at ways of involving donors in development work is focused on how ment agencies that this new relation- work to build legitimate and account- to spend and invest this aid in the ship implies. able security systems in developing most effective manner, so as to countries. reduce poverty and ensure sustain- Conflict prevention (www.oecd.org/ able development in developing development/governance/conflict): Sustainable development (www.oecd. countries. The April meeting also adopted org/dev/growth): Strategies for Sustain- guidelines on Helping Prevent Violent able Development: Practical Guidance for Major new developments in 2001 Conflict: Orientations for External Partners. Development Co-operation, also adopted included a milestone agreement on These suggest how donors can make in April, seeks to clarify the purposes untying aid and the adoption of new conflict prevention part of the main- and principles underlying effective guidelines on poverty reduction, conflict prevention, sustainable development and capacity building for trade.

New guidelines

Development co-operation ministers and heads of aid agencies met in April 2001 and adopted four new sets of guidelines for development issues, as well as endorsing recommendations on untying ODA to the world’s poorest countries (see box p. 49).

Poverty Reduction (www.oecd.org/dac/ poverty): The new Development Assistance Committee (DAC) guidelines on Poverty Reduction reaffirm the commitment to international development goals such as halving the proportion of people in extreme poverty and hunger by 2015. They aim to clarify concepts and defini- (left to right) Charles Goerens, Luxembourg Minister for Development Co- tions of poverty and its effects, operation and Humanitarian Action, Eveline Herfkens, Netherlands Minister suggest priorities for action and for Development Co-operation, and Guido Van Hecken, Director, Private Office describe best practice in policies, of the Belgian Secretary of State for Development Co-operation, at the DAC programmes, instruments and chan- high-level meeting in April 2001. nels for reducing poverty. They set

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UNTYING AID

www.oecd.org/dac/partnerships [email protected]

Members of the Development Assistance Committee forgiveness; sector and multi-sector programmes assist- (DAC) spent US$53.7 billion in 2000 on Official Develop- ance; investment project aid; import and commodity sup- ment Assistance (ODA) to developing countries. About port; commercial services contracts; and ODA to NGOs two-thirds of it was given bilaterally and the rest through for procurement-related activities. multilateral development banks such as the World Bank. Total bilateral aid to the least developed countries stands Effort-Sharing: Promoting a reasonable balance among at around US$8 billion a year (some 17% of total bilateral DAC members in implementing the untying aid initia- aid); about half of this is “tied”, meaning it must be spent tive is an integral part of the Recommendation. The issue on procurement of goods and services in the donor of balanced effort-sharing arises because the Recommen- countries. dation applies indiscriminately to all members’ aid programmes, regardless of the variations in the volume, Proponents of untied aid emphasise that it is a more structure and geographical orientation of assistance from efficient way to deliver development assistance (a different countries. Members have agreed to identify and Development Centre study found that tied aid raises the implement additional actions to promote effort-sharing cost of many goods and services by an estimated 15-30%). and to regularly review their progress. They have also Tied aid also increases the administrative burden on both said they do not intend their aid to the least developed recipients and donors and tends to favour projects that countries to decline over time as a result of the Recom- require capital intensive imports or donor-based techni- mendation. cal expertise rather than smaller, more poverty-focused programmes. Transparency and Monitoring: The Recommendation sets out strong transparency, implementation and review pro- After intensive discussions, the DAC reached agreement cedures to ensure a level playing field, monitor compli- at a high-level meeting in April 2001 on a Recommend- ance with the Recommendation and assess its effective- ation to untie ODA to the least developed countries (for a ness. Notifications of untied aid offers will be made list of these countries see www.oecd.org/dac/stats/dac), publicly available so that companies in donor and with effect from 1 January 2002. The recommendation aims recipient countries will be aware of the possibility of to promote and ensure adequate ODA flows and achieve bidding for the contract. Bidding will take place accord- balanced efforts among DAC members in untying aid. ing to the 1986 DAC Good Procurement Practices for ODA. Donors will also inform the OECD Secretariat which com- Coverage: As of 1 January 2002, ODA to the least devel- pany has been awarded the contract. An electronic infor- oped countries was untied in the following areas: balance- mation exchange system will allow members to ask each of-payments and structural adjustment support; debt other for additional information or to clarify ambiguities.

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national and local strategies for sus- and hunger; achieving universal pri- tainable development and describes mary education; promoting gender the various forms they can take in equality and empowering women; developing countries. It also offers reducing child mortality; improving guidance on how development co- maternal health; combating HIV/AIDS, operation agencies can support malaria and other diseases; ensuring them. The guidelines are based on environmental sustainability; and international experience and multi- developing a global partnership for stakeholder reviews in developing development. The OECD will be countries. working with the United Nations, the International Monetary Fund and the Trade capacity (www.oecd.org/ World Bank in regular reporting on, and development/trade): The fourth new monitoring progress towards, them. set of guidelines, Strengthening Trade Capacity for Development, offers a The OECD is also deepening its work common reference point for the on policy coherence and develop- trade, aid and finance communities, ment in order to create opportunities as they develop more coherent strat- for better growth in developing These Guidelines provide ways for egies to help developing countries countries. donor governments to honour integrate with the global economy. their commitment to conflict They also show how donors can help Regional issues prevention as an integral part of developing countries build their www.oecd.org/development the quest to reduce poverty. They capacity for trade. cover key issues such as: security, Regional development was high on development and dealing with In 2002, work will focus on imple- the agenda in 2001, with annual small arms; regional co-operation; peace processes, justice and menting and disseminating DAC forums organised jointly with the reconciliation; engaging in decisions and on promoting coher- regional development banks. Tech- partnerships for peace; working ence between development co- nology was the hot topic for Asia and with business; and grappling with operation and other policy areas Latin America. The seventh Annual the political economy of war. such as trade, environment and Forum on Asian Perspectives, organ- financial governance, as well as on ised with the Asian Development the Millennium Development Goals. Bank, focused on technology and poverty reduction while the twelfth Inter- Millennium Development national Forum on Latin American Goals Perspectives, organised with the www.oecd.org/dac/goals Inter-American Development Bank, [email protected] looked at Competitiveness and New Technologies. The second Annual The OECD welcomed the Millennium Forum on African Perspectives, Development Goals included in the organised with the African Develop- “road map” for the Millennium ment Bank, focused on regional Summit laid out by UN Secretary integration. The OECD also organised General Kofi Annan in September a policy dialogue on corporate gov- 2001 and will work with other inter- ernance in emerging economies and national organisations to achieve developing countries in co-operation them. Adopted by the international with the European Bank for Recon- community in 2000, the goals build on struction and Development (EBRD). international development goals Expert workshops covered issues published by the DAC in 1996 in its such as how e-commerce can contri- report Shaping the 21st Century: The Role bute to development, and the impact of Development Co-operation. The goals of foreign direct investment on edu- include eradicating extreme poverty cation in developing countries.

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DEVELOPMENT CENTRE

www.oecd.org/dev [email protected]

The Development Centre carries out comparative ment process helps a country earn policy credibility research and policy dialogue with developing countries. abroad while signalling a commitment to transparency Its mission is to help promote a better understanding in at home. the OECD of the economic and social problems of developing countries and to Work on poverty reduction and skills build- transfer to them the knowledge, informa- ing looked at ways to develop better indi- tion and experience gained in the devel- cators to measure human capital in development process. It serves as a meeting oping countries and to explore how foreign place and a forum where individuals from investors can contribute to education and developing as well as OECD countries, be training policies to help build the skills of they researchers, representatives of the local residents. Case studies of Indonesia, private sector or NGOs, civil servants or Madagascar, Peru and Tanzania demon- high-level government officials, can freely strated how institutional and policy reform express their views. can enhance the effectiveness of education and health spending in reducing poverty. The Development Centre draws on the OECD’s multidisciplinary expertise and Emerging Africa, an analysis of the possibili- experience of member country policy ties for sustained economic take-off for six analysis to enrich its own work on devel- African countries, was completed in 2001 oping countries. For example, the Centre is publishing and the Centre also produced or prepared 12 other pub- in early 2002 in collaboration with the African Develop- lications on Africa including Policies to Promote Competitive- ment Bank the first African Economic Outlook. The African ness in Manufacturing in Sub-Saharan Africa (co-published Economic Outlook, modelled on the OECD Economic Out- with the IMF and the African Economic Research Consor- look. comprises country notes on 22 African states plus a tium), Towards Arab and Euro-Med Regional Integration and comparative statistical annex. work on reforming the financial sector in Africa and on corruption in Mozambique. A series of papers on regional The Development Centre’s 26 member countries include integration in Africa explored the idea that regionalism several developing economies (Argentina, Brazil, Chile can create a springboard for progressive insertion into and India, which joined in March 2001). the global economy.

A highlight of work on globalisation, development and Case studies on the costs and benefits of measures to governance in 2001 was the publication of The World reduce greenhouse gas emissions in China and India Economy, A Millennial Perspective. This pioneering effort to showed that implementing policies to prevent climate quantify the economic performance of nations since the change are less costly at national level than often antici- year 1000 offered a reminder that different countries and pated by governments of developing countries. regions have taken the lead in the performance stakes over the centuries. Don’t Fix, Don’t Float looked at ques- The successful Directory of NGOs Active in Sustainable Devel- tions pertaining to changes in the international financial opment and Public Attitudes and International Development Co- architecture from the perspective of developing coun- operation are being updated. The latter update is based tries. And research in Argentina, Brazil, Chile, China, India, in part on the results of an experts meeting held in Dub- Malaysia and South Africa concluded that appropriate lin, supported by the Swedish International Development attention to corporate governance during the develop- Agency (SIDA) and Ireland Aid.

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The OECD also participated in and consortium of policy-makers, statisti- number of task team meetings on ad- contributed to preparations for the cians, and users of statistical informa- vocacy, indicators of statistical UN conference on Financing for tion that aims to build statistical capacity, statistical strategic planning, Development held in Mexico in capacity as the foundation for effec- and population censuses. The future March 2002. tive development policies by helping work of the consortium will concen- develop well-managed, appropriately trate on broadening coverage of the Statistical capacity resourced statistical systems. Activi- initiative beyond anglophone Africa; building ties in 2001 included two sub-regional encouraging bilateral donors and trust www.paris21.org/ workshops covering 20 African coun- funds to help countries implement tries and a follow-up workshop in the action plans developed at the PARIS21 (Partners in Statistics for Zambia; a one-day workshop at the sub-regional workshops; and com- Development in the 21st Century) is UN Economic Commission for Africa pleting and disseminating the mater- an international initiative by a global covering some 40 countries; and a ials resulting from the task team work.

SAHEL AND WEST AFRICA CLUB

www.oecd.org/sah [email protected]

The Sahel and West Africa Club is an informal forum for tion in West Africa; regional dimensions of development; reflection and exchanging views with and about African and future studies. countries and working to improve development aid. It creates and facilitates links between OECD member coun- Highlights of the work in 2001 included distribution of an tries and West Africa and between the public and private ECOLOC (programme to revive local economies) Manual sectors. The Club’s programmes are approved by a policy on local economies and training for African experts in orientation group comprising donor agencies as well as municipal development. Experimental work on local leading West African networks and partner institutions. participatory development is underway in Ségou and Sikasso in Mali. The Sahel Club was created in 1977 to facilitate co- operation among aid donors following massive drought In the area of regional dimensions of development, in the African region. It has changed over the years in studies are being finalised of the financial mechan- response to changing regional needs and in 2001 it isms of integration and on regional trade. Work is also extended its mission to the whole of West Africa and was underway on the S.K.Bo area (Sikasso in Mali, renamed the Sahel and West Africa Club. It also decided Korhogo in Ivory Coast and Bobo Dioulasso in Burkina to increase the involvement in its work of civil society Faso). from both OECD and West African countries and to encourage greater participation in its structure by the Work on future studies included an assessment of existing southern partners. future studies for West Africa and the establishment of research themes for the Club’s future studies, such as The Club’s work programme for 2001-2003 is focused on economic competitiveness, the regional dimension of three main areas: local development and decentralisa- development and socio-political risks. 52 O E C D A N N U A L R E P O R T

CO-OPERATIVE RELATIONS WITH NON-MEMBERS

www.oecd.org/ccnm [email protected]

The OECD maintains co-operative Conference on Sustainable Develop- tion dimensions of trade policy were relations with a wide range of transi- ment scheduled for September 2002 the subjects of meetings in Chile and tion and emerging market economies in Johannesburg. Paris of the Global Forum on Trade. covering topics of mutual interest. OECD member country officials and The Global Forum on the Knowledge The Global Forum on Competition, experts engage their non-member Economy concentrated in 2001 on which held its first meeting in Paris counterparts in policy dialogue and indicators of the knowledge eco- in October 2001, offers a venue for conduct peer assessments while nomy, innovation policy, skills and non-OECD members to contribute sharing each other’s rich and varied education, e-commerce and biotech- to the formulation of an OECD anti- policy experiences. nology. The Global Forum on Gov- cartel programme. It also offers a ernance held meetings in Paris, Italy, chance for members and non- The year 2001 saw a major restruc- Brazil, South Africa and the Slovak members to discuss international turing of the activities of the Centre Republic to discuss ways to enhance merger control. The inaugural meet- for Co-operation with Non-Members, efficiency, openness, transparency ing of the Global Forum on Inter- grouping its work around Global and accountability of member and national Investment in Mexico City Forums in eight policy areas where non-member governments. in November discussed ways for the OECD has particular expertise governments to attract foreign and where global dialogue can have Trade and development in non- investment in order to promote sus- an important impact on policy- OECD countries, as well as the tainable development and reduce making. The programmes for regions labour, environmental and competi- poverty. and countries were also reorganised. This strengthened the focus on key areas of institutional and policy reform to ensure that the benefits of globalisation are fully shared worldwide.

Global forums www.oecd.org/ccnm

The Global Forums aim to achieve sustained results and to develop stable active networks of policy- makers in OECD member and non- member economies in eight key areas: sustainable development, the knowledge economy, governance, trade, agriculture, taxation, international investment and competition.

The Global Forum on Sustainable Development focused on associating non-members with the OECD sus- Adrian Nastase, Romanian Prime Minister, and Seiichi Kondo, OECD Deputy tainable development project and Secretary-General. providing contributions to the World 53 O E C D A N N U A L R E P O R T

CHINA

www.oecd.org/ccnm/china [email protected]

The year 2001 marked a milestone in the building of a closer relationship between the OECD and China. China’s chief trade negotiator and chief co-ordinator for co- operation with the OECD, Vice-Minister of Foreign Trade and Economic Co-operation Long Yongtu, played a major role in this development. He came to the OECD Paris headquarters three times in 2001 for ministerial and other high-level meetings and opened the first informal consultation between China and OECD member countries at the Beijing headquarters of China’s Ministry of Foreign Trade and Economic Co-operation (MOFTEC) in September.

