Globalisation, Inclusive Societies in Focus at OECD Ministerial Meeting

15 June 2017

The debate over how to address globalisation and its ramifications took centre stage last week at the Organisation for Economic Co-operation and Development’s (OECD) annual forum and ministerial meeting.

The OECD gatherings, held at the organisation’s Paris headquarters, are high-profile events on the international trade and investment calendar, bringing together government officials, along with representatives from international organisations, civil society, the private sector, and the academic world.

This year’s forum was held on 6-7 June, while the OECD’s Ministerial Council Meeting (MCM) took place on 7-8 June. The forum had as its theme “Bridging Divides,” with the agenda touching upon topics such as the future of work, the idea of a universal “basic income,” and the digital economy, among various others.

The meeting comes at a time of continued tensions over how to address concerns over globalisation’s potential downsides, and what steps should be taken to address these issues, including through trade and domestic policies.

“We’re beyond quick fixes to address the discontent of citizens. There is no returning to the past. Too many things are not working for too many people. The only way forward is not to patch up globalisation, but to shake it up,” said OECD Secretary-General Angel Gurría in an article released the day prior to the meetings.

 “We are faced with a paradox: never before in the course of human history have we enjoyed better standards of living, working, and health as we do in this present period of globalisation – and still many people turn against globalisation. Why?” said Danish Prime Minister Lars Løkke Rasmussen in a statement published prior to the event.

The Danish leader, whose country held the chairmanship of this year’s MCM, called for policymakers to work towardsf “bridging this gap” between those people who have benefited the most from the current landscape, and those who have experienced job losses and other difficulties.

The Paris-based agency also released its economic outlook last week, predicting “modest” improvements to global growth, while cautioning that risks remain. Growth is now likely to hit 3.5 percent this year and 3.6 percent in the following, according to its estimates.

The World Bank had issued its own forecasts earlier in the week, which saw the Washington-based institution similarly predict that global economic growth is due to see improvement this year, due partly to increased trade flows. (See Bridges Weekly, 8 June 2017)

Ministerial Council Meeting: various statements

Notably, the 2017 MCM saw ministers issue several statements: one from the chair, one from ministers as a consensus document, and a third solely on behalf of the United States.

The chair’s statement referred to areas that appeared to have consensus among ministers present – along with which areas instead had “near consensus.” It focused specifically on the areas of international trade, investment, and climate change.

On trade, the “near consensus” section highlighted the value of “a strong commitment to rules-based free international trade and investment,” and the centrality of the WTO in the multilateral trading regime. It also included language on “the importance of reaffirming standstill and rollback commitments to resist all forms of protectionism, and to stand firm against unfair trade practices and urge all countries to abide by international trade rules.”

Along with various other points on trade, the “near consensus” part of the document also calls the UN’s Paris Agreement on climate change a “historical” accord that serves as a “cornerstone for effectively and urgently tackling climate change and for implementing the 2030 Agenda.”

US President Donald Trump confirmed his plans to pull his country out of the Paris Agreement earlier this month. (See Bridges Weekly, 1 June 2017 and 8 June 2017)

The chair’s statement notes that nearly all participants reaffirmed that they will push for the “effective implementation” of their domestic climate plans under the Paris Agreement, which are known as “nationally determined contributions,” with the plan to scale up both mitigation and adaptation efforts in the years to come.

Officials afterwards suggested that the need for a chair’s statement reflecting a divergence of views should not be considered surprising, given the current international policy landscape.

“Of course there are going to be tough discussions, no doubt about that. There are different opinions around the world right now, but we’re going to move ahead… doing things even better than we have done before,” said Anders Samuelson, the Danish Minister of Foreign Affairs who served as MCM chair, in the closing press conference.

At the same event, Gurría told reporters in response to questions regarding the US stance that there was no “confrontation,” suggesting that diverging views at these OECD events are not uncommon. He also noted that since there were “known differences” among members among certain issues, such as climate change, that this result was to be expected.

Meanwhile, the US statement was issued as a “response” to the chair’s statement, touching upon issues ranging from trade’s unequal effects on societies, to the need to address barriers of multiple types, along with the value of the international order with regards to trade.

"The United States believes that free and fair trade and international investment can lead to economic growth and job creation.  At the same time, we acknowledge that trade has not always worked to the benefit of everyone, given that unfair trade practices on the part of some countries disadvantage workers, farmers, ranchers, and businesses in global markets and can result in large, persistent trade imbalances,” said the US statement issued after the meeting.

That same statement also referred to tackling market access barriers and addressing “trade-distorting practices,” making a specific reference to the use of “WTO-consistent trade remedies” as part of a broader enforcement strategy.

There is also language specific to the WTO. “The United States recognises the importance of international trading systems, including WTO-consistent trade agreements,” the statement said, including by taking steps to address challenges with the organisation’s functioning, backing ministerial conference preparations, and referring to the importance of “effective and timely enforcement of the WTO agreements as negotiated.”

The separate MCM consensus statement was entitled “Making Globalisation Work: Better Lives for All.” While noting the separate chair’s statement on international trade, investment, and climate change, it does include a section on “other norms and standards” which the group did agree were especially valuable for supporting “inclusive and sustainable trade and investment.”

These included addressing competition and market failures; tax avoidance and evasion; responsible business conduct; digitalisation; and illicit trade and corruption.

The countries and groups represented at the MCM included Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States, and the European Union.

Trade ministers’ meeting

Another highlight of the annual OECD week was a meeting of trade ministers on the event’s sidelines, hosted by Australian trade minister Steven Ciobo.

The Paris trade ministers’ meeting, while informal, is looked to closely by the trade community, given the potential signals these gatherings can send regarding the negotiations at the Geneva-based World Trade Organization.

WTO members are currently preparing for their eleventh ministerial conference, scheduled for this December in Buenos Aires, Argentina. Among the areas being discussed for possible deliverables at this year’s meeting are a deal on disciplining harmful fisheries subsidies and how to address the thorny issue of domestic agricultural support, among other topics.

Prior to the Buenos Aires gathering, various trade ministers are now due to gather in October in Marrakech, Morocco, sources said, in a bid to set the stage for the December WTO event and get a better sense of what will be possible at that time.

“I think that, by early October, we should be in a position to tell what is achievable by MC11, and then we can plan accordingly,” said WTO Director-General Azevêdo at last week’s trade ministers’ meeting.

“Whatever the scenario is in December, MC11 should provide a strong platform for future work,” he said.

ICTSD reporting.

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