News Brief - January 2008

Accession talks go ahead; Anti-corruption fight rewarded –; – as Brazil and Turkey warned; Latin American Reforms; Jobless benefits; Economy; Nano-safety; Italian red tape; Steely growth; New conference centre opens; World Bank ties; Soundbites; Plus ça change…

Accession talks go ahead
Anti-corruption fight rewarded–
– as Brazil and Turkey warned
Latin American Reforms
Jobless benefits
Economy
Nano-safety
Italian red tape
Steely growth
New conference centre opens
World Bank ties
Soundbites
Plus ça change…
Accession talks go aheadOECD countries have given a green light for the start of accession talks with five candidates for membership: Chile, Estonia, Israel, Russia and Slovenia.The approval of so-called “roadmaps” setting a negotiating framework for each of the five countries marks the formal launch of a process agreed at an OECD ministerial meeting in May 2007. In parallel, the OECD has announced plans to engage more closely with five major emerging economies: Brazil, China, India, Indonesia and South Africa. The twin-track process is designed to reinforce the OECD’s role as a hub for dialogue on global issues, said OECD secretary-general, Angel Gurría.“By extending our membership and deepening our relations with other big players in the world economy, we are broadening our perspectives and consolidating our role as a source of policy solutions,” Mr Gurría added. “Governments must work together to tackle issues like innovation and intellectual property rights, poverty and inequality, climate change and international migration. OECD provides a forum for doing that.”Created in 1961, the OECD has 30 members, the newest member being the Slovak Republic, which joined in 2000. Accession negotiations will take place individually between the candidate countries and the OECD committees that handle the organisation’s work, in policy areas ranging from farming to financial affairs and from taxation to trade.Once OECD committees are satisfied that a candidate country fulfils their requirements for membership, a final decision on whether to issue an invitation for membership will be taken on a basis of consensus by the OECD’s governing council.Anti-corruption fight rewarded–The OECD has marked the 10th year anniversary of its Anti-Bribery Convention by receiving not one but two accolades for its work against corruption. Transparency International presented one of its two annual Integrity Awards to Mark Pieth, the chair of OECD’s Working Group on Bribery, for his “outstanding leadership in fighting corruption on an international scale.”Separately, African Investor magazine “highly commended” the OECD’s Anti-Corruption Division for its work with South Africa. In a speech accepting the award for Smart Regulation, Patrick Moulette, head of the Anti- Corruption Division, said that this recognition gave “an important signal that the African business community is willing to take measures to tackle foreign bribery–a crucial step for ensuring an attractive and stable African investment climate.” South Africa had already become the first African country to sign the OECD Anti-Bribery Convention earlier in the summer, joining the OECD Working Group on Bribery as its 37th member (see OECD Observer No. 262, page 4).Congratulating both Prof. Pieth and members of the Anti-Corruption Division, OECD Secretary-General Angel Gurría said these awards were a clear signal of support for the international fight against corruption and noted a growing recognition that corruption undermines democratic institutions and damages the investment climate in developing countries.