China’s accession to the World Trade Organization (WTO) is likely to provide further impetus to ongoing domestic reforms that will encourage further deepening of OECD- China co-operation. WTO membership will expand the After more than two decades of progress in market opportunities for foreign direct investment (FDI) and al- reforms and trade and investment liberalisation, the entry of China into the WTO marks a new era for its low China to better realise its comparative advantage in integration into the world economy. Drawing on the the world economy. As part of work to encourage invest- experiences of OECD members over the past 50 years, ment in less favoured regions, the OECD and China held and the organisation’s extensive work with non-member a conference in Xian in October on challenges and pros- economies, this landmark study provides readers with a pects for FDI in the central and western regions which comprehensive view of the domestic policy issues at have received very little FDI to date. Future OECD-China stake and with specific recommendations for action. work on investment will cover such areas as mergers and acquisitions, FDI statistics and an FDI Policy Study of China. China has been engaged in an extensive economic reform process over the past two decades, with impressive The economy will have to undergo some major adjust- results. To continue this progress, China will need to ments before the full benefits of WTO membership can improve the efficiency of its domestic economy in the be realised. China’s Agriculture in the International Trading face of enhanced international competition. These System, published in 2001, examines the numerous chal- reforms will entail strengthening the Chinese govern- lenges facing Chinese agriculture as the country prepares ment’s ability to support economic development in a for increased integration into the international trading more complex and competitive environment, improving system, from employment for redundant farm labour to the flexibility of macroeconomic policies and develop- environmental protection. A substantial reallocation of ing a comprehensive regulatory policy framework to resources among the various sectors of the economy and support the efficient functioning of markets. a major restructuring of the business sector will be needed to correct widespread inefficiencies that now Most of these issues are reviewed in a landmark study, exist. These adjustments are being impeded by weak- China in the World Economy: the Domestic Policy Challenges, pub- nesses in the financial system, overly intrusive govern- lished in early 2002 on the domestic economic policy ment intervention in operations of state-owned enter- challenges that China faces in its efforts to realise the prises, excessive segmentation among China’s regions, full benefits of liberalisation of its international trade and and other structural problems. investment policies.

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The Global Forum on Agriculture The Global Forum on Taxation held ting best practices in tax policy and fosters dialogue with non-members two meetings in Paris in September administration. on agricultural policies including 2001 focused on the application of trade and market policies to evalu- tax treaties and counteracting harm- Regional and country ate and strengthen the process of ful tax practices (see box p. 41). More programmes policy reform and trade liberalisa- than 80 economies were represented www.oecd.org/ccnm/regional tion. A meeting in April in Paris gath- as well as major international organi- [email protected] ered representatives of more than sations. The aim is to assist in elimi- 40 economies. As a regular agenda nating tax measures that distort trade The regional and country pro- item of these meetings, Brazil, China, and investment flows, preventing grammes provide for more targeted and Russia presented their latest double taxation, counteracting tax co-operation with non-members in policy developments. evasion and avoidance and promo- three areas: Europe and Central

THE BALTIC REGION

www.oecd.org/ccnm/baltics [email protected]

The Baltic Regional Programme, established in 1998, is the OECD’s main vehicle for co-operation with Lithuania, Latvia and Estonia. Several northwestern regions of the Russian Federation also participate in some of the activities.

The overall aims of the programme are to support the Baltic countries in completing their transition to market (left to right) Gita Kalmet, chargée d’affaires, Estonia, economies, to promote their stable integration into the Donald Johnston, OECD Secretary-General, and Asta global economy and to encourage them to use best prac- Skaisgiryté Liauskiene, Ambassador of Lithuania to tices developed by the OECD in various areas. The pro- France, on the occasion of an exchange of letters by which gramme also seeks to associate the Baltic countries more Estonia and Lithuania adhere to the OECD Declaration on closely with OECD instruments in areas including foreign international investment and multinational enterprises. investment, competition, bribery, taxation, insurance and entrepreneurship. The detailed work programme is policies with OECD instruments and standards. Estonia developed in close consultation with the Baltic counties. and Lithuania signed the OECD Declaration on Inter- national Investment and Multinational Enterprises in Much of the work consists of policy reviews and policy September 2001. Lithuania became an observer in the dialogue. Work on foreign direct investment, education, Committee on Competition Law and Policy in 2001. The insurance and pensions reform, taxation and statistics as Baltic countries have been actively involved in the well as social and labour markets has been completed development of the Baltic Anti-Corruption Initiative or is ongoing. New work on trade and on combating bri- (BACI) which was launched in 2001. bery was launched in 2001. All activities in this programme depend on voluntary Since the establishment of the programme, the Baltic contributions from OECD member governments as well countries have made significant progress in aligning their as the Baltic countries for their implementation.

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Asia; Asia; and South America. There current programmes focused pri- is a general programme for each marily on South Africa. region, as well as a specific programme for a particular country – In addition to specific regional and Russia, China (see box p. 54) and Brazil country programmes, non-member (see box p. 18). There are also sub- economies may also participate by regional programmes for South invitation in OECD bodies and legal Eastern Europe and the Baltic region instruments. For example non- (see box p. 55). members Argentina, Brazil, Bulgaria and Chile have adhered to the OECD The third annual meeting of the Convention on Combating Bribery of Anti-Corruption Network for Trans- Foreign Public Officials in Interna- ition Economies in Istanbul in tional Business Transactions and March 2001 agreed on the need for more than 20 non-members parti- future work on the role that the rule cipate in over 30 committees and of law and the use of legal instru- other subsidiary bodies of the ments, good governance, civil organisation. society and regional networking can play in combating corruption. The Russian Federation faces In 2001, the OECD invited Brazil and The OECD also completed a review important economic and social Chile to participate in the Public of Ukraine’s foreign direct invest- challenges. By 1998 national Management Committee, China in ment policies that led to the estab- income was little more than half the Committee for Scientific and lishment of a Ukraine Forum on its level in 1990. Life expectancy Technological Policy, Chinese Taipei Investment and Enterprise Devel- for men is now about 61 years, in the Committee on Competition opment. The Investment Environment compared to 65 years a decade Law and Policy, and Argentina in the ago. More than a quarter of the in the Russian Federation: Laws, Poli- Committee on Fiscal Affairs. Estonia Russian population is poverty- cies and Institutions was one of several and Lithuania adhered to the OECD stricken according to official publications dealing with Russian criteria. This book provides a Declaration on International Invest- issues. detailed analysis of the social ment and Multinational Enterprises. problems facing the Russian Slovenia became a full participant in The OECD/World Bank Roundtables Federation, and develops the work on bribery in international on Corporate Governance confirmed proposals for continuing reform business transactions of the Commit- their role in 2001 as the leading fora to improve the economic funda- tee on International Investment and for promoting good corporate govern- mentals, including productivity, Multinational Enterprises as well as ance in Russia, Asia, Latin America while at the same time ensuring an observer in the Education Com- and Eurasia. Several publications that social and labour market mittee, the Working Party of Senior during the year contributed to this policies become more effective in Budget Officials and standing com- helping the poorest Russians. work, including Corporate Governance in mittees of the Nuclear Energy Asia. The OECD also launched a Forum Agency. for Asian Insolvency Reform (FAIR) in co-operation with the Asian Develop- Partnerships ment Bank (ADB) and the Asia-Pacific with other international Economic Council (APEC). Given the organisations relevance of the OECD’s work on public governance to non-members, the SIGMA, a joint initiative of the OECD The OECD further expanded and public governance outreach pro- and the European Union principally focused its relationship with other gramme was extended in 2001. It financed by the European Commis- international organisations in 2001 included a number of global and sion continued to support public notably with the World Bank. Pos- regional events, such as a meeting in management reform in 15 countries. sible partnerships with other inter- Johannesburg in November to help national and regional organisations, promote institution building and Exploratory work for possible future as well as regional development policy reform. co-operation in regions outside the banks are being explored.

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STATISTICS

www.oecd.org/statistics [email protected]

Statistics are a key element of the guidelines for the development of soundness and comparability. New OECD’s work and the organisation statistical activities; and an agree- methodological work in 2002 will has a high reputation for the quality ment on specific rules for the man- focus on issues related to informa- of its statistical output. The OECD agement of the system. It is expected tion and communication technology secretariat and committees require that the statistical programme will be (software measurement) and on a wide range of reliable statistics to fully implemented by 2003. selected service activities. The data- monitor developments in member base on capital stocks and capital countries and in key non-member Short-term indicators services will be updated and countries. The OECD also produces expanded, using work completed in an extensive range of specialist sta- The OECD publishes an extensive 2001. A new data set on productivity tistical publications and databases range of short-term economic indi- measures and unit labour costs will for government agencies and the cators on a weekly, monthly and be developed in 2002. public. These range from annual and quarterly basis, including national historical data to a “hot file” of key accounts, production, composite New departures economic indicators for the 30 mem- leading indicators, retail prices, ber countries updated weekly on the financial, international trade and The OECD also develops new indi- OECD website. balance of payments. The indicators cators in response to changing eco- are disseminated online, on CD-ROM nomic patterns and concerns and is To ensure comparability and reliabil- and on paper. The OECD’s principal aiming to provide a comprehensive ity of these statistics the OECD also short-term indicator database, the report on OECD agri-environmental promotes the adoption of interna- monthly Main Economic Indicators (MEI), indicators by 2004. The report will tional statistical standards and best was significantly enhanced in 2001 provide information to policy-makers methodological practice. One of the with the inclusion of detailed on the evolution, state and possible main responsibilities of the Statistics balance-of-payments series for mem- future changes in key environmental Directorate is to co-ordinate these ber countries and a range of indi- areas in agriculture, to help them statistical activities with other direc- cators for non-members Brazil and understand the links with policies torates of the organisation. The Indonesia. A monthly press release and contribute to the monitoring and OECD launched a project for the re- for the OECD composite leading evaluation of policies in achieving form of its statistical system in 2001 indicator began in November. At the sustainable agriculture. In the scien- in order to improve this co- end of 2001, the first of a series of tific field, a revised Frascati Manual ordination and the statistics opera- methodological analysis publica- of guidelines for measuring research tions at the OECD. This, along with tions was released, comparing and development (R&D) is sched- an improved presentation of statis- compilation practices of member uled for publication in 2003. Topics tical activities on the Internet via a countries for industrial production being studied include service sector new Statistics Portal and increased indices, retail trade and construction R&D, the improvement of compara- transparency of OECD statistics in indicators. Similar analyses will be bility with national accounting sys- SourceOECD, the organisation’s published in 2002 for other key short- tems and methodologies for the bet- online library, will provide a clearer term indicators. ter derivation of R&D data on picture of the quality and breadth of hospitals and clinical trials. OECD statistics. National accounts Other new developments in 2001 In 2002, the OECD will work towards The OECD plays an important role in included a draft statistical definition the full implementation of the statis- providing timely, reliable national of biotechnology to help countries tical system from a technical point of accounts data for OECD member interested in indicators to measure view; the definition of the main countries ensuring methodological biotechnology. A decision was taken 57 O E C D A N N U A L R E P O R T

STATISTICS – NEW PUBLICATIONS

www.oecd.org/statistics/newsletters

Two new publications, the Statistics Newsletter and the Statistics Brief, were launched in 2001 to help raise awareness of the wide range of statistical work being carried out at the OECD and help users to understand it better.

The Statistics Newsletter (http://www.oecd.org/statistics/ newsletters), a monthly publication launched in May 2001, is already reaching more than 2 000 readers in national statistical agencies, government ministries, international organisations, the private sector and academia. Its mission is to raise awareness in member countries of the wide range of important statistical work being conducted throughout the organisation and to strengthen the extended OECD statistical network.

The Statistics Brief (http://www.oecd.org/ statistics/newsletters), launched in October 2001, is intended to help government statisticians, economists, policy-makers and researchers understand important statistical questions. The first issue dealt with measurement challenges in trade in goods and in services. It will be produced several times a year.

Other new statistical publications in 2001 include the OECD Manual on Measuring Productivity, the first comprehensive guide to the various productivity measures culture databases cover commodities outlook, agri- involved in constructing industry-level productivity indi- cultural policies in emerging and transition economies cators. This manual presents the theoretical foundations and agricultural support estimates. The Tariffs and Trade to productivity measurement, and discusses implemen- CD-ROM provides access to pre-Uruguay Round MFN tation and measurement issues. The OECD Manual on tariffs, bound tariff levels negotiated during the Round, Measuring Capital serves to clarify the conceptual issues and corresponding data on the value of imports and ex- concerning stocks and flows of fixed capital, and provides ports by partner country. The database covers all OECD practical guidelines for estimation. The Manual also deals countries. Several databases previously published on with the definition and measurement of “capital services” diskette were also made available on CD-ROM in 2001. which measure the contribution of capital assets to the They include Indicators of Industry and Services, provid- production process. ing an overall view of short-term economic developments in a number of industrial and services branches for OECD There have also been two new CD-ROM products this countries and main economic groupings and Structural year: OECD Agricultural Databases, a unique, reliable and Statistics for Industry and Services. The Institutional up-to-date source of international statistics on agriculture, Investors database of statistics on institutional saving and and Tariffs and Trade, providing a unique and compre- investment in the OECD area since 1980 was also made hensive data set on market access issues. The three agri- available on CD-ROM.

