29 September 1993

Doc. 6900

1403-29/9/93-14-E

REPORT

in reply to the report on the activities of OECD in 1992

(Rapporteur: Mr HELLSTRÖM,

Sweden, Socialist Group)


I. Draft resolution

1.       The enlarged Parliamentary Assembly has examined the activities of OECD with the participation on an equal footing of delegations from OECD and Council of Europe member countries.

2.       The world economy is faced simultaneously with a multitude of new challenges which, if overcome, can give rise to a prolonged era of prosperity and co-operation, but which if shunned could lead to stagnation and confrontation among countries and regions. The challenges include an unusually severe and stubborn recession with unacceptably high levels of unemployment; and unexpectedly arduous process of economic and political renewal in central and eastern Europe; tardiness in concluding a Uruguay Round of multilateral negotiations vital to the further growth of world trade; uncertainty about the prospect of continued economic integration in Europe; rapid structural change both nationally and internationally; the rapid growth of numerous Asian economies; and the uneven progress observed in developing countries, with some showing welcome economic progress and development toward democracy and the respect of human rights, and others lagging seriously behind in these respects.

A.       Economic policies and co-operation in related fields

3.       Economic growth in the OECD area is still weak. It is expected to be no higher than 1,2% in 1993, although it is foreseen to rise to 2,7% in 1994. Both the timing and the strength of the eventual recovery are difficult to predict. Nevertheless, the value of world merchandise trade grew by 5,5% in 1992, reversing a downward trend in trade growth which began in 1989.

4.       Unemployment in the OECD area is expected to rise to an unprecedented 36 million people by the end of 1993, or around 8,5% of the workforce. A decline in joblessness — uncertain how strong — may be possible in 1994, depending on whether the economic recovery materialises. Such a level of unemployment — leading to a marginalisation of entire categories of citizens and especially the young — is totally unacceptable and calls for co-ordinated, determined and imaginative action as well as solidarity by OECD member countries.

5.       As a consequence of the above developments, voices in favour of protectionist measures are being heard. It is important to resist the latter, in the interest of the long-term health of the world economy and of individual countries. At the same time, however, the world economy will not for much longer be able to sustain the pressure exerted on it by large structural current account imbalances between countries and regions. It behoves all governments to deal with these policies, including fiscal and structural issues, which are contributing to such imbalances. In this regard, more realistic and stable exchange rates between the regions of the world should be sought.

6.       Inflation, however, continues to decrease, and is expected to reach only 3% for the OECD area in 1993, down from 3,3% in 1992 and expected at 2,8% in 1994.

7.       The enlarged Assembly, in consequence, calls on OECD member countries:

      i.       to muster, in a spirit of mutual concessions and commitments, the determination necessary to overcome the last hurdles to a successful conclusion of the Uruguay Round — thereby imbuing a hesitant world economy with new dynamism and realising economic gains worldwide through enhanced trade.

      ii.       to deal effectively with the problems of slow economic growth and rising unemployment, by implementing a concerted strategy for sustained non-inflationary growth and employment, by adopting appropriate fiscal policies, by making all efforts for human resource development, by fostering flexible and effective labour market policies, in co-operation with the "social partners", that is employers and employees by enabling the private sector to play its full role in job creation, and by creating policy frameworks that facilitate the introduction and diffusion of new technology.

      iii.       to show greater resolve and imagination in fighting unemployment in ways which do not increase budget deficits, concentrating on innovative measures designed to stimulate employment, on raising the general skill and educational level of the workforce, and on restoring the belief on the part of the long-term unemployed, among them many young people, in society's ability to provide them with the basis for a meaningful employment.

      iv.       to pursue their efforts to reduce, over the medium term, budget deficits which at their present level add unduly to the national debt, sap market confidence in the longevity of economic recovery, and prevent a lowering of interest rates necessary to stimulate investment;

      v.       to move with, rather than against, the world's economy by pursuing structural reform in all sectors of the economy, rendering them more competitive and responsive to market forces;

      vi.       in particular, to prepare themselves for the knowledge-intensive society of tomorrow, in which the individual's capacity for learning new concepts and skills will be crucial to his or her success, and in which the nationality and formal relations among firms matter less than the permanent, informal exchange of information among all market participants;

      vii.       to set up science and technology assessment schemes in their national parliaments.

8.       The enlarged Assembly also calls on OECD member countries, in their relations with the economies in transition (the countries of central and eastern Europe, the Newly Independent States, and the economies in transition in Asia):

      i.       to pursue their material and conceptual assistance to these countries at this critical stage in their attempt to change the production system and property rights, in order to help them in the establishment of socially-just and environmentally-sound, market-oriented economies, based on democracy, human rights, the rule of law and efficient, well-respected institutions;

      ii.       to improve the co-ordination of the assistance, whether given bilaterally or through international organisations;

      iii. to encourage co-operation with and assistance to scientific institutions of these countries, to enhance their national innovation capacity and to take steps in order to facilitate technology transfer programmes;

      iv.       to reduce substantially and progressively any protectionism in their trade and investment relations with these countries, thus preparing for the eventual creation of a pan-European market spanning the continent's confines, and fostering the integration of the economies in transition into the world economy and into the framework of the rules and disciplines of the multilateral economic system.