– as Brazil and Turkey warnedMeanwhile, the OECD’s Working Group on Bribery is keeping up the pressure in monitoring the progress of the 37 countries that have signed the treaty. The most recent reviews are of Brazil and Turkey, which the OECD says urgently need to do more to meet their commitments under the OECD’s Anti-Bribery Convention.For Brazil this includes clarifying tax rules in order to prohibit the deductibility of bribes to foreign officials. More should also be done to raise public awareness of the fight against such bribery. In a separate report, the Working Group found that Turkey, a Party to the Convention since 2000, has yet to implement some of its key elements, such as the enforcement of foreign bribery offences and the establishment of corporate liabilities for the bribery of foreign public officials.For more information, visit www.oecd.org/daf/nocorruptionLatin American ReformsDemocracy, macroeconomic stability, deregulation and privatisation have helped bring about significant positive change in many Latin American countries since the early 1990s. However, for progress to continue, many more reforms are needed, says the Latin American Economic Outlook—the first-ever OECD economic outlook survey for the region.Making public sector spending both more efficient and equitable should rank high on the to-do list. For example, access to basic services, such as clean water and electricity, still remains poor in certain regions. In fact, according to the survey, fewer than one in four Latin Americans believe their taxes are being well spent.Simplifying tax codes and making them less regressive should also be another priority. Latin America has one of the highest levels of income inequality in the world.Rising levels of foreign investment have spurred noticeable advances in certain areas, such as in telecommunications. Telephone density (lines per 100 inhabitants) has easily increased the most where FDI per capita in the sector has been greatest. The survey also found that, contrary to widespread fears throughout the region, the rise of China and other Asian nations has been, on the whole, a strong driver of growth, particularly in Latin American countries which rely on commodity exports.In order to boost the region’s low level of savings, the survey also encourages Latin American governments to treat Chile’s pension reforms as a model. Private pensions in Chile have led to savings levels much higher than the regional average, while also helping to stimulate the rapid development of Chile’s financial markets.For more, contact Colm.Foy@oecd.org or order the report at www.oecdbookshop.org, ISBN: 9789264038264.Jobless benefitsRoughly one-third of all OECD countries have cut unemployment benefits in the last six years in an effort to increase work incentives, according to the recent OECD report, Benefits and Wages 2007. In 2005, the average net replacement rate (the ratio of income out of work to income in work, after taking account of taxes and benefits) in the OECD stood at 56%, down from 59% in 2001.Benefit levels for the unemployed are highest in the Nordic countries, at over 70%. The US, Italy, Greece and Turkey, with levels all below 30%, have the lowest benefits. While high benefit levels are one factor which may discourage people from seeking employment, there are others. High tax burdens for the employed create a similar disincentive, the study finds. In fact, an unemployment benefit recipient returning to a fulltime job at average pay loses a staggering 66 cents for each euro or dollar earned in the new job when both in-work taxes and the loss of out-of-work benefits are taken into account.See Benefits and Wages 2007: OECD Indicators, ISBN 9789264023789.EconomyThe standardised unemployment rate for the OECD area was 5.5% in November 2007, 0.1 percentage point lower than the previous month and 0.4 percentage point lower than a year earlier. At 7.2% in November 2007, the euro area standardised unemployment rate remained the same as the previous month, while down 0.7 percentage point from the previous year. The rate for the US for December 2007 was 5.0%, 0.3 percentage point higher than the previous month and 0.6 percentage point higher than in December 2006. For Japan, the rate was 3.8% in November 2007, 0.2 percentage point lower than the previous month and 0.2 percentage point lower than the previous year.Inflation increased as consumer prices rose by 3.3% in the OECD area in the year to November 2007, compared with 2.8% in the year to October 2007. It also rose on a monthly basis, by 0.5% in November after an increase of 0.3% between September and October 2007.Energy and food items account for most of the increase in inflation. Excluding these items, consumer prices rose by 2.0% in the year to November compared with 1.9% in October, while prices for energy increased by 13.3% year-on-year in November, compared with a rise of 8.5% in October. Consumer prices for food were up by 4.6% year-on-year in November, compared with 4.1% in October For individual countries, consumer prices in the US increased by 4.3% over the year to November, compared with 3.5% in the year to October 2007. Over the 12 months to November, consumer prices rose by 0.6% in Japan, 3.1% in Germany, 2.5% in Canada, 2.4% in Italy and in France, and 2.1% in the UK.For more details and data on OECD economic statistics, see www.oecd.org/std/newsreleasesNano-safety A new programme has been launched to test the safety of manufactured nanomaterials. Managed by the OECD Working Party on Manufactured Nanomaterials, it will measure the physicalchemical properties, environmental degradation and accumulation impact, environmental toxicology and mammalian toxicology of nanomaterials which are already or will be in use.Nanotechnology refers broadly to a field of applied science and technology whose unifying theme is the control of matter on the atomic and molecular scale—normally one to 100 nanometres—and the fabrication of devices with critical dimensions that lie within that size range. Nanotechnology is now used in a wide variety of applications, from computer chip design to sunscreen and tennis rackets.For more, see www.oced.org/env/nanosafetyItalian red tapeItaly should cut red tape by further streamlining regulation between different regions and increasing coordination between national and regional government, says a new OECD report, Italy: Ensuring Regulatory Quality across Levels of Government. It explains that such measures would help boost innovation, strengthen competition, and improve economic performance throughout the country.Decentralisation and membership in the EU has been a major stimulus to innovation in Italy, the report notes. But much more needs to be done in the form of clarifying the roles and competencies of national and local government, simplifying existing laws and introducing a more transparent legal framework. Increased use of arbitration and conciliation to settle disputes would lower costs and reduce the strain on the legal system.Order the report at www.oecdbookshop.org, ISBN: 9789264037977.Steely growthThe global steel market is in its sixth year of strong output and demand growth. But the outlook for 2008 is less buoyant amid weaker prospects for global economic growth, according to industry and government officials at the OECD’s Steel Committee meeting in Paris on 3-4 December 2007.Global crude steel production is on track to grow by 8%, to roughly 1.3 billion tonnes for 2007. Weaker growth in North America and the EU is being offset by rapid production expansion in emerging economies, especially in Asia, with China continuing to drive world production growth.Factors such as the US housing market downturn and high prices of many raw materials may moderate these projections. For more, sti.contact@oecd.org or see the website www.oecd.org/sti/steelNew conference centre opensThe OECD’s state-of-the-art conference centre finally opened with its inauguration by the secretary-general, Angel Gurría, on 16 January.
