OECD Secretary-General

Towards Coherence in International Economic Law: Perspectives at the 50th Anniversary of the OECD


Remarks by Angel Gurría, OECD Secretary-General (As prepared for delivery)

Washington D.C., 23 March 2011

Ladies and Gentlemen:

It is a great honour to make the concluding remarks for this symposium. This event has provided a unique opportunity to identify the challenges facing international economic law. I would like to thank our partners from the American Society of International Law and the George Washington University Law School for co-organising this important event with us.

For the last 50 years, the OECD has been instrumental in developing policies, international rules and best practices to address global challenges. Now, as the world emerges from the grip of a major financial and economic crisis, the OECD is more committed than ever to helping governments face the challenges of a “a new normal” and to build a more reliable global governance architecture.

Let me tell you how we are doing it.

1. Raising the bar:  coherence through global standard setting

As some of you know, the OECD was created to promote shared economic development through open markets and fair competition. We have done this by fostering multilateral cooperation and the exchange of government experience.

Over the past five decades, we have helped governments by formulating guidelines and producing international agreements in almost every area of public policy; ranging from public and private governance, investment, development aid, the environment and export credits, to public procurement and intellectual property rights. Our work has also extended to many other areas of public and private governance.

The OECD was the creator of the “Polluter Pays” principle, for example; in the 1970s. Twenty years later, this principle was recognised in the Rio declaration of the United Nations Conference on Environment and Development. It is now a key element of global efforts to address human made environmental disasters and climate change.

The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which is based on the U.S. Foreign Corrupt Practices Act, has outlawed foreign bribery in 38 countries. OECD’s recognized “gold standard” and strict monitoring mechanism puts key competitors closer in line with best practices.

Another illustrative example is the OECD Model Tax Convention, which provides the template for the 3,600 bilateral treaties around the world and is closely aligned with the U.S. Model Tax Treaty. 

In the field of corporate responsibility, the OECD Guidelines on Multinational Enterprises (MNE) are the only intergovernmental instrument to address responsible business conduct. They are currently being revised through a process open to major emerging economies and other non-OECD countries, in order to expand the consensus on responsible conduct in the global arena.

These are just a few examples of a broader universe of multilateral tools. The OECD’s ability to provide the intellectual foundations and the consensus building frameworks to enable such agreements is one of our greatest assets.

But we also work hard to ensure that these instruments stay relevant over time, by adapting them constantly to new economic circumstances and geo-economic transformations. And we are increasingly providing assistance for their implementation.

2. Implementation: mutual learning and compliance through peer review

There are two elements in our working process which are essential to produce these international tools and to help countries implementing them: mutual learning and peer pressure.

Sharing policy experiences and information helps governments better frame and present their challenges, and to put them in perspective. It helps them to come up with more effective solutions by learning from other cases. But it also helps them promoting change in their own countries.

Governments use their OECD experience to design and promote structural reforms. This is crucial. OECD evidence-based analysis and recommendations serve as a way to support and leverage policy changes and rule making at home.

But formulating and adopting the best possible policies and international instruments is not enough; as we have learnt from this crisis. One of the major challenges for international standard setting is ensuring compliance.

In the words of J. William Fulbright: “Insofar as international law is observed, it provides us with stability and order and with means of predicting the behavior of those with whom we have reciprocal obligations”.
The OECD’s experience shows how peer pressure through peer reviews can be a powerful mechanism to foster implementation. Peer reviews are not value judgments. They are systematic evaluations and assessments of the performance of one country by others.

Their ultimate goal is to help the reviewed countries improve their policy making, adopt best practices and increase their level of compliance with established standards and principles. Peer reviews are effective ways of exercising objective scrutiny and peer pressure.

Building on the OECD’s experience with peer reviews, we have worked with other organizations to help them apply this mechanism as well.

Going forward, we must ensure that non-OECD countries, especially major emerging economies, are familiar with the benefits of such mechanisms to increase compliance and improve the effectiveness of global standards. Progress in this area is a prerequisite to restoring confidence in globalization.

This leads me to the third and last element that I would like to highlight in our effort to help creating better global governance.

3. Engaging with new economic actors

The world has changed so much in the past two decades. The progressive integration of emerging and developing countries into the global economy is transforming economic landscapes and we have to adapt. Fifty years ago, OECD countries accounted for some 80% of global GDP. Today the share has fallen to about 60 % and in 25 years time it could be down to 40%. Emerging and developing countries already account for more than one fifth of global trade.

These developments pose new challenges for standard setting and global governance. The OECD is fully committed to stepping up its efforts to meet these challenges.

First of all, we are making a big effort to become more open, more plural and inclusive. Last year, we welcomed four new members into the organization - Chile, Estonia, Israel and Slovenia. Russia is on track to become our 35th member.

We are also designing innovative arrangements to engage with major emerging economies, in particular Brazil, China, India, Indonesia and South Africa. But we also work with a number of other countries from Africa, the Middle East and North Africa, Latin America or South East Asia. Around 100 non-member countries participate regularly as equals in the work of our committees, expert meetings and forums.

Secondly, we are increasing our collaboration with the leaders of the largest economies of the world, with the G8 and the G20, in shaping new instruments for a better world economy.

The G20 is calling upon our expertise on taxes, balanced growth, investment, trade protectionism, anti-corruption fossil fuel subsidies and job creation. And we have become an important partner due to our multidisciplinary character. Responding to the G20 call to improve tax transparency, the Global Forum on Transparency and Exchange of Information is just one example of how an OECD standard can become the basis for agreement and implementation with more than 90 countries.

Crafting consensus in a large and heterogeneous arena is obviously difficult. The risk is to settle for consensus by converging towards the lowest common denominator, instead of adopting effective and high quality standards.

To deliver on its ambitious policy agenda, the G20 should be equipped with a mechanism for candid and systematic policy sharing, and a mechanism for monitoring commitments. We are collaborating closely with the French presidency this year to see how can we provide the G20 with these mechanisms and ensure its utility in this new phase of economic recovery.

The OECD is ready to share its experience in the use of peer reviews. Such methods could be particularly useful in ensuring compliance with commitments set out in its Framework for strong, sustainable and balanced growth and its Mutual Assessment Process.

Another related challenge is to improve the coordination and cross-fertilization of ideas between international organizations. In this regard, I recently proposed the creation of an Observatory for Policy Coherence, bringing together all the international organizations involved in the G20. This will help us to stay at the forefront of new thinking, and ensure the implementation of more relevant and effective international standards and norms.

Ladies and Gentlemen:
We are living in a time of sweeping changes and dramatic challenges. Effective multilateral cooperation is the only way towards reaching coherent standards, which can underpin a stronger and more balanced world economy for the benefit of all.

Looking toward the next 50 years, the OECD is prepared to move the frontier of international economic law forward as an active player in the new global architecture.

While doing so, we stand strong on the foundations of the OECD Convention, signed 50 years ago. Its original goal to achieve “peaceful and harmonious relations among the peoples of the world” remains true today. Thank you very much.

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