9.       Furthermore, the enlarged Assembly calls on OECD member countries, in their relations with developing countries:

      i.       to pursue implementation of the OECD Development Assistance Committee (DAC) policy guidelines "Development Co-operation in the 1990s", and in particular to follow its recommended emphasis on the development of human resources and efficient institutions capable of ensuring democracy and curbing corruption;

      ii.       to enhance, toward this end, the portion of bilateral assistance going to priority expenditure for human development such as basic education, primary health care and the improvement of hygienic conditions;

      iii.       urgently to devote, in co-operation with the countries concerned, more resources to education, health, women's emancipation and family policies, including family planning — in order to reduce the current dramatic increase in the world's population, seeing that unchecked population growth undoes many developing countries' economic gains, throws millions into abject poverty, and puts undue strain on the environment;

10.       Relative to OECD, the enlarged Assembly:

      i.       urgently asks the Organisation to give the highest possible priority to laying a conceptual foundation for a strategy of worldwide trade liberalisation;

      ii.       recommends that OECD pursue, already before the conclusion of the GATT Uruguay Round, the issues that ought to be included in the "post-Uruguay Round" agenda for world trade, so as to prepare the world economy for the challenges awaiting it during the next century;

      iii.       encourages the Organisation to pursue its work on ways to improve currency stability among countries, an area of particular relevance to its European member countries;

      iv.       asks it to conclude urgently its employment/unemployment study, paying particular attention to the problem of long-term unemployment, and to seek to ensure that its results become incorporated as rapidly and as fully as possible in national policies;

      v.       welcomes the activities undertaken in co-operation with the central and east European countries in order to help them resolve crucial environmental problems and establish environmental policies which are compatible with their economic and industrial development, within the framework of their transition towards market economies;

      vi.       invites OECD rapidly to pursue the process of opening the organisation to new members, and to commence negotiations for membership with those countries which are able to assume all the responsibilities linked with it;

      vii.       welcomes the positive attitude expressed at OECD's 1993 ministerial meeting as regards Mexico's future membership of the Organisation, and hopes that Mexico's joining will be accompanied by a further strengthening of its pluralist parliamentary democracy and efforts at social justice. It welcomes the positive evolution of Korea's involvement in OECD activities, and hopes that Korea's early membership will further promote democracy and the integration of its economy into the framework of the rules and disciples of the multilateral economic system;

      viii. welcomes the substantial and useful results of the informal dialogue with Dynamic Asian Economies, which has been extended this year to include some Latin American countries, and encourages the Organisation to deepen this dialogue;

      ix.       welcomes OECD's expanding contacts with other non-member countries, especially those economies, such as China, that are becoming increasingly important players in the world economy. It hopes that these new links will promote the spread of OECD's aims and principles, and enable the Organisation to tackle more efficiently the global challenges it faces.

11.       Asks the OECD:

      i.       to study further the implications of member countries' high debts, and propose strategies for overcoming this international problem;

      ii.       to examine the question as to whether the world suffers from a shortage of capital, and if so what can be done to remedy the situation. It is especially important to examine whether the market can be expected to relieve any such shortage on its own — or whether various imperfections may prevent it from doing so — such as hesitation on the part of investors and consumers, or the "debt trap" which is caused by large budget deficits and which may hinder growth by keeping interest rates high;

12.       Also asks the OECD to study how the globalisation of capital movements may influence the stability of the financial system and the prospects of international economic and monetary co-operation, and how the influence of speculative movements on exchange rate volatility can be checked to defend monetary stability.

13.       Calls on the Organisation to study further the long-term consequences of structural change for different sectors of economic activity.

14.       Also asks the OECD to study the economic and social consequences of possible changes in overall taxation to reduce the burden on labour and investment through increased charges on energy and resource consumption.

15.       Asks the OECD to continue its rapidly expanding activities to assist economic reform in the countries of central and eastern Europe, the Newly Independent States, and the economies in transition in Asia, and regards the projects launched by the Organisation's Centre for Co-operation with Economies in Transition — such as the Partners in Transition Programme (PIT) undertaken together with the Czech Republic, Hungary, Poland and Slovakia, as well as the SIGMA project (Support for Improvement in Management and Government) — as essential contributions to this cause. It hopes that the aims of these activities can be better focused and defined, so as to be of even greater use to the countries assisted.

16.       Wishes that the OECD International Futures Programme should become an essential means for the Organisation to identify in time long-term trends, new opportunities and problem areas.

17.       Invites the OECD to develop more open discussion with other international organisations on the economic, political and cultural objectives of government policy-making and international co-operation.