The 12,000 m2 conference centre provides a spacious welcome and reception area, a media centre with radio and TV studios, an Internet café with WiFi access, and a new OECD bookshop. There are some 3,000 m2 of conference rooms, all equipped with the latest in acoustics and audiovisual aids, not forgetting 48 interpretation booths.
The centre, built on three levels, is capable of hosting 2,000 conferences per year, with 1,500 participants at a time. The reception area was designed with six lanes for visitors to claim their security badges. The rooms can be divided and subdivided with various permutations, for instance into 13 rooms at a time, from 70 to 400 m2 each, with an auditorium of 150 m2. Half of the conference rooms can be adjoined to create one large space of 1,600 m2. A 600-seat auditorium is also incorporated.The OECD headquarters’ renewal project, which was launched in 2000, also includes renovation of the 1922 château, completed in 2005, and a complete revamping of the main OECD office building, which is expected to re-open fully in 2009. A French-American team of well-known architects SCAU Macary, Menu & Delamain, and Pei, Cobb, Freed & Partners is leading the project.For more information, contact observer@oecd.orgWorld Bank tiesThe World Bank and OECD have agreed to step up their co-operation in a number of key areas, including efforts to promote sustainable growth, the economics of climate change, aid for trade, innovation and the design of comprehensive country frameworks for investment.The announcement was made at a joint seminar in Washington DC in December, attended by OECD Secretary-General Angel Gurría and World Bank President Robert Zoellick. “Addressing the challenges of the globalising economy means addressing the needs of those people and countries that remain on the fringes, as well as those which are emerging into the mainstream,” said Mr Zoellick. “There are many areas in which the World Bank Group and the OECD can intensify their co-operation, as the Bank moves to operationalise a vision of inclusive and sustainable globalisation.”The objective of this co-operation is “to help countries benefit from and tackle the challenges of globalisation,” Mr Gurría explained.For more, see news release of 18 December 2007 at www.oecd.org/media or contact observer@oecd.orgSoundbitesHard times–“The year ahead is an important one for Ireland. It marks a transition from a prolonged phase of sustained economic and social progress to a period of slower growth in employment and living standards. This transition will be difficult, as Irish society seeks to come to terms with life in a slower lane.” Editorial, The Irish Times, 1-2 January 2008“We need an interest rate reduction. It is the toughest [trading conditions] I have seen in a decade…” Sir Stuart Rose, CEO of retailer Marks & Spencer, quoted in Financial Times, 10 January 2008–and tough lessons“France should not be falling behind like this. We are way below the European average.” Xavier Darcos, France’s minister for education, on the results of the OECD PISA 2006 survey of student performance, cited in Les Echos, 30 November 2007. OECD Observer translation.Plus ça change…It is now abundantly clear that, if the pace of scientific progress is to be turned to good account for the national welfare and for the well-being of individual citizens, a higher level of understanding and technical competence will be required of an ever-growing proportion of the population.Henning Friis, “Preventing a bottleneck in economic progress: OECD works to avoid shortages of scientists and engineers”. From OECD Observer No. 4, June 1963

©OECD Observer No. 264/265, December 2007-January 2008



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