Barbados joins tax haven effort ahead of deadline
Barbados will not appear on a forthcoming OECD list of unco-operative tax havens, after discussions with the OECD showed that Barbados has transparent tax and regulatory systems. Recent legislative changes also enhanced the transparency of its tax and regulatory rules, the OECD and Barbados said in a joint statement. Barbados, which already has long-standing information exchange arrangements with other countries, said it was willing to enter into tax information exchange arrangements with those OECD members not covered by existing arrangements. The announcement brings to 11 the number of countries that have agreed to co-operate in making their tax regimes more transparent, from an original list of 35 unco-operative regimes that were published by the OECD in 2000 (see also Combating harmful tax practices).
The OECD is pursuing co-operative dialogue with other non-OECD economies identified as tax havens. It believes that all jurisdictions are well-placed to make a decision to commit to improving the transparency of their tax and regulatory systems and to establish effective exchange of information by a deadline of 28 February, Gabriel Makhlouf, chair of the OECD committee on fiscal affairs, said in a statement in late January.
Work with non-OECD economies in the coming months will focus on financial centres not identified as tax havens, Mr Makhlouf said. The OECD is also progressing in reviews of potentially harmful preferential tax regimes in its own countries and hopes to finalise them by June.
All countries urged to counter terrorist financing
The Financial Action Task Force (FATF), which leads the international campaign against money laundering and operates from the OECD’s headquarters, has now invited the whole world to join a self-assessment exercise. This has already been carried out by FATF members to determine if each country’s financial systems are equipped to combat the financing of terrorism. The call came at the end of an FATF ple
nary meeting in Hong Kong at the end of January. The FATF will begin identifying jurisdictions that lack appropriate measures to combat terrorist financing in June. All of the FATF’s members have already assessed their own systems using eight special recommendations to combat terrorist financing adopted in October when the FATF widened its mission from combating money laundering of criminal funds to include countering terrorist financing. The recommendations include making financing terrorism, terrorist acts and terrorist organisations a criminal offence, freezing and confiscating terrorist assets and assisting other countries as much as possible in financing investigations.
“Countries throughout the world are united in ensuring that terrorists and those who support them are denied access to the international financial system,” FATF president Clarie Lo said after the meeting. Other countries wishing to complete the self-assessment questionnaire on terrorist financing should do so before 1May 2002. The questionnaire is available at www.fatf-gafi.org and the FATF is ready to assist non-members to comply with the special recommendations.
For more on terrorist financing see: www.fatf-gafi.org/TerFinance_en.htm
Zero economic growth as trade falls -
The economic slowdown saw the OECD area marking time in the third quarter of 2001, with gross domestic product (GDP) showing no change from the previous three months for the second quarter in a row. GDP was up 0.8% from a year earlier, but this was the slowest increase since comparable figures for all 30 member countries first became available in 1995. Growth in the euro area was just on the plus side at 0.1% in the three months to the end of September from the previous quarter, but in the Group of Seven largest economies, activity shrank 0.2%, with only France, Italy and the UK in positive territory.
Merchandise trade in the OECD area fell for the second quarter in a row, both from the previous quarter and from a year earlier. Exports and imports each fell a seasonally adjusted 1.9% in value terms from the previous quarter, with exports down 6.3% from a year earlier and imports dropping 7.2%. G7 exports fell 5.4% in volume terms from a year earlier, due notably to a 13% fall in Japanese exports and an 11.8% drop in those from the US, although virtually all G7 countries saw a fall in exports with the exception of Germany, where they were up 4.3%. G7 imports also shrank 3.3% in volume terms from a year earlier, with Canada seeing the sharpest fall at 7.6% followed by the US with a drop of 6.8%. Only France and the UK increased their imports over the period.