B.       Agriculture

18.       The enlarged Assembly requests governments of OECD member countries and, where appropriate, OECD itself:

      i.       to take into account, in concluding the trade negotiations in the GATT Uruguay Round, the importance of maintaining a viable agricultural sector (including fishing and forestry) which does not distort international trade;

      ii.       to continue refining the important work on agricultural policies, markets and trade - monitoring and outlook, particularly in the light of new international trade arrangements such as GATT, the North American Free Trade Agreement, and the European Economic Area, etc. This work should include the monitoring of structural adjustment and its multiple liaisons with rural development and environmental questions as well as the analysis of agricultural producers' and fishermen's situation. The development prospects in the non-food and animal-feed agricultural sector should also be studied;

      iii.       to continue and step up their endeavours to assist European economies in transition with the reform of agricultural and rural development policy, inviting them to take part in some OECD activities and opening up agricultural markets to them;

      iv.       to maintain a policy of actively assisting agricultural and rural development in the developing countries and help them find new markets for their agricultural products.

C.       Environment

19.       As far as environmental and natural resources protection are concerned, the Enlarged Assembly welcomes the development and restructuring of the organisation's environmental sector, which will allow it to respond in the best possible way to the aims and priorities the latter has committed itself to.

20.       It encourages OECD:

      i.       to pursue, through the International Energy Agency (IEA) and the OECD Nuclear Energy Agency (NEA), the activities related to the conception and setting up of environmentally favourable energy policies which, taking into account the renewable energy potential and energy efficiency programmes which would contribute to ensuring sustainable development of the planet;

      ii.       to develop the work on internalisation of environmental costs and possible fiscal measures in this field;

      iii.       to give priority to studying, in co-operation with other international organisations, the crucial problem represented by nuclear power plants in central and east European countries, in accordance with measures proposed in Recommendation 1209 (1993) of the Parliamentary Assembly of the Council of Europe on nuclear power plants in central and eastern Europe;

      iv.       to give priority to implementing the environmental action programme in central and eastern Europe, adopted at the Environmental pan-European Ministerial Conference in Lucerne, in April 1993;

      v.       to continue implementation of the guidelines fixed by the 1992 Ministerial meeting "Strategy for the '90s", and notably an evaluation of member states' performance in the environmental field, which must contribute to the dynamic development of national environmental policies respecting the economic development and the principles of sustainable development as defined in the Brundtland report;

      vi.       to develop activities concerning the environmental problems of towns, notably those concerning energy, and associate the Council of Europe Standing Conference of Local and Regional Authorities with this work;

      vii.       to pursue, in co-operation with other international organisations concerned, the implementation of the conclusions of the Rio Conference on the Environment and Development.

D.       Migration and demography

21.       The enlarged Assembly invites OECD:

i.       to co-operate very closely with the Council of Europe with the common aim of defining identification criteria and data gathering methods that would provide comparable statistics;

ii.       to speed up the admission of east European countries to the Continuous Reporting System (SOPEMI), which provides highly detailed information on international migration trends in the member states of OECD;

iii.       to give more detailed consideration to the integration of migrants in host societies, in the light of Recommendation 1206 (1993) of the Parliamentary Assembly of the Council of Europe on the integration of migrants and community relations;

iv.       to study the global problems arising from clandestine migration, taking into account, in particular, Recommendation 1211 (1993) of the Parliamentary Assembly of the Council of European clandestine migration: traffickers and employers of clandestine migrants;

v.       to develop its research activities, namely concerning causes, consequences and measures to be taken in the long term in the fields of politics, demography, economy and ecology and to make the results available to all Council of Europe and OECD member countries;

vi.       to re-inforce co-operation in general with the Council of Europe in the field of migration and demography.

vii.       to deal with migration in its worldwide dimension, affecting as it does all continents.

II. Explanatory memorandum

by Mr HELLSTRÖM

Contents

Page

A.       INTRODUCTION        9

1.       The general economic situation in the OECD area.

      Economic growth, unemployment, inflation and other

      factors        9

2.       An OECD "recipe": open and multilateral trade; a

      determined struggle against unemployment and inflation;

      and "structural adjustment"        11

B.       OECD ACTIVITIES: SOME PRIORITIES        14

1.       Unemployment        14

2.       Technology and the economy        18

3.       Facing the challenges of a new world: OECD membership.

      Central and eastern Europe. Development co-operation        19

4.       Rural development        23

5.       Environment        23

6.       OECD follow-up to the 1992 Ministerial Communiqué,

      and to the Assembly's Resolution 988 (1992)        24

C.       CONCLUDING COMMENTS        25

APPENDICES        27

A.       Introduction

1.        The general economic situation in the OECD area. Economic growth,        unemployment, inflation and other factors

1.       The purpose of the present draft report is to present current activities and concerns of OECD. The Rapporteur will from time from time make observations of his own on issues which he sees as being of importance, or which were raised during his discussions with OECD officials in Paris in late April 1993, or in the ensuing enlarged committee deliberations with OECD on 28 June.