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to develop “model” surveys, one for tion, taxation of wages, unemploy- R&D surveys and one for special bio- ment insurance wage replacement technology surveys, to help member rates and employment protection countries undertaking work in this indicators. This will be the first time area and to ensure a high level of that such information will be com- international comparability. And the piled and published systematically Working Party on Indicators for the for OECD countries. It should be an Information Society (WPIIS) approved asset to analysts interested in a model questionnaire on ICT use in assessing the impact of different the business enterprise sector, policy and regulatory environments intended to provide guidance to on labour market outcomes. OECD countries for the measurement of indicators of ICT, Internet use and Non-observed economy electronic commerce. The OECD is developing interna- The OECD is also working to im- tional standards for measuring the prove international harmonisation “non-observed economy” (NOE) to The monthly Main Economic of environmental data and indica- ensure that national accounts pro- Indicators (MEI) presents tors, and to strengthen the capacity vide a comprehensive picture of eco- comparative statistics providing of member and selected non- nomic activity. The non-observed an overview of recent inter- member countries in the field of in- economy includes underground and national economic developments formation and reporting concerning informal activities, as well as activi- for the 30 OECD countries and a the environment and sustainable ties that are missing from GDP number of non-members. Using development. The 2001 Compen- because of inadequacies in data col- up-to-date, user-friendly graphi- dium of OECD environmental data, lection procedures. The OECD is pro- cal and tabular presentation, the a report on environmental de- moting best practice in the measure- indicators cover national coupling indicators, as well as ment of the NOE through workshops, accounts, business surveys and updated key environmental indica- training and publications. A team of consumer opinions, leading indicators, retail sales, produc- tors and information on environ- experts drawn from the OECD, inter- tion, construction, prices, employ- mentally related taxes are due for national agencies including the Inter- ment, unemployment, wages, publication in 2002. The OECD is national Labour Organization, IMF finance, foreign trade and balance also reviewing with Eurostat the and Eurostat, and the Dutch and of payments. The series is also OECD questionnaires on the state Italian statistics offices is developing available on CD-ROM and online. of the environment and on environ- “A Handbook for Measurement of the mental expenditure and revenues. Non-Observed Economy” to be published in early 2002. Most internationally comparable labour force statistics come from Development indicators in providing aid, debt relief and labour force surveys and consist www.developmentgoals.org. market access. Updates to A Better largely of information on outcomes World for All: Progress towards the (unemployment and participation The OECD works jointly with the International Development Goals, a joint rates, employment-to-population United Nations, the World Bank and publication of the four organisations ratios, etc.). What is not generally the International Monetary Fund on in 2000, on progress towards the compiled and published is informa- indicators for the Millennium Devel- MDGs will be published annually tion on the institutional and regula- opment Goals (MDGs) set out in the from 2002. A partial update is tory framework that affects the func- Millennium Declaration signed in included in the Development Co- tioning of the labour market. In 2002, 2000 by 189 countries. The 48 indi- operation Report 2001 (www.oecd.org/ the OECD will be preparing a publi- cators monitor progress by develop- dac). The OECD will continue to work cation which will include such infor- ing countries towards goals for with the World Bank and the UN to mation alongside the usual labour poverty reduction, education, health establish a set of qualitative indica- force statistics. It will also include and the environment, along with tors to measure governance in devel- data on minimum wages, unionisa- actions, mainly by OECD countries, oping and transition countries. 59 O E C D A N N U A L R E P O R T

PUBLIC AFFAIRS AND COMMUNICATIONS

www.oecd.org/about

The OECD has an active policy of able free of charge via SourceOECD. communication, dialogue and infor- Feedback has been positive and mation dissemination with a broad more web-books are likely to be range of stakeholders, whether introduced during 2002. policy-makers, academics, business, labour, civil society organisations or The innovative Browse_it service the media. Activities with these launched in 2000, which allows stakeholders make an important sub- readers to browse the full text of stantive contribution to the OECD’s monographs online, free of charge via work. Transparency and openness the online bookshop (www.oecd.org/ are also important for building trust bookshop), has been a great success in public institutions and for promo- with more than 8 000 browsing ses- ting greater public understanding of sions registered every month. Sales the benefits and challenges of global via the online bookshop have mean- economic and social change. while risen to an average 1 100 a month from 900 in 2000. Amadou Cheikh Kanouté, Regional A second-generation website was Director for Africa, Consumers launched in 2001, improving access International, Senegal at the session Media relations to the results of the organisation’s on digital opportunities and the www.oecd.org/media work. The OECD continues to digital divide at Forum 2001. [email protected] pioneer in electronic publishing, building on its important role as a Media relations activities support and print publisher. reflect the priorities of the of the online library, SourceOECD organisation. All through the year, the Publishing (www.sourceoecd.org) in 2001, its first Media Relations Division is required www.sourceoecd.org/ full year of operation, and nearly 100 to field journalists’ questions on a [email protected] took the entire service. By the end range of sometimes thorny issues from of 2001, monthly usage exceeded the new economy to the OECD’s crack- The OECD publishes about 250 titles 50 000 visitor sessions, and some in- down on tax havens. But it also plays a year in English and French. The stitutions were using the service a prominent role in actively dissemi- highlight of 2001 was the publication more than 1 000 times a month. The nating news about the OECD’s work of The World Economy: A Millennial Per- online statistics databases have from environment policy, economic spective by Angus Maddison. This been the biggest draw, accounting for analysis and education to regulatory analysis of the world economy over half of all usage. reform, biotechnology and health. the past 1 000 years attracted a great deal of attention and strong demand. In October the OECD launched its One of the objectives over the year A great number of titles are trans- first experimental, web-book, The was to deepen relations with direc- lated into other languages, often OECD Science, Technology and Industry torates, to ensure that news material through co-editions or license agree- Scoreboard, a long-time best-seller in provides full and correct information ments. In 2001, 180 partial and full print. The key feature is the ability that is of use to journalists. The divi- translations were published in to select a single graph or table, and sion organised interviews with and 28 languages. then offer users the ability to placed articles by the Secretary- download the underlying data. In its General and other senior Secretariat More than 1 500 institutions sub- first month more than 5 000 readers officials, in newspapers and maga- scribed to at least one of the 75 parts tried out this web-book, made avail- zines ranging from Libération (France) 60 O E C D A N N U A L R E P O R T

FORUM 2001

www.oecd.org/forum/2001

In 2001, the OECD Forum firmly consolidated its position as an international public conference offering leaders from civil society, business and labour an opportunity to discuss key issues of the 21st century with government ministers and leaders of international organisations. What is unique about the OECD Forum is that it allows participants to shape the outcome of the OECD annual ministerial meeting. Indeed, OECD ministers officially “welcomed OECD Forum 2001 as an effective multi- stakeholder dialogue providing a valuable input into our work”.

OECD Forum 2001, which tackled the theme of “Sustain- able Development and the New Economy”, brought together some 1 500 participants from 80 countries. They discussed issues ranging from the role of new technologies to corporate responsibility, agriculture, environment, multilateral trade talks and transport.

Harvard professor E.O. Wilson warned the Forum of the need to protect biodiversity. Ministers who took part in the debates included US Commerce Secretary Donald Raymond Gilmartin, Chairman, President & Chief Evans, French Health Minister Bernard Kouchner and Executive Officer, Merck & Co. Inc, United States at Brazil’s Foreign Minister Celso Lafer. Other key speakers the health session at Forum 2001. included Friends of the Earth Chairman Ricardo Navarro, Secretary-General of the Malaysian Trades Union Con- gress Govindasamy Rajasekaran, France Telecom Chair- debate to OECD ministers during their session on man Michel Bon, Merck Chief Executive Officer Raymond sustainable development. Gilmartin and WTO Director General Mike Moore. At the closure of Forum 2001, Secretary-General Donald Svend Auken, Danish Minister for the Environment and Johnston remarked to participants that the “Forum has Energy, captured the spirit of the Forum when he said become a landmark in the life of the OECD”. Forum 2002, that “High hopes of reducing environmental degradation also to be held in Paris, will again take place alongside raised at the Rio summit of 1992 have not been borne the annual ministerial meetings and will be on the theme out ... It is now time to go beyond fine words and into “Taking Care of the Fundamentals: Security, Equity, action.” He reported back on the conclusions of the Forum Education and Growth.”

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NEW WEBSITE

www.oecd.org [email protected]

The OECD made further strides towards its aims of transparency, timeliness of information and customised service with the launch in September 2001 of a second- generation website that puts OECD data and analysis within easy reach of anyone with access to the Internet. With more than 9 million visitors in 2001 and 6 million pages viewed each month, the website has become a reference for international policy-making and analysis. Thanks to the new portal, the organisation’s public knowledge base is now fully accessible to better serve the international community.

Key features of the new website:

Timeliness of information with daily updates.

Statistics portal: a one-stop-shop for statistics and indicators, providing governments, institutions and the public with a unique facility for analysing key policy issues using reliable data.

Country-focused documentation: a feature allowing visitors to search online for OECD expertise on individual countries.

User-friendliness: users can navigate the site by theme or by directorate. Focused searching: a contextual navigation and search engine that gives only the desired information. My OECD: visitors can tailor the site to their specific needs and sign up for e-mail alerts on topics of interest Browsing: a browsing facility for the documents and to them. publications database.

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and Espresso (Italy) to Nikkei (Japan) Global Reporting Initiative and and the International Herald Tribune. Greenpeace as well as leading It also provided TV and photo cover- academics. age of major OECD events for outside news organisations and stepped up The online edition, www.oecdobserver.org, the frequency of internally produced has become an important visibility CNN World Report items that provide tool for the organisation since its news on the organisation’s work for a launch in August 1999. Traffic rose by wide audience around the world. over 100% from January to December New techniques for internal commu- 2001 and more than 1.3 million pages nications include OECD-TV, pro- were accessed. Visitors come from all viding televised news about OECD over the world and the site figures activities. strongly on major Internet search engines. Govindasamy Rajasekaran, OECD Observer Secretary-General of the Malaysian www.oecdobserver.org Trades Union Congress (MTUC) at OECD in Figures [email protected] the trade and development session at www.oecd.org/publications/ Forum 2001. figures/ The OECD Observer is the organisation’s public magazine. Launched in OECD in Figures is a pocket-sized November 1962, it offers concise and forum of debate for a wide commu- databook for OECD member authoritative analysis of crucial world nity of political personalities, experts countries covering everything from economic, social and scientific and opinion leaders. In 2001 guest economics to health, education and issues. The Observer is available in writers included Poul Rasmussen, the science. It is one of the organisation’s English, French and Japanese Danish Prime Minister, Werner most popular publications and is (limited edition). Müller, Germany’s Economics and edited by Public Affairs in coopera- Technology Minister, US Health Sec- tion with the Statistics Directorate. The Observer is a window for the work retary Tommy Thompson and Mike of the OECD and a platform for com- Moore, Director General of the World OLISnet municating the ideas of the Trade Organization. Contributions organisation’s experts to the wider from civil society included busi- More than 8 000 authorised govern- public. Recently, the magazine has nesses such as Microsoft and the ment officials and representatives of positioned itself successfully as a Economist Group, and NGOs like other concerned agencies in member

POLICY BRIEFS

Part of the task of communicating the OECD’s message involves tailoring information in a form that can convey the organisation’s analysis and policy conclusions to non- specialist audiences. OECD Policy Briefs are concise (8-12 pages) treatments of major aspects of the organisation’s work. Written for a general audience, each Brief explores a different issue in a question and answer format. The series was initiated in 1997.

In addition to Briefs covering country economic surveys, themes in 2001 included sustainable development, hard core cartels, trade and development, and the OECD’s relationship with civil society.

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BUSINESS AND INDUSTRY ADVISORY COMMITTEE TO THE OECD (BIAC)

Executive Board Chairman: Mr. Jacques SAMPRÉ, Ancien Directeur Délégué, SANOFI Dr. Bruno LAMBORGHINI, Chairman, Olivetti Tecnost, (France) Member of the Olivetti Board of Directors, Chairman, Dr. Josef SIEGERS, Member of the Executive Board, BDA EITO (European Information Technology) (Italy) (Germany) Vice-Chairmen: Mr. Edwin D. WILLIAMSON, Partner, Sullivan & Cromwell (United States) Mr. Serge GRAVEL, Associé, Gravel, Otto & Associés (Canada) Secretary General: Mr. Masaharu IKUTA, Chairman of BIAC Japan; Chairman Mr. Douglas C. WORTH of O.S.K. Lines, Ltd. (Japan) 13-15, chaussée de la Muette, Mr. Anders NARVINGER, Group Senior Vice President, 75016 Paris. ABB Financial Services Ltd. (Sweden) Tel: + 33 (0) 1 42 30 09 60 Dr. Ungsuh K. PARK, Director and Member of the Board Fax: + 33 (0) 1 42 88 78 38 of Directors, Pohang Iron & Steel Co., Ltd. (POSCO) E-mail: [email protected] BIAC Secretary (Korea) Internet: www.biac.org/ General Douglas Worth

TRADE UNION ADVISORY COMMITTEE TO THE OECD (TUAC)

Administrative Committee President: General Secretary: Mr. John SWEENEY, President of the AFL-CIO (USA) Mr. John EVANS

Vice-Presidents: 26, avenue de la Grande-Armée, Mr. Luc CORTEBEECK, President of the Belgian Confed- 75017 Paris eration of Christian Trade Unions (CSC-Belgium) Tel: + 33 (0) 1 55 37 37 37 Mr. Etsuya WASHIO, President of RENGO (Japan) Fax: + 33 (0) 1 47 54 98 28 Mrs. Evy BUVERUD-PEDERSEN, Secretary of the Nor- E-mail: [email protected] TUAC General Secretary wegian Confederation of Trade Unions (LO-N-Norway) Internet: www.tuac.org/ John Evans

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countries and non-member countries assistance by German Federal Min- climate change and employment; use the secure OECD online informa- ister for Economic Co-operation and harmful tax practices and other tax tion network OLISnet to keep abreast Development Heidemarie Wieczorek- issues. BIAC and TUAC also made of OECD work. The network offers Zeul and DAC chairman Jean-Claude important contributions to OECD one-stop access to OECD committee Faure to more than 30 journalists and Forum 2001 as Forum “knowledge documents and statistics, publica- civil society representatives. The partners”. tions and policy papers, and inter- Tokyo Centre (www.oecdtokyo.org/; active facilities such as committee [email protected]) moved in Civil society bulletin boards and discussion December 2001 to the Japan Press groups directly from the user’s desk- Center Building, taking it closer to A number of initiatives in 2001 top PC. By using OLISnet regularly, the Japanese government offices and improved the coherence of the committee delegates can keep them- the business centre. organisation’s co-operative relations selves informed about and prepare with civil society, alongside its tradi- for upcoming meetings. At the same Business, labour, civil tional partnerships such as with BIAC time, OECD information is more society and and TUAC. In March an informal easily circulated within governments. parliamentarians meeting was organised with CSOs Government officials interested in www.biac.org/; [email protected] that have been participating actively signing up to the free service can www.tuac.org/; [email protected] and constructively in the OECD’s complete an application form on the work to discuss experiences to date, OECD website. The OECD has undertaken close con- following a request from OECD min- sultation and dialogue with civil isters in 2000 to deepen dialogue The OECD Centres society since its creation in 1961. For and consultation with civil society. www.oecd.org/about many years this was primarily with the business and labour sectors, through A Policy Brief and a webpage on The OECD Centres in Germany, Japan, the Business and Industry Advisory “Civil Society and the OECD” were Mexico and the United States dis- Committee to the OECD (BIAC) and created as external and internal com- seminate OECD information through the Trade Union Advisory Committee munications tools. In addition, the the sale and distribution of books and to the OECD (TUAC). But over the past OECD Visits Programme welcomed electronic products. In addition, the decade the OECD has held increas- some 4 000 visitors from civil society, centres provide information to the ingly extensive dialogue and consul- parliaments, academia, business, media and parliaments as well as to tations with other civil society organi- labour and government. business, labour and other non- sations (CSOs) across most areas of governmental organisations. the Organisation’s work. Since 2000 it Parliamentarians has also organised an annual OECD The Washington Center (www.oecd Forum (see box p. 61). The OECD also maintains relation- wash.org; washington.contact@oecd. ships with parliamentarians in org) gave a new look to the release BIAC and TUAC member countries. The Council of of the OECD Economic Outlook in May Europe (COE) Parliamentary Assem- with a special event at the National During 2001, both BIAC and TUAC bly, which provides a forum for par- Press Club organised as a panel dis- provided valuable input to the work liamentarians to hold a yearly debate cussion attended by more than 100 of the OECD, especially for the on OECD activities, focused on some journalists, researchers and congres- reports to OECD ministers on the of the policy issues arising from the sional staffers. The Mexico Centre growth project (see box p. 16) and sus- 11 September terrorist attacks. The (www.rtn.net.mx/ocde/; mexico.con tainable development. Consultative annual meeting between the Eco- [email protected]) increased its links meetings were held during the year nomics and Security Committee of the with members of congress in Mexico under the OECD’s Labour/Manage- NATO Parliamentary Assembly and and Latin America. A highlight for the ment Programme (LMP) on a number the OECD Secretariat was opened up Berlin Centre (www.oecd.org/deut of subjects including: firms, workers to non-NATO OECD countries in 2001. schland/; berlin.contact@oecd. org) and the changing workplace: consid- Both Korea and Mexico took advan- was a joint presentation of the annual erations for the old and the new tage of this opportunity to send DAC report on official development economy; trade and environment; parliamentarians to this meeting.

