COMMUNIQUE OF THE MEETING OF THE OECD COUNCIL MEETING AT MINISTERIAL LEVEL
27-28 APRIL 1998
1. The 1998 OECD Council's agenda covered four areas:- economic growth
and the global implications of the Asian crisis; structural reform and
adjustment; strengthening the multilateral system and; the OECD's role
and future challenges. However, developments on the MAI dominated the meeting
and the media interest as Ministers strove to reach a consensus on its
future, and on which a separate Ministerial statement was released. A TUAC
note is circulated in addition to this evaluation.
2. In a new development Donald Johnston, OECD Secretary-General, organised
more extensive consultations with the social partners than in past years.
This took the form of a working dinner with key Ministers and certain Heads
of OECD Directorates on the eve of the Ministerial meeting, followed by
joint TUAC/BIAC consultations with Ministers the next morning. At both
events the trade union delegation stressed that the Asian crisis had laid
open the fault lines running through the global economy, and that the correct
response was to govern and manage its direction in the interest of all
with a strong social dimension, rather than to push ahead blindly with
more liberalisation and deregulation. Co-ordinated policies for growth
had to be put in place, along with adaptable as opposed to flexible labour
market policies to give workers confidence in change. At the same time
a broad-based transparent Commission had to be initiated to forge a new
consensus on the appropriate international financial market regulation.
Without these measures the risk of a backlash against globalisation was
a real one.
3. The Communique issued at the end of the meeting highlighted the confused
debate among policy makers on how best to respond to the challenges posed
by the crisis in Asia and globalisation in general. Ministers were complacent
on the prospects for growth, and the familiar policy messages were repeated
on the need for macroeconomic stability, structural reform and further
liberalisation. The references to the WTO were worrying as Ministers called
for further and deeper liberalisation, without responding to the need for
a meaningful social dimension. Little of any substance was said on the
need to develop a new architecture to govern the operation of financial markets. Although in the consultations the need for openness and transparency
in the OECD work on financial markets was recognised.
4. At the same time Ministers were clearly worried that they are losing
the public debate on the effects of globalisation, and that gains from
liberalisation are not being shared widely. This was highlighted by the
confusion surrounding the call for a pause in the MAI negotiations and
the failure to set a new deadline for the completion of negotiations. In
addition, Ministers recognised that an open and informed public debate
was needed on trade and investment liberalisation, and that liberalisation
has to form part of a coherent set of policies to achieve improvements
in living standards. What these policies are, however, appears to be little
changed from the past. In this sense Ministers ducked the opportunity to
have a full and frank debate on developing a new approach to globalisation.
Economic Growth, The Global Implications Of The Asian Crisis And
The Multilateral System (§ 2-11)
5. The following messages on these key issues can be drawn from the
- In general, Ministers recognised the "growth potential over the longer
term" in Asia, implicitly acknowledging that a short-term recovery was
unlikely. Emphasis was placed on the need for "good governance and effective
structural policies" together with macroeconomic stability. Nothing was
said on the worsening situation in many of the Asian countries as unemployment
rises, except to say that appropriate, targeted development assistance
should be provided. As expected Ministers urged the full implementation
of agreed reforms with the IMF and World Bank. However, aware of the problems
that could arise if trade deficits widen in the OECD as a result of the
Asian crisis the Communique called on OECD countries to sustain growth
and domestic demand.
- The Japanese government sought and gained support from the OECD countries
for its latest stimulus package, but on the margins of the meeting criticisms
were made that it still fell short of what's needed to stimulate effectively
domestic demand led growth. Similarly, Korea's reform efforts were welcomed,
but no recognition was made to the role played by the Korean trade unions
in helping to stabilise the economy, nor to the need for Korea to bring
its labour legislation into conformity with ILO rulings on freedom of association.
- Turning to the effects of the Asian crisis on the OECD region, the
message was one of complacency - "the underlying economic situation in
most OECD countries is generally good". Sound public finances and control
of inflation were highlighted, but with medium-term fiscal consolidation.
Importantly, within this the role of tax reform was stressed.