2.       The debate in the Parliamentary Assembly on OECD activities is foreseen for 30 September. Following the reform of the rules governing the debate, parliamentary delegations coming from OECD countries which are not member of the Council of Europe will participate with exactly the same rights (to vote and present amendments both in committee and in Plenary Assembly) as delegations from the member states of the Council of Europe. In addition, the European Parliament will participate in an observer capacity, with a right to present amendments (although not to vote).

3.       Economic growth in the OECD area is still weak. It is expected to be no higher than 1,2% in 1993, although it is foreseen to accelerate to 2,7% in 1994. Growth this year is expected to be stronger in the United States (2,6% this year and 3,1% in 1994, partly depending on the performance of President Clinton's stimulation package) than in Japan (1% in 1993 and 3,3% in 1994) and in European OECD countries which are even expected to register "negative growth" of -0,3% in 1993 (1,8% in 1994). Finally, growth in Canada in 1993 is predicted at 3,1% (4,5% in 1994), that of Australia at 2,9% (3,1% next year) and that of New Zealand at 3,1% (3,5% in 1994).

4.       OECD foresees a further strong raise in unemployment in 1993, to the unprecedented figure of 36 million people, or 8,5 % of the workforce. A decline may be possible only in 1994, by which time eleven OECD countries could have double-digit joblessness rates.

5.       Moreover, many of those who will become unemployed over the next two years risk drifting into a long-term unemployment, with all that this will entail in terms of hardship and erosion of skills and self-esteem. In the United States, only 15% of workers laid off in the 1990-92 period are expected to be recalled to their old sectors, as compared to 44% in previous downturns. Furthermore, unemployment increasingly strikes also white-collar workers.

6.       Among the few bright spots on the horizon is the decline in inflation — OECD speaks of "disinflation" — which is expected to come down from 3,3% in 1992 to 3% this year and 2,8% in 1994 for the OECD area as a whole. Untypically for that country, Germany shows a higher than average inflation — an expected 4,9% for 1993 mainly due to the cost of unification — but it may come down somewhat as economic activity slows down toward the end of this year. (The Appendix to this report shows basic economic indicators for the OECD area.)

7.       If, thus, the task of this year's OECD Rapporteur in depicting the general economic situation is unusually ungrateful, it must be recognised that the world finds itself in a rather unique confluence of circumstances and historical changes.

8.       Firstly, there is the severity and stubbornness of the recession itself, perhaps the most persistent since the 1930s. Consumer and investor confidence in the future is in short supply, a fact which may have the effect of prolonging it. At the same time, government budget deficits (both present and accumulated) make it difficult for countries to undertake, individually and in isolated fashion, any Keynesian, deficit-spending "kick start" of renewed economic activity (since this would risk raising interest rates, and since any increase in inflation could sap further investors' confidence in the nation's economic future).

9.       Furthermore, we have the difficult process of economic and political renewal in central and eastern Europe — moving swifter in some countries and slower in others (such as Russia), but overall creating a climate of uncertainty for domestic and foreign investments alike. Add to this that central and eastern Europe asks for nothing more than to be able to sell their fledgling production to OECD countries, while the latter, aware of the low labour costs in the reforming nations (only about one-tenth of western Europe's) start here and there to erect new trade barriers out of fear of additional unemployment at home. The Rapporteur registered concern within the OECD about west European protectionism vis-à-vis central and eastern Europe. Strong lobbies in weak or subsidised industries — not just restricted to agriculture — exercise strong pressure in favour of new trade barriers.

10.       A third uncertainty concerns western Europe itself, whether it be doubts about the implementation of the Maastricht Treaty on European Union, including its provisions for the Economic and Monetary Union (EMU); or the entry into force of the (European Community — EFTA (minus Switzerland)) European Economic Area; or the economic strength of Germany in the wake of unification. The latter country is seen as facing a particularly difficult period — with long legal procedures surrounding the clarification of property rights in eastern Germany and the rapid, too rapid in the eyes of many observers, rise of wages in the often less competitive industries in the "new Länder".

11.       Fourthly, the negotiations for a conclusion of the GATT Uruguay Round go on and on, with public and the market confidence sapped a little bit more every time a solemnly declared deadline passes by without result. Or rather, the result is a different one, namely the renewed flaring up of the debate as to whether the world is indeed heading for a "Fortress Europe" (EC + EEA), a "Fortress America" (NAFTA or the North American Free Trade Agreement) and a "Fortress East Asia" (with Japan in its midst) — and if so, what effects all this might have on global trade.