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OECD ONLINE SERVICES

www.oecd.org/OECDdirectwww.SourceOECD.org www.oecd.org/bookshop

OUR FREE THE SERVICE FOR THE SERVICE FOR E-MAIL INFORMATION HUNGRY INFORMATION HUNGRY ALERTING SERVICE INSTITUTIONS INDIVIDUALS Stay informed A single institutional subscription Your gateway to our extensive with our free e-mail alerting provides unlimited access catalogue of books, services, personalised to your to OECD books, periodicals and statistics on CD-Rom – interests. and statistics online 24 hours and now, pay-per-view. a day, 7 days a week. Be the first to know the latest Safe, easy and fast with our publications and news secure payment system. from the OECD. Ideal for universities, Ideal for everyone companies, government Ideal for individuals departments and other information hungry institutions

Accurate, continually updated, and backed by the reputation for which the OECD is known worldwide.

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OECD PUBLICATION THEMES

All OECD publications are available online under the relevant 20 themes:

Agriculture and Food Industry, Services and Trade Development National Accounts and Historical Statistics Education and Skills Nuclear Energy Emerging Economies Science and Information Technology Employment Social Issues / Migration / Health Energy Statistics: Sources and Methods Environment and Sustainable Development Taxation Finance and Investment / Insurance and Pensions Territorial Economy General Economics and Future Studies Transition Economies Governance Transport

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EXECUTIVE DIRECTORATE

www.oecd.org/about

The Executive Directorate (EXD) over- responsiveness to member country duced to both the programme of sees the management of the OECD’s needs, ensuring efficiency and cost work and the budget process. The assets and resources – human, finan- effectiveness and a commitment on programme of work is now based cial and information resources, com- the part of the secretariat to profes- around broad themes rather than munications, conference and office sional and managerial excellence. directorates, and a priorities resource facilities. It is also responsible for the day-to-day management of the organisation’s operational activities and infrastructure, including procurement, OECD meetings and conferences, security, interpretation and translation. This directorate also co- ordinates the OECD’s reform programme and elaborates the organisation’s programme of work and budget.

Internal reorganisation of the directorate continued in 2001, aiming to (left to right) Herwig Schlögl, OECD Deputy Secretary-General, Toure Alimata conform to best international and Traore, Malian Minister of Industry, Trade and Transport, Donald Johnston, member country practice, as part of OECD Secretary-General, and Mogens Lykketoft, Danish Minister for Foreign the OECD’s ongoing reform pro- Affairs, at the press conference with non-members during the OECD Minis- gramme (see chapter p. 9). A central terial Council meeting in May 2001. structure was established to strengthen the organisation’s procurement and contract management In 2002 and following years, a large allocation system has been intro- activities and to improve the services share of Executive Directorate duced. These reforms are part of a and guidance available to director- resources will be devoted to the re- major exercise aimed at improving ates in these areas. All activities development of the OECD’s head- the way the OECD takes decisions relating to conference management quarters site (see box p. 10). about resource allocation and how it (welcome, organisation of meetings, presents information to member receptions and safety) were also Programme of work countries. regrouped into a single division to improve the preparation and co- The programme of work and budget Human resources ordination of OECD meetings and to is the basic charter of the OECD’s management modernise related technologies. priorities, activities, staffing and www.oecd.org/hrm/ financing. Traditionally, it has been Organisation-wide reform initiatives approved at the end of each year by Human resource management imple- focused on ways of improving pro- the governing body, the Council, for ments and consolidates human gramme performance and output the subsequent calendar year. It was resource functions and policies, as management, better integrating work agreed in early 2001 that, from 2003/ well as providing staff and managers across the OECD, improving financial 4, the budget process would become with high standard administrative, policies and procedures and estab- biennial. recruitment, training and counselling lishing links between staff perform- services. Main achievements in 2001 ance and remuneration. The guiding Over the past few years, many and priority activities for 2002 principles of reform are greater improvements have been intro- include: 68 O E C D A N N U A L R E P O R T

• Refinement of the employment deliver and support the information annex sites and for providing a policy, including an improved and communications technology wide range of related services to contractual framework for tempo- (ICT) systems and services that support the daily functioning of the rary staff. underpin the daily work of the OECD, OECD. In 2001, efforts continued to and to identify and implement inno- improve working conditions for staff • Continued focus on management vative uses of ICT to help achieve the and to raise the quality of services development, including management training.

• Complete revision of the OECD’s remuneration policy.

• Review of staff rules to provide a more coherent and simplified framework.

• Improved international recruitment and gender balance.

• Improved health care, new contracts with management and insurance contractors, new stra- (left to right): Metin Bostancioglu, Turkish Minister of National Education and tegies for cost containment poli- Ulrich Stockling, Swiss President of the Conference of Directors of Cantons of cies and extended health care Public Education at the meeting of OECD education ministers in April 2001. networks. medium-term strategic objectives of provided to the organisation, with • Development of the human the organisation. This includes, in emphasis on quality control. Parti- resources computer system, particular, systems, facilities and cular steps were taken to contain notably the implementation of a services for policy analysis, statistics, the asbestos problem in the main new payroll system. communications and committee office building, and to assess and interaction, management of corpo- improve fire safety in the various Financial resources rate information, and administrative buildings and annexes owned or management and management reform. rented by the OECD.

In the financial area, EXD provides In 2001 the Executive Directorate, in This directorate also manages the accounting, treasury, analysis and co-operation with the Public Affairs OECD’s operational resources in reporting services to the OECD and and Communications Directorate, translation, interpretation and con- member countries. For 2002, it will launched a new OECD website. It ference logistics. In 2001, confer- continue to implement essential also consolidated specialised ences totalling 2 850 days took place reforms aimed at improving effi- Extranet services for member coun- at headquarters and elsewhere ciency and transparency, notably by tries and delegations (OLISnet); con- (including five meetings at ministe- developing quality reporting in verted all systems to the Euro; and rial level) and more than 80 000 accordance with international public introduced an integrated online standard pages were translated. The sector accounting standards, and by management system for OECD meet- Executive Directorate also undertook further strengthening internal con- ings and conferences. a complete reorganisation of its controls over financial transactions. ference services and, in liaison with Infrastructure, space and the French police, significantly Information resources event management reinforced its security measures to management address the risks associated with The Executive Directorate is increased terrorist activity following The role of information technology responsible for managing the infra- the events of 11 September in the and network services is twofold: to structure of the headquarters and United States.

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HOW THE OECD WORKS

www.oecd.org/about

The secretariat in Paris carries out Committee on International Invest- research and analysis at the request ment and Multinational Enterprises; of the OECD’s 30 member countries. Committee on Capital Movements The members meet and exchange and Invisible Transactions; Insurance information in committees devoted Committee; Committee on Financial to key issues, with decision-making Markets; Committee on Fiscal Affairs; power vested in the OECD Council. Committee on Competition Law and Policy; Committee for Scientific and The Council is composed of one rep- Technological Policy; Committee for resentative for each member country Information, Computer and Commu- plus a representative of the Euro- nications Policy; Committee on Con- pean Commission, which takes part sumer Policy; Committee on Indus- in the work of the OECD. Each try and Business Environment; member country has a permanent Maritime Transport Committee; Steel representative to the OECD and Committee; Tourism Committee; these representatives meet regularly Employment, Labour and Social in the Council. The OECD Council Affairs Committee; Education Com- meets at ministerial level once a year mittee; Committee for Agriculture; when ministers from member Fisheries Committee; Territorial Richard Hecklinger, who took up his countries raise important issues and Development Policy Committee. post as OECD Deputy Secretary- set priorities for OECD work over the General in January 2002. coming year. The specialised com- The International Energy Agency (see mittees meet to discuss ideas and box page 78) and the OECD Nuclear review progress in particular areas of Energy Agency (see box page 76) deal Policy Committee (EPC) and through policy. with energy issues. Work mandated the Economic and Development by the Council is shared out across Review Committee (EDRC) which There are about 200 committees, the OECD secretariat’s various direc- assesses policies in individual working groups and expert groups in torates, which work closely together member (and some non-member) all. Some 40 000 senior officials from on the many issues that cut across countries. Three subsidiary bodies of national administrations come to several areas of expertise such as the EPC – the Working Group on OECD committee meetings each year trade and environment or sustain- Short-Term Economic Prospects, to request, review and contribute to able development. Working Party No. 1 on Macro- work that is undertaken by the OECD economic and Structural Policy secretariat. Economics Department Analysis, and Working Party No. 3 on (ECO) Policies for the Promotion of Better The sectoral committees are: Eco- www.oecd.org/eco International Payments Equili- nomic Policy Committee; Economic [email protected] brium – also carry out multilateral and Development Review Commit- and structural surveillance. tee; Committee for Monetary and The Economics Department exam- Foreign Exchange Matters; Environ- ines economic and financial devel- The Department provides an overall ment Policy Committee; Chemicals opments in OECD countries and in macroeconomic framework to iden- Committee; Development Assist- selected non-member countries. tify priority issues needing multi- ance Committee; Public Manage- This surveillance work is carried out lateral attention. It assesses the ment Committee; Trade Committee; under the auspices of the Economic implications of a broad range of struc-

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tural issues in an economy-wide systems to respond to new policy lation, policy co-ordination and infor- perspective, drawing on work by a concerns such as national accounts, mation systems for development. It number of OECD specialised com- energy supply and use, research and supports the work both of the Devel- mittees. This currently includes work development, environment, and opment Assistance Committee (DAC) on the economic implications of service industries. and of the OECD as a whole, but its ageing, labour market policies, envi- relationship with the DAC is so close ronmentally sustainable growth, Environment Directorate that the DCD is generally identified public expenditure and tax policies, (ENV) with the DAC itself. The DAC meets education and health systems, and www.oecd.org/environment at least 15 times a year and the chair growth performance. [email protected] is based at OECD headquarters. It differs from other committees in that Twice a year, the Department pub- The Environment Directorate it has the power to make recommen- lishes the OECD Economic Outlook, examines issues such as how to dations directly to countries on the which presents analysis of recent manage natural resources in a sus- committee, as well as to the OECD macroeconomic developments and tainable way, the interplay between Council, and produces an annual near-term prospects, highlighting key the environment and trade policy, report on the efforts and policies of policy issues, and includes articles on energy and agriculture, as well as DAC members. Combined Official various structural topics. About 20 analysing the economic aspects of Development Assistance (ODA) of OECD Country Surveys are published climate change. It works with other these major aid donors was some annually under the responsibility of directorates on some issues, such as US$53 billion in 2000, more than 95% the EDRC, working with the Economic trade, and is a key contributor to the of the world total. DAC/DCD work is Policy Committee on chapters deal- OECD-wide work on sustainable about how to spend and invest this ing in-depth with a structural topic. development. The Environment aid in the most effective manner so Directorate keeps a permanent as to reduce poverty and ensure sus- Statistics Directorate watch on environmental performance tainable development in developing (STD) and compiles environmental data, countries. It does so through guide- www.oecd.org/statistics publishing its first Environmental lines, recommendations and “peer [email protected] Outlook in 2001. It produces reviews” of the development co- environmental assessments of operation policies of individual DAC The Statistics Directorate collects member countries, which are pub- members. DCD also works closely economic statistics from across the lished. The Environment Directorate with other OECD directorates on OECD. These are standardised to is also responsible for looking at issues of common interest such as make them internationally compara- issues of pollution prevention and trade, the environment, corruption in ble, and are published in both control through sensible waste man- international transactions, and child printed and electronic form. The agement, less polluting transporta- labour. monthly publication Main Economic tion and clean technology. Its work Indicators is one of the principal pub- on environmental safety and health Public Management lications of the directorate. Other includes work on chemical products: Service (PUMA) specialised publications cover standardising chemical testing and www.oecd.org/puma foreign trade, national accounts, hazard assessment procedures, co- [email protected] employment and unemployment ordinating data and laboratory prac- and there are also regular releases tice standards. The Public Management Service of updated figures, including helps member countries to achieve monthly unemployment rates and Development Co- high standards of effective and good changes in consumer prices. Other operation Directorate (DCD) governance in a quickly changing parts of the OECD publish indicators www.oecd.org/dac economic and social environment. for specialised sectors. In collabora- [email protected] Under the auspices of the Public tion with statisticians from member Management Committee, PUMA countries and other international The Development Co-operation analyses how governments manage organisations, the OECD has played Directorate (DCD) helps OECD the public sector, improve service a major role in developing new data member countries with policy formu- delivery and make policy implemen-

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tation more coherent. It develops to address major trade policy issues. Steering Group on Corporate recommendations on best practices Analytical work undertaken by the Governance. and identifies emerging challenges Trade Directorate under the auspices such as e-government and risk of the OECD Trade Committee seeks DAF works with government officials management. to support continued trade liberali- through these specialised commit- sation and foster an understanding tees and groups to analyse emerging One of PUMA’s primary functions is of the links between trade liberali- trends and prepare recommenda- to create a forum for the exchange of sation and a range of issues of pub- tions favouring policy convergence experiences and new approaches lic concern. This work advances an and best practices for national action among government representatives. informed debate, helping build con- and international co-operation. Its Top officials responsible for the sensus on a range of pertinent issues. work covers many fields including central management systems of gov- The Trade Directorate is involved in finance, insurance and private pen- ernment meet in specialized working analysis and preparations for future sions; competition law and policy; groups on budgeting and manage- trade negotiations that will cover taxation; corporate governance; anti- ment, policy-making, regulatory whole new categories of trade rules, corruption; and foreign direct invest- reform, strengthening government- such as the environment, competi- ment. These activities are often con- citizen connections, human resources tion policy, industrial policy and ducted in consultation with management, and public sector technology. At the same time, its representatives of business, finan- ethics. analysis of trade patterns and poli- cial, labour and other non- cies can help forestall problems that governmental organisations, and PUMA is also responsible in the emerge under the pressure of ever- non-member governments are OECD for the SIGMA (Support for intensifying competition. And its increasingly involved. DAF activities Improvement in Governance and unique work in export credits steers often result in recommendations, Management) programme. This is a countries away from distortive trade. standards, principles and sometimes joint venture with and principally legally binding obligations, which are financed by the European Commu- Directorate for Financial, then subject to follow-up monitoring nity to help the newly democratised Fiscal and Enterprise or peer review to promote effective countries of central and south Affairs (DAF) implementation. eastern Europe reform their public www.oecd.org/daf administration systems, drawing on [email protected] Directorate for Science, PUMA’s experience and networks. Technology and Industry The prime objective of the Directo- (STI) Trade Directorate (ECH) rate for Financial, Fiscal and Enter- www.oecd.org/sti www.oecd.org/ech prise Affairs (DAF) is to identify poli- [email protected] [email protected] cies and best practices designed to keep markets open, competitive and The Directorate for Science, Tech- The work of the Trade Directorate sustainable while combating market nology and Industry and its commit- supports a strong, rules-based multi- abuses and economic crime through tees seek to help OECD member lateral trading system that will main- international co-operation. DAF sup- countries adapt to the challenges of tain momentum for further trade ports eight main committees and the “knowledge-based” economy. liberalisation while contributing to working groups: the Committee on The Directorate provides analysis to rising standards of living and sustain- Competition Law and Policy; the underpin government policies on able development in both OECD Committee on Fiscal Affairs; the Com- emerging scientific, technological member and non-member countries. mittee on Financial Markets; the and industrial issues, and offers a Its objective is to ensure that the Insurance Committee; the Commit- forum for policy dialogue. The Com- liberalisation flowing from multi- tee on Capital Movements and mittee on Industry and Business lateral trade negotiations moves Invisible Transactions; the Commit- Environment examines framework ahead smoothly and that the multi- tee on International Investment and conditions for industrial competitive- lateral trading system, centred on the Multinational Enterprises; the ness in the context of globalisation World Trade Organization (WTO), Working Group on Bribery in Interna- and the shift towards knowledge- functions effectively and is equipped tional Business Transactions; and the based economies; it addresses poli-