- As regards particular regions, the policy framework in the US "should
continue to be directed at sustainable expansion and to increase national
savings", but attention should be payed to the emergence of inflationary
pressures. On the European Union, while the familiar statements were repeated
on the need for "sound and credible macroeconomic policies" together with
structural reforms, Ministers nevertheless stressed the need for EMU participating
countries to base their recoveries on "the sustained growth of domestic
- Beyond this mixed messages were sent on the need to reform the existing
architecture governing globalisation. The ongoing debate on the need to
re-regulate financial markets was ignored in the Communique, except to
say that "effective structural policies" were needed for "financial systems".
Similarly, the Communique was silent on the TUAC demand for an open transparent
international Commission to develop a new financial market architecture.
The Communique noted that the events in Asia "have underlined the importance
of international monetary and financial co-operation", and that advantages
lay in "all parties working together in a co-ordinated manner to prevent,
manage and contribute to overcoming crises of a global nature". Ministers
also endorsed the establishment of an OECD special programme to address
issues, including social ones arising from financial instability in non-Member
countries. During the TUAC/BIAC consultations the OECD Secretariat agreed
to a dialogue with trade unions on the programme itself and requested more
concrete proposals from TUAC on how to reduce financial market instability.
This will be followed up.
- Likewise, mixed messages were given on the process of globalisation
itself. In light of "public concerns" about the effects of trade and investment
liberalisation, Ministers recognised the importance of having an open and
well informed debate on these issues. The Communique also stated that "liberalisation
is one important component, among others, of what must be a coherent set
of policies aimed at achieving a durable improvement in living standards",
and that the gains from globalisation should be as widely shared as possible.
The way of achieving this, however, appears to be no more than continuing
existing policies but explaining them better.
Promoting Structural Reform And Adjustment (§ 12-21)
6. The Communique grouped the following issues under this broad heading:
- Implementing the Jobs Strategy: this section of the Communique was
more balanced than in 1997. Notwithstanding the emphasis given to the prevalence
of structural unemployment, the Communique nevertheless highlighted the
existence of high levels of cyclical unemployment in some OECD countries.
No explicit reference was made to labour market "flexibility" as the means
to increase employment and reduce unemployment. The message was such that
the Jobs Strategy should be implemented in full but "tailored to the specific
conditions in each country". In addition, the growing regional disparities
in unemployment were noted, as were the growing income disparities in a
number of countries.
- The Communique also touched on two recent OECD thematic reviews on
entrepreneurship and the role of technology and productivity in job creation.
In both cases Ministers eschewed the language of labour market deregulation
in favour of broader policies to "provide a suitable setting ... to improve
the conditions for entrepreneurial activity", and to "facilitate the ability
of both firms and individuals to adapt to technical change". Within this
the importance was stressed of lifelong learning for all, and the need
for effective education and training systems.
- Ministers called for a progress review on the Jobs Strategy for their
meeting in 1999, and welcomed the OECD's forthcoming work on youth unemployment
which will include a meeting of labour market experts in early 1999, to
be followed by a high-level policy conference later in the year. TUAC will
be making an active input into both activities.
- Improving Strategies for Ageing and Social Policy: Ministers received
the OECD Report "Maintaining Prosperity in an Ageing Society" that proposed
a range of "principles" to guide policy reform in encouraging "active ageing".
The Communique also noted the forthcoming meeting of OECD Social Policy
Ministers that will develop further policy conclusions in this area. It
is hoped that trade union consultations will be an integral part of the
meeting. A TUAC statement is now being prepared that sets out the trade
union agenda for social policy.
- Governance and Regulatory Issues: the Communique called on the OECD
to develop a set of standards and guidelines on corporate governance. TUAC
will seek to be involved in the follow-up of this activity.
- Ministers also welcomed the recent approval of an OECD Recommendation
on Improving Ethical Conduct in the Public Services. This was discussed
at a recent TUAC/PSI/PUMA consultation where it was agreed that discussions
would be held on how best to involve trade unions in the OECD monitoring
- A reference was made to the follow-up work by the OECD on Regulatory
Reform. Here the OECD will among other things conduct a series of country
reviews analysing regulatory reform issues in Member countries. TUAC has
been actively involved in this work, both in seeking to ensure that the
policy recommendations steer away from the old agenda of deregulation,
and ensuring that each OECD country review mission meets with trade unions.
