146th Session of the Trade Committee - Summary

The OECD Trade Committee provides senior trade policy officials of OECD Member countries and observers the opportunity for a wide-ranging exchange on key trade policy issues and developments. It held its 146th Session on 12-13 March 2007 in Paris.

As its bureau for 2007, the Committee elected Crawford Falconer (New Zealand) and Yoichi Suzuki (Japan) as Co-Chairs and Knut Brünjes (Germany) and Fernando de Mateo (Mexico) as Vice Chairs.

A major goal of this session was to reach an understanding on the Committee’s medium-term strategy. Reflections on this strategy had begun after the suspension of the Doha negotiations in July 2006, with the objective of ensuring the future relevance and impact of the Committee’s work.

o In the discussion, Delegations agreed to focus on a limited number of key policy priorities that can underpin policy discussions among decision-makers.

o These priorities will be international disciplines on export credits; trade in services, with a view to providing quantitative as well as qualitative insights; the benefits of further trade liberalization, including through a better understanding of costs; and the interaction between domestic policies and international trade.

o There was also discussion of how to strengthen working methods and communication strategies.

Linked to this there was a brief exchange of views on the current state of the Doha negotiations. Recognising that time is fast running out, Delegates expressed confidence that a broad-based and balanced conclusion was still attainable. It was pointed out that the recent intensive bilateral meetings need to be “multilateralised” as soon as possible.

At this meeting the Trade Committee undertook its biennial consultation with BIAC (the Business and Industry Advisory Committee). Representatives from BIAC focused on a number of issues where they felt the OECD Trade Committee could make a significant contribution: in particular, services liberalisation, non tariff barriers, global supply chains, the integration of emerging developing economies and bilateral-regional liberalisation.

Against the background of OECD work on globalisation and structural adjustment (GSA) and in the context of its biennial consultation with TUAC (Trade Union Advisory Committee), the Trade Committee held a Policy Forum on Trade and Labour Market Adjustment. The Secretariat presented early findings from the GSA Project.  Among other things, these indicate that while globalisation continued, total employment in OECD has increased, as has labour productivity. While job security actually appears to have been relatively stable over the past decade, labour demand in manufacturing has become more elastic, rendering workers in this sector more vulnerable to shocks, including from import competition.  In addition, the wage share of national income has declined sharply in many OECD countries. 

The discussion was then introduced by two speakers. A speaker from TUAC outlined the main findings of a recent WTO-ILO study, which had noted that there is not a clear link between income growth and poverty reduction and that increased trade is often associated with increased inequality. The speaker also raised the issue of the quality of employment and urged further work on trade and labour standards.

The second introductory speaker came from the Netherlands and presented his country’s experience with labour market adjustment to globalization.  Recent increased trade with China appears to have had little effect on the labour market, where only 1% of job losses can be directly attributed to international trade. At the same time, Dutch consumers have gained substantially from lower prices while job creation has come from increased transit trade between China and the EU.  Adjustment would be particularly facilitated by measures in the fields of education, innovation, services liberalisation and assistance to small and medium-sized enterprises.

The discussion revealed a high degree of consensus that markets need to remain open, while governments need to take seriously the issues of labour market adjustment.

This was the Trade Committee’s first meeting since the merger of the former Trade Directorate of the OECD Secretariat into the new Trade Agriculture Directorate. The Director of this new Directorate, Stefan Tangermann, reported to the Committee that the transition is proceeding well and should not affect the smooth functioning of the Committee and its subsidiary bodies.

The Trade Committee plans to hold its next meeting on 26-27 June 2007.