12.       While on the subject of East Asia, there is the widespread impression of a "job and manufacturing flight" away from western Europe (and to some extent North America) to that region, further fuelling protectionism claims. True, East Asia's economic growth has been and continues to be considerably higher — 7% to 10% per year for countries such as Singapore and the People's Republic of China — than that of "OECD-North America" or "OECD-Europe". That growth could well turn the region into a "locomotive" for growth in the rest of the world. East Asia's development is indeed broad-based, characterised by intensive trade also within the region, and it ought therefore to be welcomed by the rest of the world as a beneficial element. The Director General of GATT has recently stressed that between 40 and 45% of the merchandise exports of the United States, the European Community and Japan is now purchased by non-OECD countries.

13.       There is also the rapid change in the situation of developing countries — some moving fast forward economically, others lagging behind and crippled by a crushing debt burden. Add to this international migration — east to west and south to north — which has most OECD countries on their guard and which renders openness in economic relations even more difficult.

14.       Finally, the current recession in OECD economies coincides with an active phase of global structural change. Traditional industries in OECD countries are in decline, especially in manufacturing, and other branches of activity, such as information technology and environment protection, are on the rise.

2.       An OECD "recipe": open and multilateral trade; a determined struggle against unemployment and inflation; and "structural adjustment"

15.       All in all, the above changes constitute quite a challenge for OECD member countries, and for the world community as a whole. The Rapporteur was therefore understandably keen to learn whether there exists, as it were, an "OECD recipe" for facing them.

16.       He came away from his meetings with OECD officials with the impression that OECD remains as supportive as ever of a speedy and fruitful conclusion of the GATT Uruguay Round. It would set OECD's work on a post-Uruguay Round agenda on a firmer basis (just as many subjects introduced for the first time in the Uruguay Round were prepared beforehand in OECD). He believes that OECD has a special duty to lay the conceptual formulation for a strategy of worldwide trade liberalisation — not least between its member states and the countries in central and eastern Europe. Doing this, and contributing to a conclusion of the Uruguay Round, would be especially important in order to give new impetus to the world economy.

17.       This is also what OECD Ministers had in mind in their June 1993 Communiqué when they asked OECD to "pursue new issues arising at the interface of trade policy and other national policies (concentrating initially on competition, investment and, in the case of environment, on analytical work with a view to developing appropriate substantive guidelines as well as providing input to negotiating rules in the relevant multilateral fora)".

18.       Such issues increasingly concern also the domestic measures in the trade field of OECD member countries, for instance subsidies, anti-dumping and countervailing measures. It is essential to OECD that a successfully concluded Uruguay Round should include clear and equitable rules also in these domains, which could otherwise easily offset hard-won gains in the area of trade proper. Trade is also more and more affected by policies regarding competition at national or, as in the European Community, world regional level. Yet competition policies vary widely among different member countries, rendering the idea of a "level playing field" somewhat illusory. Finally, the recent currency gyrations, especially in Europe, make it clear that policies in this area vitally influence trade conditions. OECD, which has already studied this issue, should be asked to pursue it, particularly as it relates to the efforts to maintain the European Monetary System (EMS) and the realisation of the Economic and Monetary Union (EMU) within the European Community.

19.       All in all, OECD believes that the inability to meet past Uruguay Round deadlines has hindered investment planning, and created widespread uncertainty about the "international rules of the game". Successful completion of the Round is essential, not only for the long-term economic gains it promises both for OECD and for non-OECD countries, but also because it could act as a catalyst in restoring confidence. OECD governments have it within their power to achieve this, and they should not be distracted from this crucial objective by sectoral pressures.

20.       The above needless to say also comprises agriculture. Now that a European Community — United States understanding on agriculture — the "Blair House" accord has been reached, pressure can at last be brought in favour of an overall conclusion of the Uruguay Round. It is particularly important in this situation that no party starts to "backtrack" on compromises already reached, be it agriculture, services, intellectual property or market access.

21.       Yet is must be recognised that very little progress has been made in implementing the principles of reform adopted by the OECD Ministerial Council in 1987. The cost of support remains very high. The 1993 OECD Ministerial Communiqué gives the figure of $US 354 thousand million in transfers from taxpayers and consumers to the agricultural sector in 1992, an increase of 7% over the previous year. And serious distortions continue to affect international markets. The successful conclusion of the Uruguay Round would be a major contribution to the reform process. That message was reinforced by the OECD Monitoring and Outlook report of 1993, which was presented to the Ministerial Council in June 1993.

22.       Agriculture is increasingly linked with other sectors of the economy and fulfils multiple functions. There is therefore a need for an integrated approach to agricultural reform, agricultural adjustment, environment and rural development, as reiterated by the June 1993 Ministerial Council.

23.       Increasingly also, consideration must be paid to the reforms under way in the agriculture of central and eastern Europe. If the OECD area already suffers from massive agricultural surpluses, and if central and eastern Europe is already increasing its agricultural output (not to mention, say, the People's Republic of China, then overproduction (and resulting subsidies) will become even more difficult to sustain. Fresh thinking, and a co-ordinated approach among different world regions are urgently needed to solve this particular problem.