- The Electronic World: Ministers noted their intention to seek a WTO
agreement on trade aspects relating to electronic commerce, and welcomed
the ongoing OECD work to examine the economic and social policy implications
of this matter. As part of this a conference of Ministers will be held
in Ottawa in October 1998. TUAC will be participating in the OECD work
programme and the Ottawa conference.
Strengthening The Multilateral System (§ 23-33)
7. This section of the Communique reverted to a traditional call for
liberalisation. Much was said by Ministers on widening and deepening trade
liberalisation through the WTO, and the Communique reaffirmed the role
of the OECD in preparing the ground for future WTO negotiations, including
Agriculture. Ministers did renew their support for "the observance of internationally
recognised core labour standards and the goal of reaching agreement on
an ILO declaration and follow-up mechanism", and also noted "the important
role of the social partners in the process. However, these statements are
inadequate when set against the trade union demand to set up a WTO Working
Party on trade and labour standards, or to include labour standards in
WTO national reviews, and even the statement in the Singapore WTO Communique
and London G8 Jobs Conference that the ILO and WTO Secretariats would continue
8. One welcome development was the affirmation by Ministers of their
commitment to the OECD Guidelines for Multinational Enterprises, and the
need to ensure their relevance and effectiveness. This commitment will
be tested in the forthcoming review of the Guidelines, where TUAC has called
among other things for measures to strengthen implementation mechanisms.
9. This section of the Communique also included the need for an early
ratification of the OECD Shipbuilding Agreement which had an original target
date of January 1996; the marking of the 20th anniversary of the Export
Credit Arrangements; the announcement of the OECD Recommendation on measures
against "hard core" cartels; and the commitment by Ministers to implement
by the target date of 31 December 1998 the OECD Convention on Combating
Bribery of Foreign Public Officials. On this point TUAC along with the
ICFTU and the ETUC co-operated to produce a joint statement (released during
the Ministerial meeting) with BIAC and other international business organisations
calling on governments to ratify the Convention. TUAC has also been invited
to participate in the further activities of the OECD Working Party dealing
with this issue, and will involve the ICFTU in this work.
10. In addition, Ministers welcomed the OECD Report, "Harmful Tax Competition:
An Emerging Global Issue", along with the establishment of Guidelines on
Harmful Preferential Tax Regimes, and a commitment was made to produce
a list of tax havens and create a Forum on Harmful Tax Practices. In essence
this represents a determination by the OECD to curb the proliferation of
tax havens that undermine the fiscal base of other countries. TUAC has
fully supported these aspects of the OECD's work. It is of concern, however,
that Luxembourg and Switzerland announced that they would not participate
in this work.
OECD's Current And Future Challenges (§ 34-38)
11. The debate centred on three challenges for the OECD namely: its
work with non-Member countries and future Members, its work on sustainable
development, and matters relating to internal reform and the budget. Work
with non-Member countries will continue to centre around the "Big 5" of
Brazil, China, India, Indonesia and Russia, transition countries plus the
new work on financial markets arising from the Asian crisis. Divisions
continue as to whether the OECD should expand its membership. While Ministers
confirmed that it must remain open the current focus is on Russia and the
Slovak Republic, with the former being over the medium-term. A debate also
took place around the OECD's partnership strategy to help developing countries.
The agenda here includes the development of a broad range of indicators
related to sustainable development, emphasising social and environmental
factors. As part of this Ministers welcomed the new OECD Guidelines on
Gender Equality and Women's Empowerment in Development Co-operation. Agreed
further work included a report for the 1999 Ministerial meeting on the
links between trade, investment and development, plus the development of
a Recommendation on the untying of ODA.
12. A three year work programme on sustainable development (interpreted
as economic, social and environmental development) was agreed that followed
on from the Shared Goals for Action adopted by OECD Environment Ministers
in April this year. This includes analysing ways in which Member countries
can meet the Kyoto targets, and work with non-Members on strategies to
implement sustainable development. Support was also given to re-interpret
Article 1 of the OECD's Convention such that the term 'sustainable' as
applied to economic growth includes social and environmental considerations.
13. As regards internal OECD reform an inconclusive debate took place
around the budget formula, with some large contributors seeking greater
contributions from smaller countries. Further budget cuts may still occur
as Ministers simply recognised the need to return to a "stable and predictable
budgetary climate as soon as possible".