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cies that affect the performances of Education and training systems are and international policies; and fish- economies at sectoral and firm analysed and the picture of progress eries sustainability and market levels. The Committee for Scientific in education is presented in an liberalisation. and Technological Policy examines annual compendium of facts and how to stimulate innovation and figures, Education at a Glance. The The directorate carries out its work effectively fund and manage science directorate watches employment programme under the guidance of systems; biotechnology, and espe- and earnings patterns, and the the Committee for Agriculture and its cially its application to human health annual Employment Outlook offers subsidiary bodies (Working Party on and sustainable development, is analysis of key labour market trends Agricultural Policies, Working Party part of the agenda for intense discus- and policies. The flows and effects of on Markets and Commodity Groups) sion. The Committee for Information, how and why people move between and the Committee for Fisheries. Two Computer and Communications countries are studied and summar- joint working parties, on Agriculture Policy addresses the many issues ised in Trends in International Migration. and Trade and on Agriculture and involved in promoting the effective The directorate also looks at the ef- Environment, direct the co-operative and socially beneficial application of fectiveness of health care and social work involving other committees and information and communications welfare programmes, the role of directorates. The mandates of these technologies, including electronic women in the labour force and how joint bodies were updated in 2000. commerce, in particular in areas such technology affects workers. The directorate reports on agri- as telecommunications policy, cultural policy reform and market Internet governance, information se- Through the Centre for Educational trends in its annual Monitoring and Out- curity and privacy. The Committee on Research and Innovation, the look of Agricultural Policies and on policy Consumer Policy focuses on con- directorate focuses on work in new developments in fisheries in its sumer protection in the online teaching and learning approaches. Annual Review of Fisheries in OECD Coun- marketplace. In areas such as ship- tries. It also establishes and manages building, steel and tourism, the STI Directorate for Food, codes for international quality of works with member countries to Agriculture and Fisheries fruits and vegetables, seeds, forest monitor developments and encour- (AGR) products and tractors in order to pro- age the adoption of OECD-wide www.oecd.org/agr mote trade as well as a co-operative standards or “rules of the game”. [email protected] research programme between research institutions to contribute to Directorate for Education, The Directorate for Food, Agriculture the scientific basis for managing bio- Employment, Labour and and Fisheries helps member logical resources for sustainable Social Affairs (ELS) countries in achieving the shared agricultural systems. www.oecd.org/els goals and in adopting the policy prin- [email protected] ciples and operational criteria for Territorial Development agricultural policy reform identified Service (TDS) This directorate oversees work on the by OECD agriculture ministers in www.oecd.org/tds many interrelated policy areas that 1987 and again in 1998. It also aims [email protected] can prevent social exclusion. Its to help member countries imple- activities are focused on five main ment economically efficient, sustain- The Territorial Development Service areas: education and skills, employ- able fisheries. Its work covers six considers how urban, regional and ment, health, international migration broad areas: monitoring and evalu- rural policies and local initiatives can and social issues. Lifelong learning, ating agricultural policies; assessing generate employment, raise living from early childhood to adulthood, is future developments in agricultural standards and the quality of life, considered a key to social integration markets and trade; evaluating and assist structural change and protect and a tool in the battle against exclu- strengthening the process of trade the environment. Its work is overseen sion, both from society and the labour liberalisation; assessing the chal- by the Territorial Development market. The issue of health, given the lenges to further trade liberalisation; Policy Committee (TDPC), which was impact it can have on society’s well- enhancing the environmental established in 1999 to integrate the being as well as its cost to govern- sustainability of agriculture; analy- work on territorial issues. The com- ments, is also a priority for ELS. sing the interface between domestic mittee is served by three working

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parties addressing the specific issues Forum, which brings together repre- of urban and rural questions as well sentatives of OECD countries with as territorial indicators. One of the business, labour, academics and major contributions of the TDPC is to other civil society organisations to demonstrate how economic competi- debate significant policy issues for tiveness and sustainable develop- the globalised knowledge economy. ment go hand in hand. The Territo- PAC is also responsible for OECD rial Development Service aims to centres in Berlin/Bonn, Mexico City, give practical assistance to govern- Tokyo and Washington, and serves as ments, encouraging the creation and a point of contact with other inter- development of locally driven initia- national bodies, parliamentarians, tives for economic development, and non-governmental organisations and combining the best elements from a the general public. variety of complementary territorial development strategies. Executive Directorate (EXD) Public Affairs and www.oecd.org/about Communications Directorate (PAC) The Executive Directorate manages cover sustainable development; www.oecd.org/about the OECD’s human, financial and knowledge-based economy inclu- information resources and oversees ding biotechnology and e-commerce; The Public Affairs and Communica- all administrative, financial and governance; trade; international in- tions Directorate contributes to operational functions that are vestment; agriculture; competition; transparency and openness by required for the functioning of the and taxation. The Centre also making information about the organisation. EXD groups all support manages regional and country pro- OECD’s work and its results available services, including budget and grammes with major non-member to the public in a timely manner. PAC finance, human resources manage- economies such as China and Russia. also presents “work in progress” on ment, operations, information tech- the Internet to elicit public comment. nology and network services, pro- Development Centre It is responsible for media relations curement and contract management, www.oecd.org/dev and handles the publication and conference and security, interpreta- [email protected] marketing of some 250 books a year, tion and translation. The directorate as well as managing a fast-growing also co-ordinates the OECD reform The Development Centre is a semi- online bookshop and offering access programme and is responsible for autonomous body that promotes a to OECD publications and informa- the elaboration of the programme of better understanding of the eco- tion via the Internet. PAC also pro- work and budget. nomic and social problems of devel- duces the Policy Briefs series of bro- oping countries through comparative chures on key policy issues, the Centre for Co-operation development analysis and policy OECD Observer magazine and the with Non-Members dialogue. The Centre acts as a annual OECD in Figures compilation (CCNM) “bridge” between the advanced of key data for all member countries. www.oecdworld.org industrialised countries of the OECD The directorate manages the OECD’s [email protected] and the emerging and developing relations with the Business and economies of Africa, Asia and Latin Industry Advisory Committee (BIAC), The Centre for Co-operation with America. Its activities enable experts the Trade Union Advisory Committee Non-Members serves as the focal and policy-makers from the devel- (TUAC), the Council of Europe, and point for the development of policy oped and developing worlds to the Economics and Security Commit- dialogue between the OECD and exchange ideas and experiences, tee of the NATO Parliamentary non-member economies. It manages with the aim of informing the devel- Assembly, and is increasingly a number of programmes linked to opment communities in member involved in policy dialogue with civil the key themes of OECD work such countries and benefiting developing society. It organises the annual OECD as the OECD Global Forums which countries.

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THE INTERNATIONAL FIGHT AGAINST MONEY LAUNDERING AND TERRORIST FINANCING: THE FATF

www.fatf-gafi.org [email protected]

The Financial Action Task Force (FATF) is an independ- territories. It decided to apply counter-measures to Nauru ent intergovernmental body whose Secretariat is housed in December because of failure to make adequate at the OECD. It expanded its mission in October 2001 to progress. focus its energy and expertise on the worldwide effort to combat terrorist financing, in the wake of the 11 Septem- The FATF annual report for 2000-2001 examined current ber attacks in the United States. As a body with consid- and threatened vehicles for money laundering, including erable expertise, authority and credibility in addressing online banking and Internet casinos, the use of trusts and money-laundering issues, the FATF is well placed to take other non-corporate vehicles to launder money, the use on a significant role in the effort to prevent terrorists freely of lawyers, notaries, accountants and other profession- using the financial system. Terrorists use financial net- als, and terrorist-related money laundering. works in the same way that other criminal groups do, so that the FATF’s expertise in tracking illicit funds will be The FATF was established by a G7 summit in Paris in key in combating terrorist financing. FATF members 1989. In April 1990, the FATF issued Forty Recommend- agreed a set of Special Recommendations on terrorist ations, a comprehensive blueprint of the action needed financing. These included making the financing of terror- to fight against money laundering. Since then the FATF ism, terrorist acts and terrorist organisations a criminal has continued to examine the methods used to launder offence, freezing or confiscating terrorist assets and criminal proceeds and has completed two rounds of reporting suspicious transactions linked to terrorism. mutual evaluations of the anti-money laundering systems FATF members agreed to comply with these recommen- of its members. It has updated the Forty Recommend- dations by June 2002 and invited all countries around ations and has sought to encourage other countries the world to join them in their effort. After June 2002, the around the world to adopt anti-money laundering FATF will start work to identify non-cooperative jurisdic- measures. The FATF’s mission is reviewed every five tions and discuss possible counter-measures. years, so, when its current mission expires in 2004, members will have to decide whether it should continue. During the year, the FATF also reported significant progress in its work on non-cooperative countries and The Task Force’s 31 members are: Argentina, Australia, territories (NCCT) in the international fight against money Austria, Belgium, Brazil, Canada, Denmark, European Com- laundering. It took four jurisdictions off the list of NCCTs – mission, Finland, France, Germany, Greece, Gulf Co- the Bahamas, the Cayman Islands, Liechtenstein and operation Council, Hong Kong China, Iceland, Ireland, Italy, Panama. It also added eight jurisdictions to the list Japan, Luxembourg, Mexico, Kingdom of the Netherlands, (Egypt, Guatemala, Hungary, Indonesia, Myanmar, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Nigeria, Ukraine and Grenada) following a review of more Switzerland, Turkey, United Kingdom, United States.

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NUCLEAR ENERGY AGENCY

www.nea.fr/ [email protected]

More than 350 nuclear reactors provide almost a quarter tricity technologies and alternative fuels for the trans- of the electricity in the OECD area. For many OECD port sector. countries, nuclear power is an important component in meeting future electricity requirements. The Nuclear Civil society Energy Agency (NEA) helps its 27 member countries to [email protected] maintain and develop, through international co- operation, the scientific, technological and legal bases The NEA has several activities to identify ways of invol- required for the safe, environmentally friendly and eco- ving the public more closely in nuclear energy decision- nomical use of nuclear energy for peaceful purposes. making to imbue a spirit of greater trust, confidence and accountability. A Forum on Stakeholder Confidence has The NEA pursues a balanced programme of work in been established for radioactive waste management to nuclear safety and regulation, radioactive waste manage- analyse lessons learnt regarding stakeholder interaction ment, nuclear law and liability, nuclear development and and public participation. A stakeholder workshop economics, radiation protection and nuclear science. analysed the interaction of different institutions, inclu- Several key areas were emphasised in 2001 and will ding civil society, in the decision to select a repository maintain high priority over the next two years. They site for disposal of used nuclear fuel in Finland. The NEA include the role of nuclear power in the context of sus- also sponsored a meeting in Switzerland on The Better tainable development; attention to societal concerns in Integration of Radiation Protection in Modern Society. nuclear energy decision-making; modernisation of the The NEA will be considering additional activities to sup- system of radiation protection; and maintenance of port public authorities in their efforts to take account of infrastructure associated with nuclear power. societal needs in nuclear energy decision-making processes. Nuclear energy and sustainable development Nuclear infrastructure and development [email protected] [email protected]

The NEA presented its report, Nuclear Energy in a Sustain- A major problem facing the international community is able Development Perspective, at the OECD Forum 2001 in May. ageing of nuclear energy personnel. The NEA is working The report assesses nuclear energy in the context of eco- with member countries on mechanisms to attract young nomic, environmental and social issues and identifies professionals. The NEA, together with the University of indicators for measuring how the sector might contribute Montpellier, has established an International School of to sustainable development. A workshop jointly organ- Nuclear Law whose primary objective is to provide high- ised with the IEA considered the relevance of external quality education to law students at doctoral or masters costs in assessing the economic competitiveness of elec- level and to young legal professionals. Students

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from 34 countries attended the first session. The NEA report Trends in the Nuclear Fuel Cycle: Economic, Social and Environmental Aspects, published in 2001, offers a fresh look at nuclear fuel cycle options and related technological choices.

Nuclear safety, radiation protection and nuclear waste management [email protected]

NEA work continues in traditional technical areas including nuclear safety, operating experience, risk assessment, and analysis and management of accidents. Heads of regulatory agencies, researchers and industry agreed at a Workshop on the Role of Nuclear Safety Research that such research is critical to effective regulation. Two new international safety research projects are expected to become operational at the beginning of 2002, investi- The role of nuclear energy in a sustainable gating severe accidents and nuclear piping reliability. The development context has multiple facets, a NEA actively contributes to the review of the principles significant number of which relate to the and philosophy of the international system of radiation nuclear fuel cycle. This report provides a protection by preparing specific proposals for its description of the developments and trends in improvement. In nuclear waste management, the NEA the nuclear fuel cycle that may improve the competitiveness and sustainability of nuclear organised, at the request of the US government, an generating systems over the medium and long international peer review of the Yucca Mountain Project, term. It also presents criteria and indicators the proposed site for US spent nuclear fuel disposal. for future nuclear energy systems. Nuclear energy data

Nuclear Energy Data (the “Brown Book”) provides an annual update of statistical information and projections, country-by-country, on nuclear electricity generation and currently extend to 2015 at 5-year intervals. The 2002 ver- related fuel cycle capacities and requirements. All sup- sion will extend to 2020, be more reader friendly and porting stages of the nuclear fuel cycle are included: ura- provide more complete information about each country’s nium production, conversion, enrichment, fuel fabrica- nuclear programme, latest developments and trends in tion, spent fuel capacities and reprocessing. The forecasts the nuclear energy field.

