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The annual OECD summit
OECD Council Meeting at Ministerial Level, Paris, 26-27 May 1999
For the first time ever, seven non-member countries—Argentina, Brazil, China, India, Indonesia, the Russian Federation and the Slovak Republic—were invited to the OECD Council Meeting at Ministerial Level, held last 26 and 27 May at the Château de la Muette in Paris. This initiative showed the growing importance of the emerging and developing countries in the world economy and, above all, their interdependence with the OECD countries. “The 29 member countries and the seven invited countries account for no less than 68% of the world population and 90% of world GDP” the chairman pointed out, adding that the “time when the OECD countries could manage the world economy is a thing of the past... we are now all in the same boat”. The non-member countries for their part seemed quite satisfied with the proceedings. The Indian minister for external affairs, Jaswant Singh, said in an interview with the Observer that many, if not all, of the core areas of interest at the OECD, whether it be corporate governance or e-commerce, were naturally of great relevance to economies such as India and therefore it made perfect sense to hold the dialogue. It should of course be emphasised that the OECD’s co-operation with non-member countries is not exactly a recent development. What was new was the presence of non-members at the council itself. In the late 1980s the OECD had initiated a policy dialogue with a number of major players in the world economy, particularly in Asia and Latin America. And after the fall of the Berlin Wall in 1989, the OECD launched a programme for the transition economies of Central and Eastern Europe. Then, in 1991, it initiated a co-operation programme with the Newly Independent States, and in particular with the Russian Federation. This ongoing dialogue is today managed by the OECD’s Centre for Co-operation with Non-Members, which was created in January 1998. It was in the discussions on the next round of multilateral trade negotiations at the WTO that the invited countries participated most actively. Although all the governments represented broadly supported the future “millennium round”, and agreed that this time it should not be allowed to drag out too long, there is still some disagreement about the topics to be discussed. Some European countries wish to include issues such as investment, competition, the environment and social standards, while the emerging countries want to limit discussions to agriculture and services. Argentina and Brazil were highly critical of a number of OECD countries that oppose imports of agricultural products. Fears of renewed protectionism were also mentioned during the review of the economic prospects of OECD countries, since the imbalances caused by the growth differentials between the United States, Europe and Japan could lead these countries to rely increasingly on trade restrictions. Janet Yellen, chief economist at the White House, said that “the blood pressure of the US economy is excellent”, though the OECD experts encouraged the United States authorities to “maintain sound policies and remain vigilant for signs of overheating”. Ms Yellen called on Japan and Europe to take measures to accelerate growth in order to prevent a further deterioration of the US current account. The OECD is forecasting a record US balance of payments deficit of US$ 300 billion this year and US$ 320 billion in the year 2000. Japan was asked to step up the reforms in the banking sector in order to stimulate demand-led economic growth, while Europe has to maintain “an appropriate mix of macroeconomic policies and vigorous structural measures”. Trade union representatives at the council meeting expressed fears that “the global economy would be plunged into deep depression” if “the US locomotive were to stall”. The OECD experts considered that on the whole growth in the OECD area and throughout the world remained insufficient. And although confidence and financial stability have improved in a number of emerging economies, “the situation continues to require attention”.