– but recovery is on the cards
Despite the slowdown, the OECD is confident that a recovery will take place in 2002. The latest OECD Economic Outlook posted a forecast of 1% for the OECD area. Chief economist Ignazio Visco, speaking outside a convention in Rome in mid-January, emphasised that while there were downside risks, the US economy was recovering faster than expected from the terrorist attacks of September 2001. In Japan more fiscal consolidation would be needed, while in the euro zone, fiscal discipline should be maintained, though there was some room for interest rate reductions. Neither the Enron issue nor Argentina’s problems were of sufficient magnitude to alter the OECD’s world view, Mr Visco argued.
The next OECD Economic Outlook will be published in April. See: www.oecd.org/macroeconomics.
Some 320 people die every day in road crashes in OECD countries, making a total of 116 000 deaths in car crashes in 2000 in the 26 countries for which figures are available. That is the equivalent of the population of a small city wiped out. The 2000 figures were 1.6% below the number in 1999, but the death toll
could be halved if successful measures adopted in some countries, such as specific safety targets in relation to speed, alcohol and wearing seatbelts, were extended to all OECD member states. Strong penalties for infringements and hard-hitting public awareness campaigns to highlight dangers such as drink-driving and excessive speed also appear to help. Alcohol is a factor in a third of all accidents, and excessive speed in slightly more than a third, OECD figures show. Also, road safety for the elderly needs a rethink. Only six out of every 1 000 male drivers aged 65-74 were involved in a crash in the UK in 1998, lower than any other age group over 25; yet US figures show that older drivers are more likely to die in accidents than younger counterparts, with the death rate at 12.7 per 100 000 people for the over-65s in 1997, compared with 10.3 for 25-64-year-olds.
For full details of the 2000 road deaths figures: www.oecd.org/transport.
Ageing and Transport: Mobility Needs and Safety Issues, OECD, 2001.
Freight flies higher
Air cargo traffic is expected to return to growth in 2002, reversing a slowdown that began in late 2000 and was exacerbated by the events of 11 September, air cargo industry representatives say. Most expect air cargo demand to increase by around 1% in the first half of 2002 and 3% in the second half, after falling somewhat in 2001. Stronger growth of up to 9% is expected in 2003, based on projected increases in levels of economic activity around the world, industry representatives said at an OECD workshop on liberalisation in the air cargo sector in January.
Participants from the air cargo industry, OECD countries and international organisations also looked at whether existing restrictions on international traffic rights, similar to those which operate for passenger airline services, are creating barriers to efficient air cargo services. They agreed that relaxing the restrictions would allow better market access and improve the industry’s ability to respond to client needs.
The OECD has suggested two possible avenues for liberalising air cargo services, which were discussed at the meeting. One is a bilateral protocol for liberalising air cargo traffic rights which could be added to existing bilateral agreements; and the other is a new multilateral agreement for liberalising air cargo traffic without compromising essential safety and security aspects. It is now up to OECD governments to decide whether they wish to use these approaches to progress towards market liberalisation in air cargo.
Air cargo plays a vital role in ensuring the competitiveness and commercial success of a large number of industries across the globe. While in terms of weight, air cargo accounts for only about 2% of all cargo moved worldwide, in value terms it constitutes more than a third of the total.
Same world, different audiences
World Economic Forum, New York
“It is not enough to say – though it is true – that without business the poor would have no hope of escaping their poverty. Too many of them have no hope as it is. You must show that economics, properly applied, and profits, wisely invested, can bring social benefits within reach not only for the few but for the many, and eventually for all.”
• UN Secretary-General Kofi Annan at the closing session of the World Economic Forum in New York, February 2002
World Social Forum, Porto Alegre
“At the same time, you in civil society must show that you are ready to work in partnerships for change, rather than remain aloof through the politics of confrontation. We cannot afford to wait for perfect governance, or to engage in endless accusations and discussions. The challenges at hand are far too urgent.”
• UN Secretary-General Kofi Annan in a message to the World Social Forum in Porto Alegre, Brazil, February 2002
©OECD Observer No 230, January 2002