“… I think that this year, the debates at the OECD Forum have shown that member countries are now more explicit about the importance of nuclear energy as an element of the OECD programme of work.”

Luis Echávarri, Director-General of the Nuclear Energy Agency

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INTERNATIONAL ENERGY AGENCY www.iea.org [email protected]

The International Energy Agency (IEA) is the forum for energy co-operation among 26 OECD member countries. It maintains a system of co-ordinated responses to oil- supply disruptions. The IEA promotes rational, market- oriented energy policies, the development and deploy- ment of clean energies and enhanced energy efficiency. To this end, the agency conducts regular peer reviews of the energy policies of member countries. IEA work also focuses on the link between energy and the environment, especially in relation to climate change.

The Czech Republic joined the IEA in 2001 and the Republic of Korea is in the final stages of finalising its membership. Poland and the Slovak Republic are candidates for membership.

The Governing Board at Ministerial level met in May to This volume contains data on the supply and discuss energy security, market reform and the role of consumption of coal, oil, gas, electricity, heat, energy in achieving sustainable growth. Ministers com- combustible renewables and waste in energy mitted themselves “to strengthen energy security across balances. The figures are expressed in million the full range of primary energies, to continue energy tonnes of oil equivalent. Historical tables market and regulatory reform; to expand access to energy summarise key energy and economic indicators services; to improve energy efficiency; to support the as well as production, trade and final consumption data. This book includes definitions of development and transfer of energy technologies; and products and flows. There are explanatory notes to foster a sustainable energy future”. on the individual country data and conversion factors from original units to tonnes of oil Oil markets and security equivalent. Key indicators have been provided since 1960. More detailed data in original units Energy security is, and remains, the IEA’s core mission. are published in Energy Statistics of OECD The IEA is equipped to act quickly to meet any supply Countries, the sister volume of this publication. problems and renewed its readiness to face any poten-

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tial disruptions after the 11 September attacks in the Insights: Assessing Today’s Supplies to Fuel Tomorrow’s Growth. United States. Members’ emergency oil stocks are, Reserves of oil, gas, coal and uranium are more than collectively, well above 90 days of net oil imports. adequate to meet projected demand growth until 2020 and beyond, but massive investment in energy pro- In 2001, lower global economic growth brought shrink- duction and transportation infrastructure will be needed. ing oil demand which producers sought to match with production cuts. Non-OPEC production is expected to Energy technology continue to grow through 2002. In response to concerns about increasing volatility in the market, the IEA Some 40 IEA international collaborative programmes, launched an initiative to improve oil data transparency. involving member and non-member countries, encour- The effort involves key international organisations and age the development and use of clean, efficient energy 70 countries. The initial results have been extremely technology. The IEA is host to the secretariat of the promising. Climate Technology Initiative (CTI) which fosters use of climate-friendly technologies in developing and trans- Energy and climate change ition countries.

The IEA continued work on domestic and other action to The IEA is increasingly active in providing analysis and curb energy-related greenhouse gas emissions, attend- international collaboration for renewable energy issues. ing the COP6 meeting in Bonn and the COP7 meeting in All member governments have commitments to expand Marrakesh. International Emission Trading: From Concept to the renewable element of their energy supply. Reality moves the debate from “whether” to trade to “how” it can be done. At the meeting of the UN Commission on The IEA gave high importance to increasing energy effi- Sustainable Development in April 2001, the IEA tabled ciency and worked to accelerate the broader commer- its members’ collective interpretation of their role in cial application of clean-fuel technologies. It spear- ensuring sustainable development. headed international co-operation on labels and standards for electrical appliances and equipment. Energy diversification Relations with non-members Analytical work continues on market reform in the gas and electricity industries, including electricity transmis- The IEA strengthened its relationships with China, India sion, distributed power and flexibility in gas supply and and Russia through implementing agreements and other demand. The IEA also completed a comprehensive study collaborative efforts and prepared an in-depth review of of future world energy supply, World Energy Outlook – 2001 Russian energy policies.

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EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT

www.oecd.org/cem/ [email protected]

The European Conference of Ministers of Transport the implementation of sustainable policies for travel in (ECMT) is an intergovernmental organisation where cities. Ministers in 2001 approved the project’s ministers responsible for inland transport co-operate recommendations, which included establishing a sup- on policy development. There are 41 full member coun- portive national policy framework and improving insti- tries, six associate member countries and two observer tutional co-ordination and co-operation. They endorsed countries. The ECMT is administratively part of the recommendations to decentralise responsibilities when OECD and contributes to many activities within the possible and centralise when necessary, as well as to organisation. encourage effective public participation, partnerships and communication. The ministers also called for a sup- The annual ministerial meeting in May 2001 in Lisbon portive legal and regulatory framework, comprehensive endorsed a series of recommendations on transport for pricing and fiscal structure, rationalised financing and people with reduced mobility as well as discussing a wide investment and improved data collection, monitoring range of other transport issues including sustainable and research. transport and combating crime in transport. Follow-up work will focus on monitoring implementation Accessible transport of these recommendations, in particular by examining the implications for specific groups of countries (e.g. The annual ministerial meeting adopted a resolution on central and eastern Europe), and exploring ways to accessible transport for people with reduced mobility, improve consistency in urban data collection and moni- which also takes account of the needs of the elderly. The toring. A guide to good practice will be developed to help resolution brings together in a single document all the governments establish a supportive policy and institu- ECMT’s earlier resolutions regarding access to buses, tional framework and establish positive incentives for trains and coaches; transport for wheelchair users; and sustainable travel in urban areas. parking facilities for people with reduced mobility. Pan-European integration With the ageing of populations, transport systems will of transport become less safe unless additional measures are taken, not because old people are more dangerous, but because While transport problems are increasingly similar across they are more fragile. Such measures include design of ECMT countries, countries in central and eastern Europe, infrastructure and vehicles, the management of traffic and as well as the former Soviet economies, face many parti- the infrastructure provided to users. cular difficulties in terms of infrastructure and the split between different modes of transport. An ECMT Policy Sustainable urban transport Forum in February 2001 identified several key issues including the problem of priorities in infrastructure plan- The current project on implementing sustainable urban ning, financing sources and the need for a clear policy travel policies began in 1998. The project focused on framework.

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cations of electronic tracking of goods and security in passenger transport.

Road transport

Road transport across Europe continued to grow in 2000, up by 3.93% over 1999 and a threefold increase since 1970. Road accident fatalities continue to decline, with the number of people killed on the roads in 2000 in western Europe down by more than 2.6% and in central and eastern Europe down by 4.9%, the best results since 1996. Despite this marked improvement, the number of deaths on the European continent at over 100 000 per year is an appalling and unacceptable consequence of our mobility.

Research Do older road users pose a safety risk to others? Is mandatory testing effective in determining The ECMT holds regular roundtables, seminars and sym- the driving competence of older drivers? Are posia on transport economic issues to support and com- OECD Member countries prepared to meet the plete its policy work. Their conclusions serve as a basis safety and mobility needs of the baby boom generation in the 21st century? This report for formulating proposals for policy decisions to be sub- dispels many of the myths and misperceptions mitted to ministers. The introductory reports are then commonly held regarding elderly road users, published. Recently published titles are: “Round Table and offers policy and research recommendations 116: Transport of Waste Products” and “Round Table 117: to provide for their safe, lifelong mobility. Economic Evaluation of Road Traffic Safety Measures”. “What Role for the Railways in the East?” the result of a roundtable held in September 2001, was published in February 2002. A joint OECD/ECMT seminar on the impact Combating crime in transport of e-commerce on transport was held in June 2001 with a view to analysing the interaction between e-commerce Two reports were presented to ministers on “Theft of and transport and assessing the implications for trans- Goods and Goods Vehicles in Europe” and on “Improving port of the growth in e-commerce. The conclusions are Security for Road Freight Vehicles”. Further work will available on www.oecd.org/cem/online/ecom01/ address issues including illegal immigration, the impli- index.htm.

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OECD ORGANISATION CHART

GENERAL SECRETARIAT

Legal Financial Council Directorate Control and and Management Executive Consultancy Committee Secretariat

Public Affairs and Communications COUNCIL Directorate International

COMMUNICATIONS Energy SECRETARY-GENERAL Agency Donald J. Johnston DEPUTY SECRETARIES-GENERAL • Thorvald Moe • Herwig Schlögl • Seiichi Kondo • Richard Hecklinger PRIVATE OFFICE OF THE SECRETARY-GENERAL Human Budget Resource Operations and Finance Management Service Service SECRETARIAT EXECUTIVE DIRECTORATE

Economics Statistics Environment Department Directorate Directorate

COMMITTEES

82 OECD ANNUAL REPORT

Advisory Centre for Unit on Co-operation Multidisciplinary with Issues Non-members

European Centre Nuclear Conference for Educational Energy of Ministers Development Research Club Agency of Transport Centre and Innovation du Sahel

SEMI-AUTONOMOUS BODIES

Information Technology and Network Services Interpretation Translation

Directorate Directorate Directorate for Education, Directorate Development Public for Financial, for Science, Employment, for Food, Territorial Co-operation Management Trade Fiscal and Technology Labour and Agriculture Development Directorate Service Directorate Enterprise Affairs and Industry Social Affairs and Fisheries Service

OECD ORGANISATION CHART - MARCH 2002

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OECD DIRECTORY

ECONOMIC GROWTH AND Finance and investment Food safety STABILITY www.oecd.org/finance/ www.oecd.org/foodsafety/ www.oecd.org/growth [email protected] [email protected] [email protected] SUSTAINABLE DEVELOPMENT Future studies Economic surveys www.oecd.org/sustainabledevelop www.oecd.org/futurestudies www.oecd.org/macroeconomics/about/ ment/ [email protected] Country_Surveys/Members [email protected] DEVELOPMENT [email protected] Environment www.oecd.org/development Industry and growth www.oecd.org/environment [email protected] www.oecd.org/enterprise [email protected] Development Centre [email protected] Energy www.oecd.org/dev Tourism www.iea.org; www.nea.fr [email protected] www.oecd.org/sti/tourism Sahel and West Africa Club [email protected] [email protected]; [email protected] www.oecd.org/sah Territorial reviews GOVERNANCE [email protected] www.oecd.org/territorial www.oecd.org/governance [email protected] [email protected] CO-OPERATIVE RELATIONS WITH NON-MEMBERS EMPLOYMENT AND SOCIAL Bribery and corruption www.oecd.org/ccnm COHESION www.oecd.org/corruption [email protected] www.oecd.org/els [email protected] China [email protected] Corporate governance www.oecd.org/ccnm/china Education/Human capital www.oecd.org/corporate/ Regional and country programmes www.oecd.org/education [email protected] www.oecd.org/ccnm/regional [email protected] Regulatory reform Employment www.oecd.org/regreform/regref STATISTICS www.oecd.org/employment [email protected] www.oecd.org/statistics [email protected] Taxation [email protected] OECD health project www.oecd.org/taxation/ Development indicators www.oecd.org/health [email protected] www.developmentgoals.org [email protected] Harmful tax practices PUBLIC AFFAIRS AND Migration www.oecd.org/taxation/ctpa/htp COMMUNICATIONS www.oecd.org/migration [email protected] www.oecd.org/about [email protected] Electronic commerce Publishing Social issues www.oecd.org/ecommerce/ www.sourceoecd.org/ www.oecd.org/social [email protected] [email protected] [email protected] Media relations Public governance www.oecd.org/media TRADE AND INTERNATIONAL www.oecd.org/puma [email protected] INVESTMENT [email protected] www.oecd.org/trade Forum 2001 [email protected] BEST USE OF NEW www.oecd.org/forum/2001 Export credits TECHNOLOGIES OECD Observer www.oecd.org/science www.oecd.org/trade/xcred www.oecdobserver.org [email protected] [email protected] [email protected] Trade and competition ICT Business, labour www.oecd.org/regreform/competition www.oecd.org/ict/ www.biac.org/; [email protected] [email protected] [email protected] www.tuac.org; [email protected] Agricultural trade Biotechnology OECD website www.oecd.org/agriculture/trade www.oecd.org/biotechnology/ www.oecd.org [email protected] [email protected] [email protected]

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OECD COUNCIL MEETING AT MINISTERIAL LEVEL COMMUNIQUÉ: TOWARDS A SUSTAINABLE FUTURE www.oecd.org/about

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, Minis- ter 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 Com- mittee (BIAC) and the Trade Union Advisory Committee (TUAC) to the OECD.

We welcome the accession of the Slovak Republic to the OECD. Slovakia’s accession completes more than a decade Marianne Jelved, Danish Minister for Economic Affairs and of progress on reform that accelerated with the launching Vice Prime Minister, with Donald Johnston, OECD in 1991 of OECD’s Partners in Transition Programme with Secretary-General, at the final press conference after the the Czech and Slovak Republics, Hungary and Poland. ministerial meeting.

Our societies, as well as those of all other countries, face major transitions. We look to OECD to continue its path- finder role of identifying and evaluating emerging policy more peaceful world. This process is open to the range of issues and developing new policy concepts and approaches partners outside the Organisation’s membership who share in areas where the Organisation has comparative advantage. our commitment to the development of a rules- and values- OECD contributes to deeper international understanding, based open world economy. We endorse the Organisation’s a more stable international economic system and enhanced programmes of co-operation with countries outside OECD prosperity worldwide, through its unique and indispensable and welcome the growing interest among Non Members in intergovernmental process of analysis, dialogue and policy participating in OECD’s work. OECD remains open, on the development. basis of mutual interest, to membership by countries sharing the same values while being selective and pursuing the We are committed to shaping globalisation to the benefit Organisation’s tradition of high standards for membership of all, and ensuring that the poorest are not left behind. We as well as efficiency and relevance to its Members. We value recognise the need, nationally and internationally, to bring the bridges OECD can build with non-Member countries in greater coherence across the range of policies that impact common pursuit of reform and their successful integration on the achievement of this goal. Trade, investment and into the international economic system. development policies, in particular, have a vital contribution to make to sustainable development and poverty Our discussions with Ministers from Brazil, China, Indonesia, reduction: strengthening the coherence among these policy Mali, Romania, Russia, Singapore and South Africa at our areas deserves special attention. We look to OECD to assist Council Meeting this year are a contribution to strength- us in this task. ened confidence in the multilateral trading system and a step toward the launch of new WTO negotiations in Doha in OECD and the wider world November this year. OECD’s co-operation and dialogue with countries in all re- OECD’s enhanced co-operation with its long-standing part- gions of the world is a powerful instrument for advancing ners BIAC and TUAC has been complemented over the last economic, environmental and social progress towards a year by strengthened co-operative activities with NGOs and 85 O E C D A N N U A L R E P O R T

other representatives of civil society. This continuing financial and corporate sectors and to enhance structural dialogue builds trust in public institutions and promotes reform in securities and real-estate markets. Vigorous imple- public understanding of the benefits and challenges of mentation of this strong intent is essential and regulatory global economic and social change. We welcome OECD reform should be quickened. Forum 2001 as an effective multi-stakeholder dialogue providing valuable input to our work. Growth in Europe will slow this year, but prospects are favourable. Economic fundamentals remain good and un- Economic perspectives employment will continue to decline. Further structural reforms that increase the efficient operation of labour, pro- The world economy has slowed significantly since we last duct and financial markets are needed to strengthen long- met in June 2000. Growth in the OECD area is now projected term growth and reduce unemployment on a durable basis. to decline to around 2% in 2001, half the rate achieved last In the euro area, with upside risks to price stability dimin- year. In addition, some large current account imbalances ishing, scope for an easing of monetary policy emerged. persist. However, the foundations are in place for a return Fiscal tightening over some years has created room for the to stronger growth, and inflation is expected to remain low. tax cuts being implemented in most European countries. Macroeconomic policies and structural reforms should aim These will support demand and improve incentives for work to enhance productivity growth and increase employment and investment and thus supply-side conditions. Tax cuts over the long term. 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 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 differ- Laurent Fabius, French Minister for the Economy, Finance entiated responsibilities, to deliver essential public goods and Industry (left), and Poul Nyrup Rasmussen, Danish Prime Minister. of a global nature. We recognise that OECD countries bear a special responsibility for leadership on sustainable development worldwide, historically and because of the The United States economy has experienced a significant weight they continue to have in the global economy and slowdown. Long-term fundamentals remain strong. Mone- environment. We recognise the urgency of the challenge tary policy should continue to aim at sustained non- and the gap between policy design and implementation. inflationary growth. Fiscal policy should focus in the medium We are committed to closing this gap and will work ener- term on economic efficiency and fiscal soundness, includ- getically with countries outside the OECD’s membership to ing encouragement of higher private savings. achieve our joint sustainable development goals.