24.       Other ingredients in the OECD recipe for taking us out of the present recession may be summed up as: continued "structural reform" of economies so as to render them more competitive; the preparation of the work force for new employment challenges; pursuit of efforts to contain inflation; and responsible fiscal policies.

25.       As regards the latter, OECD regrets member countries' insufficient reduction of "structural", or underlying, budget deficits in the "fat years" of the 1980s, leaving them with a more difficult situation now that the recession adds "cyclical" deficits (for example, through increased unemployment expenditure).

26.       This leaves precious little lee-way for any "Keynesian" solution to lift countries out of recession if they act on their own and in isolated fashion. However, if a worldwide, co-ordinated attempt were to be undertaken it would stand a much greater chance of being successful.

27.        The OECD December 1992 economic outlook argues that "a temporary fiscal expansion might strengthen confidence and demand in cases where activity remains weak. But it is imperative that any such package be both temporary and accompanied by a credible commitment to unwind it when the economy picks up".

28.       Indeed, OECD in the same publication calls it "essential" that any package of short-term temporary measures "be accompanied by a detailed set of binding commitments to reduce a rates of debt to GDP to more sustainable levels over the medium term. An assured medium-term reduction in budget deficits is one key to a durable reduction in real long-term interest rates that would strengthen investment, output and employment. It would also provide monetary policy with more room for manoeuvre". Your Rapporteur believes that OECD should study in greater detail the implications of OECD countries' high debts, and devise detailed strategies for overcoming this problem. And he takes comfort in the 1993 OECD Ministerial Communiqué, when "ministers commit their governments to reducing with determination government budget structural deficits over the medium term".

29.       OECD is in consequence highly concerned with improving the "quality of public expenditure" (or "the value for public money") which, it regrets, did not happen in the 1980s. Governments are therefore encouraged to reassess their spending priorities, with a view to helping build the physical and human capital base on which future growth and prosperity ultimately rest. It is to reorient public expenditure away from "passive" policies of paying out unemployment benefits and associated income transfers, and toward "active" labour market policies geared to improving job prospects for the unemployed. Also, it is suggested, basic education and training for young people and adults should be improved. At the same time, expanding these forms of public spending would require matching expenditures cuts in other fields.

30.       Is there a capital shortage in the world — caused by such things as large government borrowing requirements, the costs of rebuilding central and eastern Europe and the debt crisis of many developing countries? Some OECD interlocutors seem not to believe so, arguing instead that lenders' doubts about borrowers' credibility are perhaps an even more important reason. In other words, the funds would be there, but the will to provide them on favourable terms would not.

31.       Should this be so, will then states — say in central and eastern Europe or in the developing world — feel pressure to put their economic and political house in order, thereby standing a greater chance of gaining investors' confidence? Or will the economic degradation that may follow from a dearth in foreign lending at a critical juncture in their reform process so depress these countries that the forces of chaos and violence will gain the upper hand? The fate of large parts of the world hangs in the balance.

32.       Generally speaking, the United States will need to reduce its budget deficit in order to free funds for private investment, especially at a time when Germany can not be counted on within the near future to become again a capital exporter of note. Similarly Japan, in recent years a major exporter of capital, is seen to become less so in the future, in particular owing to the needs arising from the rapid ageing of its population.

33.       In sum, then, the Rapporteur believes that the issue of a possible capital shortage in the world — and the remedy against it if it exists — should be studied in greater depth by OECD. It is especially important to examine whether the market can be expected to relieve any such shortage on its own; or whether, as some maintain, various imperfections will prevent it from doing so — notably investors' and consumers' "uncertainty" — including the high debt exposure of many consumers — and the "debt trap" caused by large budget deficits.

34.       How much of the present recession is caused by "psychological factors". Why are the market and consumers "holding back" their investment and spending? As we have seen there are also "objective factors", but your Rapporteur came away from his meeting with OECD officials with the conviction that a determined, co-ordinated action by governments — in the Uruguay Round, in European economic and political co-operation, in infrastructure investment, and in helping to sort out the problems of central and eastern Europe and the south — could "turn the page" in a decisive way at this stage of events.

35.       Your Rapporteur in this context notes the words in the June 1993 Ministerial Council of OECD, to the effect that "ministers ... agreed on collective action to meet the challenges facing their countries ... [and] are resolved to take additional action to improve both macro-economic and structural policies, and to extend international co-operation, in particular by strengthening the open multilateral trading system".

B.       OECD activities: some priorities

1.       Unemployment

36.       One of OECD's major concerns is widespread unemployment, which is eating like a cancer at our societies. How can it be that when so much of our resources are devoted to reducing it, it still did not come down noticeably during the "good years" of the 1980s but indeed increased in certain years, only to grow even more during the "bad years" since? Why has Europe mastered unemployment less well than the United States and Japan? Finally, what consequences will "sustained unemployment" have for such things as the social fabric in our countries; social tensions and conflict; a younger generation who no longer feels "needed"; the future of free trade; society's attitude to work versus leisure time (work sharing, care of children or the aged); or the psychology of the population (anxiety, reluctance to consume)? We note in this context the proposal, presented at the European Community European Council meeting in June 1993, to reduce unemployment in the European Community by half during the 1990s.

