Outreach, reform and the economics of climate change

OECD Council at Ministerial Level, Paris, 4-5 June 2008

Concerns for the world economy were already building when OECD governments met for the annual Ministerial Council Meeting (MCM) last June.

France’s finance minister, Christine Lagarde, chaired this year’s annual ministerial council–the highpoint in the OECD calendar–and her summary issued after the meeting carried a hint of premonition about the economy when ministers called for “continued close policy co-ordination”. The consensus view at the time was still relatively optimistic though, for despite the “shocks” which had hit the global economy, the OECD was showing “resilience to the headwinds” thanks to “structural reforms and sound macroeconomic policies” of recent years. But a watchful eye had to be kept on financial markets, where “current credit conditions are restraining investment”.The 2008 meeting built on “the landmark decision of the MCM 2007” to begin expanding its membership by welcoming for the first time the five candidate countries–Chile, Estonia, Israel, Russian Federation, Slovenia–and the five so-called “enhanced engagement” countries–Brazil, India, Indonesia, China and South Africa–as participants in the event.Ministers congratulated Secretary-General Angel Gurría on his strong leadership, which they said was reflected in a report examining new strategic orientations for the OECD entitled “The Pursuit of Relevance for a Better World Economy”, which would enable the OECD to adapt and respond to new challenges. “The economics of climate change, pressure on resources, inequality and global poverty remain high priorities for the OECD”, ministers agreed.Ministers encouraged the OECD to pursue its vision in the global governance architecture. They adopted the Declaration on Policy Coherence for Development. Estonia and Slovenia adhered to it. This pledges for more dialogue between partner countries and calls for better international co-ordination to spread globalisation’s benefits, covering trade, agriculture, migration, environment and science and technology, as well as energy and security. The declaration invites OECD to present cases of the common benefits or trade-offs for policy coherence for development.Climate change is one of the greatest challenges, and while each country had to devise its own mix of policies, many ministers observed that market instruments, including taxes and carbon-trading schemes, financial and tax incentives, removal of subsidies, loan guarantees, and elimination of tariffs on environmental goods and services are key, and must be backed by the likes of clean technologies and regulatory standards.Ministers emphasised the importance of international co-operation, with many stressing the principle of “common but differentiated responsibility and respective capability […] for achieving an ambitious and affordable international agreement”. An “effective post-2012 international framework on climate change and the related national policies will need to stimulate innovation” and diffusion of technologies to developing countries accelerated. Ministers called on the OECD to continue appropriate work on climate change, “in collaboration with the IEA and other international organisations”.On multilateral trade, ministers “underlined the need for more open markets for agricultural and industrial goods and services”, as well as the need to improve people’s understanding of open markets and to build “a solid case for further trade liberalisation”, which the OECD would help communicate, as well as providing analysis and advice.On sovereign wealth funds (SWFs), ministers welcomed the benefits that these can bring and they adopted an OECD Declaration on SWFs and Recipient Country Policies. Ministers from Chile, Estonia and Slovenia adhered to the Declaration. Ministers then discussed how to manage and win support for reform in their countries, and looked to the OECD for support on the question. Ministers also agreed on a major reform of financing to secure a longterm foundation for the organisation in meeting its priorities and “preserve the OECD’s influence, relevance and excellence”. RJC Read the full 2,300-word Chair’s summary at www.oecd.org/mcm2008For more on climate change see www.oecd.org/env/ccFor more on trade, see www.oecd.org/tad/tradeFor more on sovereign wealth funds, see www.oecd.org/daf/investmentFor more on the Declaration on Policy Coherence for Development, see www.oecd.org/mcm2008©OECD Observer No 269 October 2008

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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