In Japan, prospects for a self-sustained recovery in the short We agree that real progress must be made, nationally and term are uncertain while prices continue to decline and internationally, in order to succeed at the World Summit on government debt is increasing. Monetary policy needs to Sustainable Development in Johannesburg in September provide ample liquidity until consumer price inflation stays 2002. We will ensure that sustainable development strate- at or above zero. The fiscal policy in place has been geared gies are put in place in all our countries by the time of the to aid recovery, but a credible medium-term strategy for World Summit. OECD’s Roundtable on Sustainable Devel- fiscal consolidation and structural reforms must be development should strengthen its role as a forum for interna- oped without delay. We welcome the Japanese authorities’ tional dialogue among stakeholders. We endorse OECD’s strong intent to resolve balance sheet problems in the Environmental Strategy for the First Decade of the 21st

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Century1 , and look to OECD to support and monitor its • Manage natural resources: The market prices of natural implementation. We welcome IEA Ministers’ Communiqué2 resources must reflect the full environmental and social on the place of energy in a sustainable future. costs and benefits of economic activity, to take better account of non-market values and long-term impacts. OECD’s report Policies to Enhance Sustainable Development out- Progress requires improving the knowledge base lines a policy framework for better integrating economic, through research on environmental thresholds and non- environmental and social objectives, and decoupling eco- market values, making markets better serve conserva- nomic growth from a range of environmental pressures. The tion goals, and reducing the net costs of waste flows. report emphasises the need for sound analysis based on strong science that considers the full range of policy instru- • Harness science and technology: Scientific research and inno- ments and associated costs and benefits. We endorse the vation can enhance the efficiency of resource inputs and policy recommendations derived from it: the environmental quality of growth. The increased use of market signals to achieve environmental objectives • Make markets work: All OECD countries should make better will boost the contribution of science and technology to use of market-based instruments and combine them sustainable development. New information and com- effectively with regulation. Measures to encourage vol- munications technologies (ICT) offer possibilities for sig- untary initiatives and programmes to raise awareness nificant reductions in the use of materials, energy and have a role to play. The implementation of instruments transport, and potential new directions in environmen- such as tradable permit systems, environment-related tal policy design, implementation and monitoring. taxes, and the phasing out of support programmes that are environmentally damaging in agriculture, fisheries, • Strengthen decision-making and information: Improved policy transport, energy, manufacturing and elsewhere, should integration and coherence at all levels of government, be pursued, and applied according to national circum- closer involvement of parliaments, and better mecha- stances. This will contribute to the development of sus- nisms for interacting with citizens and civil society tainable consumption and production patterns. organisations, including greater public access to information and participation in decision-making, are • Respond to climate change: We recognise that climate change required. When designing policies for sustainable is the most urgent global environmental challenge, development, countries should apply precaution as requiring strong leadership and action by OECD appropriate in situations where there is lack of scien- Members, in accordance with their common but differ- tific certainty. entiated responsibilities, and working closely with transition and developing countries under the United • Linkages with the global economy: Trade, investment, envi- Nations Framework Convention on Climate Change ronmental and social policies should be coherent and (UNFCCC). OECD governments recognise the need to mutually supportive. Ensuring that the benefits of significantly reduce global greenhouse gas emissions, globalisation and technological advance are widely with developed countries taking the lead, and to pro- shared requires open world markets. We must also tect and enhance greenhouse gas sinks and reservoirs encourage environmentally and socially sustainable in order to stabilise concentrations in the atmosphere over the long term at a level that would prevent dangerous anthropogenic interference with the climate system. We will fully implement our national commitments, such as emission limitation and reduction targets, including those established under the UNFCCC. While recognising our differences over the Kyoto Protocol, OECD governments are determined to work together to address climate change and will participate constructively in the resumed COP6 in Bonn. For a large majority of OECD countries this means seeking entry into force of the Kyoto Protocol by 2002, with timely ratification processes, and with the broadest possible support of the international community. We ask OECD to continue to contribute to the analysis and international dialogue on these issues. (left to right): Didier Reynders, Belgian Minister of Finance, Geir H. Haarde, Icelandic Minister of Finance and Pascal Couchepin, Swiss Federal Counsellor and Head 1. PAC/COM/NEWS(2001)46. of the Federal Department of the Economy. 2. IEA/PRESS(01)13.

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growth in developing countries through improved Ministerial Conference Opportunity for All3 , in London on market access for developing countries to OECD 9-10 October 2000, demonstrated how concerted action markets, and support for capacity building, co-operation across different parts of government can successfully tackle in the area of technology, good governance, and poverty deprivation. reduction. Ageing OECD will continue to assist governments by: The consequences of population ageing remain a major • developing agreed indicators that measure progress concern for OECD economies. OECD’s review of retirement across all three dimensions of sustainable development, income systems shows that countries are putting in place including decoupling of economic growth from environ- reforms, but more needs to be done to strengthen them mental degradation, with a view to incorporating these and make “active ageing” a reality. Further reforms are into OECD’s economic, social and environmental peer needed to encourage continued labour force participation review processes, and filling gaps in the statistical and of older workers and to achieve a better balance, taking scientific data; account of national context, among various forms of pensions, to support the fundamental goal of ensuring adequate • identifying how obstacles to policy reforms, in particular incomes in old age. We welcome OECD’s work on active to the better use of market-based instruments, and to ageing, including its contribution to the Turin Charter4 . We the reduction of environmentally harmful subsidies, can must urgently address the barriers against hiring, retraining be overcome; and deepening its analytical work on these and retention of older workers, and we look forward to instruments; OECD’s work on this topic.

• analysing further the social aspects of sustainable Health development, including work on human and social capi- Health is vital to sustainable development. Health systems tal, as well as their interaction with their economic and are an important element in social cohesion and represent environmental dimensions; the largest service sector in many OECD countries. Their • providing guidance for achieving improved economic, efficiency, effectiveness and equity consequences, their environmental and social policy coherence and integration. impact on public finances, and their ability to meet the challenges of medical advances, ageing populations and rising OECD will report progress to us in 2002, in particular on the expectations require creative policy approaches. OECD’s use of sustainable development indicators, with a view to Health Project will provide policy guidance on these contributing to the forthcoming Johannesburg Summit. matters, and we look forward to the Ottawa Conference in November 2001 on improving the performance of health The social dimension of sustainable systems. development Migration Social cohesion Migration is an increasingly pressing issue, for immigrant Deepened social cohesion is a central objective for sustain- and emigrant countries, their governments and the general able development. We are thus committed to fighting the public. It raises a host of social, economic, development causes of poverty and social exclusion: persistently low and foreign policy challenges and opportunities. OECD is a incomes, lack of opportunities to work and to learn, and key reference point for the monitoring of migration trends lack of access to good quality public services affect parti- and policies. We look to OECD to deepen and extend its cular groups and areas and prevent progress toward sus- analysis of the economic and social impacts of migration in tainable development. Extending opportunities for work both host and origin countries, including the international and good careers, to all those who can work, is a key element mobility of workers at different skill levels. in any strategy to combat poverty and social exclusion. OECD unemployment has declined significantly in recent Growth, technology and human capital years, but more needs to be done to reduce long-term unemployment and benefit dependency within the context At their May 1999 meeting, Ministers asked OECD to analyse of an adequate social safety net. We welcome OECD’s work the causes underlying differences in growth performance in on employment-oriented social policies to help tackle social OECD countries and identify factors, institutions and poli- inequalities, facilitate adjustment to rapid economic restruc- cies that could enhance longer-term growth prospects. We turing, and improve growth prospects. The recent UK/OECD 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 pat- 3. PAC/COM/NEWS(2000)88. terns over the past decade. Other factors include the use 4. Towards Active Ageing, 10-11 November 2000. and quality of labour and greater efficiency in the combina- 88 O E C D A N N U A L R E P O R T

tion of labour and capital. Seizing new growth opportuni- resources to cope with new technology and to adapt ties requires a set of mutually reinforcing policies: labour market institutions to the changing nature of work. We welcome the ambitious framework Investing in Com- • Get the fundamentals right. Stable macroeconomic poli- petencies for All5 adopted by Education Ministers at cies are a prerequisite for a successful growth strategy, their April 2001 meeting. higher employment and price stability. Fiscal discipline and productivity-oriented wage developments contri- • Research, innovation and entrepreneurship are key to bute to low inflation, and reduce uncertainty, thus growth. We will sustain our commitment to adequate enhancing the efficiency of price mechanisms in allo- funding of basic research and seek to improve the effi- cating resources and strengthening consumer and inves- ciency and effectiveness of public money for research tor confidence. More open, competitive and efficient and development, to foster intellectual property product, financial and labour markets and institutions regimes that promote innovation and ensure its diffu- spur change and make economies more adaptable. sion, and to remove barriers to effective interaction between science and industry. We will work to ensure an environment favourable to business and risk-taking, and particularly for new firms and SMEs as set out in the Bologna Charter. We are committed to improving access to high-risk finance and reviewing burdensome administrative regulations and bankruptcy provisions.

• Specific policies for the successful use of ICT. We will work to facilitate the diffusion of ICT by increasing competition in the ICT sectors, especially telecommunications and fostering users’ trust in those sectors. The public and private sectors should work together to ensure that ICT applications, such as e-commerce, become secure and reliable to use.

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 Svend Auken, Danish Minister for the Environment and will also deepen its work on the relationship between growth Energy, at a press conference on sustainable development and sustainable development. OECD will report to us in at the ministerial meeting. 2003.

Good progress has been made in fulfilling the 1998 OECD Ministerial Declarations on Privacy, Authentication and Con- Favourable macroeconomic conditions and structural sumer Protection in relation to electronic commerce. Work and regulatory reforms reinforce each other, increasing will continue in these areas to deepen trust in e-commerce. opportunities for innovation and growth potential. An efficient, effective and transparent fiscal framework for e-commerce is also essential: implementation of the Ottawa • New technology has heightened the role and importance Taxation Framework Conditions is advancing6 , and will be of education and the development of human capital. A the subject of a global conference, Tax Administration in an comprehensive life-long learning strategy is required, Electronic World, to be held in Montreal in June 2001. including: access to early childhood education and care; a solid foundation in basic education; a better school- A “digital divide” has arisen within and among OECD to-work transition with closer links between education Member countries as well as between the developed and and the labour market; and effective training systems the developing world, and will widen if countries do not or that provide lifelong educational opportunities. We re- cannot respond adequately to the new technological oppor- cognise the need to enhance the capacity of human tunities. OECD work shows pro-competitive policies and appropriate regulatory structures are essential elements for 5. PAC/COM/NEWS(2001)32. bridging this divide. We welcome the results of the Dubai 6. See Taxation and Electronic Commerce : Implementing the Ottawa Tax- Conference on these issues held in January 2001. We ation Framework Conditions, May 2001 encourage OECD to continue to build co-operation with 89 O E C D A N N U A L R E P O R T

transition and developing countries and with other inter- There is increasing public debate about the comparative national bodies, including through its important contribu- benefits and costs of regulation and deregulation in Member tion to the G8 DOT Force initiative to implement the countries. OECD’s continuing analysis of regulatory reform Okinawa Charter. We look forward to the OECD Global Forum shows that carefully designed policies enhance regulatory on the digital economy in 2002. quality, strengthen consumer choice and reduce prices; the reviews of regulatory reform in Member countries8 provide substantial multidisciplinary guidance on regulatory management. We welcome OECD’s 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 OECD’s work to develop principles and best practices for the regulation of private pensions.