37.       The Rapporteur sees OECD's preoccupation with the unemployment issue as underlying many of its programmes — from the "active society" to the previously mentioned "structural adjustment" (for internationally competitive jobs are certain jobs in the long-term), to the so-called Technology Economy Programme. Only a society that knows how to integrate technological gains into the production process can maintain employment, in an increasingly competitive world, where the emphasis will be more and more on advanced products and services.

38.       In particular, the OECD's employment/unemployment study currently under way will, it is hoped, shed new light on the complex issues relating future economic growth with work opportunities. This study was started following the 1992 OECD Ministerial Council, which invited the Secretary General to "initiate a comprehensive research effort on the reasons for and the remedies to the disappointing progress in reducing unemployment". Although the work if not yet finished, it is reported to emphasise the need for a progressive shift of resources away from measures that risk generating dependency to those that mobilise labour supply, develop employment-related skills and improve the functioning of the labour market. The Rapporteur strongly wishes it also to pay attention to the problem of long-term unemployment, and hopes it can be finished, presented to OECD member countries and incorporated in policies as soon as possible.

39.       The discussions on the employment/unemployment study has highlighted a divergence between those who continue to believe in traditional economic theory, and those who see the present situation as entirely new. The novelty, according to the latter school of thought, lies not only in the speed of structural change (should it be slowed down?), but also in the advanced state of "globalisation" of the economy (causing industry to move out) and the high pace of technological development (which takes away jobs, at least in the short-term).

40.       An "active society", in the view of OECD, is one which involves more people, the young and the old, the handicapped and the long-term unemployed, in more of the tasks facing it. In your Rapporteur's discussion with the Organisation, the long-term ageing of the populations in OECD countries was referred to. This will have important social, economic and financial consequences. There will be fewer people in the active ages of employment, who will have to pay for a larger and larger group of old-age pensioners. In this situation it must be asked whether our passive retirement should not be revised in a more flexible direction, especially since older people today have many more opportunities than in the past to lead active lives. Perhaps people reaching retirement could work, say, part-time and spend the other half of their active time in various socially useful activities. Future old-age pensioners will expect more from their retirement, and society should be in a position to fulfil these expectations.

41.       Active labour market policies also imply finding ways to integrate labour, education and social policies, and going from income support measures to policies stimulating employment and activity. Developing the skills of the labour force, and especially women — in brief, education and training — becomes a priority.

42.        An "active society" is clearly better prepared to tackle "structural reform". OECD sees structural reform as essential to expand the potential of OECD economies for non-inflationary growth, to provide new, genuinely competitive job opportunities, and to improve the efficiency of the public sector. More generally, structural reform enhances the effectiveness of macro-economic policies and make product, labour and capital markets more responsive to a changing political, economic and technological environment.

43.       Structural reform is thus an extremely important tool for long-term economic growth, and OECD is the only international organisation that deals with the whole range of areas where structural adjustment is needed, such as manpower and social policies, education, industrial and regional policies, and science and technology. Permanent structural reform is needed in most economic sectors. It is normally associated with both positive and negative effects, and it is the task of all those responsible for the decision-making process in society to minimise the latter. Basically, the aim of any structural adjustment policy should be to prepare a society in time for the changes it faces, so as to avoid bottlenecks in any form they could take.

44.       Structural adjustment policies may also entail making wage settlements less uniform across the regions of a given country. Some observers believe that rigid, centralised wage agreements which do not recognise wealth and cost-of-living differences among regions in fact accentuate the exodus of companies and people from disadvantaged areas as entrepreneurs are no longer attracted by the lower cost of labour. In the United States low wages have permitted many people entry into the labour market, followed by the possibility of moving toward more skilled occupations later. However, in the United States an increasing number of people also form part of the new underclass of so-called "working poor" — often families where both parents work but which still fall below the "poverty line". Others maintain, on the other hand, that central wage agreements can be valuable, both in increasing overall consumer demand and in contributing to more dynamic structural adjustment, notably by forcing less competitive industries to modernise or leave the market.

45.       In Europe the span between wages is less pronounced, and the "working poor" as

defined above are probably fewer. However, comparatively generous unemployment benefits — in themselves of course welcome — have contributed to a growing group of long-term unemployed people, who lose confidence in their own capacity, find their skills becoming outmoded, and grow used to a life of non-work. As has been pointed out, it must be a primary concern to society, and to these people themselves, again to have the possibility of letting work give more meaning to their life. The Rapporteur feels that OECD should study more intensely the long-term unemployment problem and its many consequences.