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 Recom- mendations, 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 Brigita Schmögnerová, Slovak Minister of Finance, with legislation; and the role of foreign subsidiaries and of off- Vitor Manuel Silva Santos, Portuguese Deputy Secretary shore centres in bribery transactions. We encourage efforts of State for the Economy. 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. Economic and social disparities between regions are increasing and prospects for prosperity are uneven. OECD’s We note the work undertaken on harmful tax practices and Territorial Reviews7 will make an important contribution to look forward to the conclusions of the OECD project. the regional and local dimensions of our policies. The corporate world: governance and responsibility We welcome the success of the two conferences held in November 2000: Gender Mainstreaming: Competitiveness We welcome the work of OECD in co-operation with the and Growth and Women Entrepreneurs in SMEs. We look World Bank and in particular the successful corporate gov- to OECD to further integrate gender analysis into its work, ernance roundtables that have been held during the past and take steps to improve gender balance within the year in Asia, Latin America, Russia, and Eurasia. These Organisation. roundtables are playing an important role in strengthening corporate governance worldwide and will assist OECD in Governance preparation of the first assessment of the OECD Corporate Governance Principles in 2005. We look forward to analyti- Strengthening effective and coherent public governance cal work and the exchange of information among Member 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 7. Reviews completed so far: National – Hungary, Italy Korea. Regional – Teruel and CCV (Spain), Tzoumerka (Greece) and governance. Enhanced openness, transparency, and Bergamo (Italy). In 2001/2, Canada, Mexico, and Switzerland are accountability must become guiding principles for govern- expected to be reviewed at the national level, together with a ments within OECD’s membership and beyond. OECD number of regions in other Member countries. should continue to make a vital contribution through its 8. Reviews completed so far: Czech Republic, Denmark, Greece, dialogue on public governance with Non Members. We Hungary, Ireland, Italy, Japan, Korea, Mexico, the Netherlands, welcome the conclusions of the Third Global Forum on E- Spain and the United States. In 2001/2002 Canada, Poland, Turkey Government held in Naples in March 2001 and ask OECD to and the United Kingdom are to be reviewed. There are several explore further the challenges and opportunities of e- candidates interested in being reviewed in 2002/3, including government. Germany. 90 O E C D A N N U A L R E P O R T

countries on their corporate governance experiences in the goal of sustainable development. The links between trade preparation for that assessment. We also welcome OECD’s liberalisation and environment, as well as the sustainable Report on the Misuse of Corporate Vehicles9 for Illicit use of natural resources, will need to be carefully clarified. Purposes, which will contribute to efforts to combat corrup- All WTO members will need to be creative and flexible in tion and money laundering. addressing areas and modalities of negotiation. Trade and labour as well as other social development issues raise con- Private initiatives for corporate responsibility are also cerns that must be addressed through dialogue that takes increasing: we invite OECD to build on this positive devel- into account the expertise of all relevant international opment in support of effective implementation of the OECD institutions, including the WTO. Guidelines for Multinational Enterprises. We reaffirm our commitment to the Guidelines and the need for all A new round is essential for developing countries given the stakeholders to pursue the ongoing constructive dialogue need to stimulate their economic growth, alleviate poverty that underpinned the review of the Guidelines in 2000. We and promote their integration into the multilateral trading support further agreed analytical work in the field of corpo- system. We recognise that they have a particular interest in rate responsibility and expect the forthcoming Annual Meet- a number of areas, including agriculture and textiles and ing of National Contact Points to enhance further the clothing. Some progress has been made to date on Uruguay implementation of the Guidelines. Round implementation issues and we urge all WTO members to seek ways to address developing country International investment is an important engine for global requests and concerns, and to build confidence as prepa- sustainable growth and the integration of Non Members into rations for Doha proceed. We welcome recent initiatives by the world economy. The OECD Global Forum on Investment OECD Members to liberalise preferential market access for in November 2001 and the UN High Level Conference on the least developed countries, and the moves to incorpo- Financing for Development, to be held in Mexico in 2002, rate trade into poverty reduction strategy programmes. will benefit from OECD’s analytical work on foreign direct Enhanced capacity building and technical assistance are also investment. We welcome the intention of Estonia, Israel, vital, if developing countries are to benefit from more open Latvia, Lithuania, Singapore, Slovenia and Venezuela to markets. We support the recently revised Integrated Frame- adhere to the Declaration on International Investment and work Initiative. Multinational Enterprises, and encourage other countries to do the same.

The multilateral trading system We are committed to the launch of a new global round of multilateral trade negotiations at the WTO Ministerial Con- ference 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 (left to right) Hwang Doo-Yun, Korean Minister for Trade, agenda” and will offer the prospect of a wider distribution Pierre Pettigrew, Canadian Minister for International of the benefits sought by all participants. We renew our com- Trade, Lydie Polfer, Luxembourg Deputy Prime Minister and Minister for Foreign Affairs and External Trade, and mitment to the strengthening of the multilateral trading Gerrit Ybema, Netherlands Minister for Foreign Trade, system and our rejection of protectionist pressures. Ministry of Economic Affairs. All WTO members will have to find their concerns and interests reflected in the final result, and negotiations will Taking into account the strong interest of civil society need to be conducted in a transparent manner. We must regarding globalisation and the process of trade and invest- aim for trade liberalisation and strengthened WTO rules ment liberalisation, we are committed to transparency and responding to the needs of the 21st century and our shared 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 9. Corporate vehicles are legal entities, including corporations, effective and predictable governance framework and greater trusts, foundations, and partnerships with limited liability features, through which a wide variety of commercial activities are conducted coherence among international organisations, and when and assets are held. combined with mutually supportive environmental and 91 O E C D A N N U A L R E P O R T

social policies, are fundamental for sustainable develop- Understanding on Agriculture, and call for urgent conclu- ment and a major driving force for innovation, growth and sion of this Understanding. We encourage further work on enhanced human welfare worldwide. WTO-consistent pref- the financing provisions of the Export Credit Arrangement erential trade agreements can complement but cannot in the light of, inter alia, recent developments in the WTO. substitute for coherent multilateral rules and progressive We ask OECD to continue to work on the export credit pro- multilateral liberalisation. visions of the 1994 Understanding on Shipbuilding with a view to implementing these before the end of 2001. We consider that OECD has a major role to play in continuing efforts to strengthen the multilateral trading system, and Shipbuilding build understanding of what is at stake for countries at all levels of development. OECD will continue to build bridges, We ask OECD to redouble its efforts to explore solutions to through its analytical work and its non-negotiating policy bring about normal competitive conditions in shipbuilding, dialogue, among its membership and beyond. We welcome and encourage shipbuilding countries outside the OECD to ongoing efforts in OECD to promote greater coherence participate in this work. between trade and development co-operation policies. We look forward to a progress report in 2002. Agriculture and fisheries Agriculture and fisheries are key sectors for sustainable development and the multilateral trading system.

• While decreasing in 2000 following two years of increase, support to agriculture in the OECD area remains high at around US$ 327 billion, as measured by the Producer Support Estimate10 . Despite some shift away from market price support and output payments, these continue to be the dominant forms of support in most countries, with consequent adverse impacts on production and trade, in both developed and developing countries. The WTO negotiations within the “built-in” agenda11 provide an important opportunity for further reform, which will bring economic, environmental and social benefits. OECD’s analysis of multifunctionality, decoupling, the Hendrik Vygen, Deputy Director-General for External impacts of the Uruguay Round Agreement and various Economic Policy and European Policy at the German Ministry of Economics and Technology (left), with Caio trade-related topics, including environmental linkages, Koch-Weser, German State Secretary for Finance. is an essential contribution to the understanding of agricultural policies and their international impacts.

• Fisheries policies have to address the relation between Export credits sustainable management of resources and trade liberal- Export credit policy can contribute positively to sustainable isation, the causes of unsustainable fishing, and the need development and should be coherent with its objectives. to avoid those subsidies that are harmful, to be further We welcome the substantial progress achieved in the Export analysed by OECD based on its recent study, Transition Credit Working Party towards agreement on a Recommen- to Responsible Fisheries. This study is a valuable contribu- dation on Common Approaches on Environment and Export tion, and we look to OECD, in co-operation with the FAO Credits and encourage the Working Party to finalise this work and other international organisations, to deepen its as soon as possible and before the end of 2001, as we analysis in these fields to inform policy development. requested last year. We also welcome the Working Party’s Action Statement on Bribery and Export Credits and its work Food safety on unproductive expenditure in Heavily Indebted Poor Food safety continues to be a high priority for consumers Countries, together with the readiness of a number of and governments. We agree that a science-based and Members to voluntarily extend the latter to other low- rules-based approach must remain the basis for policy at income countries. We urge the Working Party to finalise the both the national and international levels. In cases where Statement of Principles on Unproductive Expenditure and the scientific evidence is insufficient and precaution is 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 Arrange- 10. Agricultural Policies in OECD Countries: Monitoring and Evaluation 2001. ment to reach full consensus on the draft Export Credit 11. Cf. Article 20 of the Uruguay Round Agreement on Agriculture.

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applied to address risks to food safety, measures taken development process, and promote more equitable effort- should be subject to review and on-going risk analysis, sharing among aid donors. This agreement is especially consistent with the WTO Agreement on the Application of welcome at the time of the Third United Nations Confer- Sanitary and Phytosanitary Measures. In co-operation with ence on the Least Developed Countries currently taking other international organisations, and in light of its recog- place in Brussels. nised areas of expertise, OECD’s programme of work will contribute to analysis and policy dialogue on wider issues of food safety.

Life sciences and biotechnology 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 OECD’s 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 OECD’s work on issues arising from the mapping of the human genome.

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 Modi- Development issues arise in a very broad range of govern- fied Organisms to be hosted by the United States in ments’ policies and actions, and therefore also within the November. work of the Organisation. The Illustrative Checklist on Policy Coherence for Poverty Reduction is a useful tool to help Development co-operation OECD governments in this area. We also encourage the The International Development Goals12 are at the heart of Organisation to deepen its work on policy coherence and development policy and provide a key common reference development and look forward to proposals in this regard. point. OECD’s new Guidelines on Poverty Reduction and its guidance on Sustainable Development Strategies, Con- We congratulate Donald Johnston on his reappointment as flict Prevention and Trade Capacity Development13 are Secretary-General. We welcome the progress he has made important contributions to the achievement of these goals. in modernising the Organisation, and ask him to take forward We are committed to providing effective ODA consistent the reform agenda – on financial and management reform, with our support for the International Development Goals. on further prioritisation of the Organisation’s work, and on We welcome the growing recognition of the importance of enhancing the Organisation’s capacity to address the closer harmonisation of donor procedures and practices. increasingly complex and interconnected issues of globalisation – to equip OECD to respond to the policy chal- We welcome the Recommendation on Untying Aid to the lenges of the next decade and beyond. We recognise the Least Developed Countries which was adopted to contri- major challenge of renovating the Organisation’s Headquar- bute to aid effectiveness, increase value for money in aid ters in an efficient and cost-effective manner, and we are procurement, improve developing country ownership of the fully committed to the success of this project.

12. Formulated in DAC’s Shaping the 21st Century (1996) and embedded in the UN Millennium Declaration (2000). 13. Development Assistance Committee High Level Meeting 25-26 April [PAC/COM/NEWS(2001)40].

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THE OECD SECRETARIAT

FEBRUARY 2002

SECRETARY-GENERAL STATISTICS INFORMATION TECHNOLOGY AND Donald J. Johnston Enrico Giovannini NETWORK SERVICES Guido Maccari DEPUTY SECRETARIES-GENERAL ENVIRONMENT Herwig Schlögl Joke Waller-Hunter INTERPRETATION Seiichi Kondo Thomas Afton Richard Hecklinger DEVELOPMENT CO-OPERATION Michael G. Roeskau TRANSLATION PRIVATE OFFICE René Prioux OF THE SECRETARY-GENERAL PUBLIC MANAGEMENT Carolyn Ervin Odile Sallard ****

ROUND TABLE ON SUSTAINABLE TRADE INTERNATIONAL ENERGY AGENCY DEVELOPMENT Jean-Marie Metzger Robert Priddle Simon Upton FINANCIAL, FISCAL NUCLEAR ENERGY AGENCY COUNCIL AND EXECUTIVE AND ENTERPRISE AFFAIRS Luis Echavarri COMMITTEE SECRETARIAT William Witherell Roger Harmel DEVELOPMENT CENTRE SCIENCE, TECHNOLOGY José Braga de Macedo ADVISORY UNIT ON AND INDUSTRY MULTIDISCIPLINARY ISSUES Takayuki Kawabata-Matsuo SAHEL AND WEST AFRICA CLUB Michael J. Oborne Jacqueline Damon EDUCATION, EMPLOYMENT, LEGAL DIRECTORATE LABOUR AND SOCIAL AFFAIRS CENTRE FOR EDUCATIONAL David Small John Martin RESEARCH AND INNOVATION John Martin AUDITOR-GENERAL FOOD, AGRICULTURE (Vacant) AND FISHERIES EUROPEAN CONFERENCE Stefan Tangermann OF MINISTERS OF TRANSPORT CENTRE FOR CO-OPERATION WITH Jack Short NON-MEMBERS TERRITORIAL DEVELOPMENT Eric Burgeat Bernard Hugonnier

EXECUTIVE DIRECTOR HUMAN RESOURCE Anthony Hutton MANAGEMENT Pierre Lebleu PUBLIC AFFAIRS AND COMMUNICATIONS OPERATIONS Christopher W. Brooks David Johnson

ECONOMICS DEPARTMENT BUDGET AND FINANCE Ignazio Visco Normand Saucier

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AMBASSADORS, PERMANENT REPRESENTATIVES TO THE OECD

FEBRUARY 2002

AUSTRALIA FRANCE His Excellency Mr. Ian K. Forsyth Her Excellency Mrs. Joëlle Bourgois

AUSTRIA GERMANY His Excellency Mr. Karl Schramek His Excellency Mr. Hans-Stefan Kruse

BELGIUM GREECE Her Excellency Ms. Régine De Clercq His Excellency Mr. George E. Krimpas

CANADA HUNGARY Her Excellency Ms. Suzanne His Excellency Mr. Béla Kádár Hurtubise

CZECH REPUBLIC ICELAND His Excellency Mr. Jaromír Prívratský Her Excellency Ms. Sigridur Asdis Snaevarr

DENMARK IRELAND His Excellency Mr. Peter Brückner His Excellency Mr. Pádraic MacKernan

FINLAND ITALY His Excellency Mr. Jorma Julin His Excellency Mr. Francesco Olivieri

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JAPAN PORTUGAL His Excellency Mr. Mutsuyoshi Her Excellency Ms. Ana Martinho Nishimura

SLOVAK REPUBLIC KOREA His Excellency Mr. Dusan Bella His Excellency Mr. Kyung-tae Lee

SPAIN LUXEMBOURG Her Excellency Ms. Elena Pisonero His Excellency Mr. Jean-Marc Hoscheit

SWEDEN MEXICO His Excellency Mr. Anders Ferm His Excellency Mr. Javier Arrigunaga

SWITZERLAND NETHERLANDS His Excellency Mr. Wilhelm B. Jaggi His Excellency Mr. Frans Engering

TURKEY His Excellency Mr. Uluç Özülker NEW ZEALAND His Excellency Mr. Adrian Macey (to take up duties in March 2002) UNITED KINGDOM His Excellency Mr. Christopher Crabbie, CMG

NORWAY Her Excellency Ms. Tanja H. Storm UNITED STATES Her Excellency Mrs. Jeanne L. Phillips

POLAND EUROPEAN COMMISSION His Excellency Mr. Jan Bielawski His Excellency Mr. John Maddison

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OECD MEMBER COUNTRIES

AUSTRALIA KOREA AUSTRIA LUXEMBOURG BELGIUM MEXICO CANADA NETHERLANDS CZECH REPUBLIC NEW ZEALAND DENMARK NORWAY FINLAND POLAND FRANCE PORTUGAL GERMANY SLOVAK REPUBLIC GREECE SPAIN HUNGARY SWEDEN ICELAND SWITZERLAND IRELAND TURKEY ITALY UNITED KINGDOM JAPAN UNITED STATES

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OECD PUBLICATIONS, 2, rue André-Pascal, 75775 PARIS CEDEX 16 PRINTED IN FRANCE (01 2002 06 1) No. 81647 2002 OECD PUBLICATIONS, 2, rue André-Pascal, 75775 PARIS CEDEX 16 PRINTED IN FRANCE (58 2002 01 3 P) ISBN 92-64-09706-6 – No. 52316 2002