46.       The OECD Secretariat is also studying "work sharing", and is asking a number of questions in its regard. For instance, should "work reduction" lead to "pay reduction" in order to be economically feasible? But would employees agree? Furthermore, "work sharing" supposes that there is somebody willing and able to carry out the jobs that are being freed. Can such a "professional match" be guaranteed? There are many who do not believe in the virtues of "work sharing", arguing that the end result will in fact be fewer rather than more jobs overall.

47.       Finally, what about the alleged loss of employment from the OECD area, especially western Europe, to low-wage, low-social security countries in central and eastern Europe and East Asia (or indeed, within the European Community itself, as recent company moves have illustrated)? Here OECD seems very much aware of the risks to economic, political and social stability posed by the massive closing of plants. And yet it remains hopeful that, as these countries develop, so will their wage levels and hence their demand for imports. In East Asia itself, formerly low-wage Japan has become "high-wage" compared to East Asian neighbours such as the Republic of Korea and Singapore, with a subsequent loss of manufacturing to them. The Republic of Korea and Singapore in their turn are now losing manufacturing to others in the region who themselves move up the wage ladder. There are many indications that the world as a whole is in the same "dynamic restructuring" process. This should be a matter for the OECD to study — for subsequent "post-Uruguay Round" consideration by GATT.

48.       It must be among the absolute priorities of our societies to ensure employment to the maximum number of their citizens. There are so many tasks around us: taking care of the handicapped, the very young, the elderly who now are often abandoned, the restoration of our environment, cultural heritage and inner cities. An "active society" also has a greater chance of becoming a "humane society" — a mission that is becoming all the more necessary to counteract the often "dehumanising" effects of technological progress. In general, OECD should be encouraged to concentrate even more than in the past on formulating guidelines for active labour market policies in member countries.

49.       International migration, which will be taken up in greater detail by another Assembly committee, is intimately linked to economic development in different parts of the world. OECD, (in close collaboration with the Council of Europe), is trying to map this relationship. The annual SOPEMI (Système d'Observation Permanente des Migrations; Continuous Reporting System on Migration) report presents both data and analysis of migration trends, movements and policies embracing south-north as well as east-west migration. An OECD conference held in March 1993 provided a forum for a broad discussion both on policies in OECD countries to control migration flows, and on international co-operation to promote development in the "sending countries" that would result in better employment — creating growth and reducing incentives to migration.

50.       It may be helpful at this point to reflect on the respective roles of the OECD and the Council of Europe. The membership, and the functions, differ, but much of the work is closely related. It is vital not only to avoid overlap and duplication but also, more positively, to ensure complementarity and even synergy between the work of the two organisations wherever possible. In matters of population and migration, for example, the common interests of the two bodies are clear, and different roles can be distinguished. The Council of Europe, through the European Population Committee (which includes distinguished scientific demographers as well as government experts in the field), prepares the annual compilation of demographic statistics of European states. [This year the Report, covering the situation for 1992, was the reference document for the European Population Conference in Geneva in March, organized jointly by the Council of Europe, the United Nations Economic Commission for Europe and the United Nations Population Fund. As such, it was enlarged not only to take account of developments in the former Soviet Union and the former Republic of Yugoslavia but also to include data on the United States of America, Canada and Israel.] On the basis of these and other data the OECD is able to carry out further technical analyses which are as useful to the Council of Europe as the collection of basic statistics is to the OECD. Similarly in the field of migration the OECD's contribution has been particularly in the form of research into migration flows and statistical analysis of the movements of population in Europe and elsewhere. The Council of Europe's role lies more in the social and political questions which arise from migratory trends, where its practical contributions are of ever increasing importance. The Council of Europe will therefore continue to concentrate on the integration of immigrants and inter-community relations, in which it is already heavily engaged.

51.       This brief examination of the relationship between the two organizations in one field illustrates very well the relationship which we may hope obtains and always will obtain in all fields. The OECD is characterized first of all by its membership, which includes virtually all the developed, pluralist democracy, market economy countries in the world, and only such countries. Apart from the fields of population and migration, areas of common interest between the Council of Europe and the OECD include the environment, health, social policy (including the incidence, causes and amelioration of poverty and social exclusion), social security, employment, education and training, urban problems and the contributions of local and regional authorities. Complementarity and synergy must be the key words in all these areas, and as a simple rule of thumb I cannot do better than to recommend a practice which I understand has been adopted in some parts at least of the Council of Europe here in Strasbourg, to the effect that proposals for new work should be placed in the context of work already under way in that area by other relevant organisations as well as in-house.

2.       Technology and the economy

52.       OECD from 1988 to 1992 carried out a major programme called the Technology Economy Programme, or TEP. Its aim was to "integrate policies for science and technology with other aspects of government policy, particularly economic, social, industrial, energy, education and manpower policies". The goal was to arrive at a better understanding, and measurement, of the synergy between technological change, the economy and the society, so that a coherent framework may be established for an analysis of public policy-making in the OECD area. A series of conferences were held on themes such as "technology and investment", "towards techno-globalism", "technology and the environment" and "technology and competitiveness".

53.       The TEP's main message was to underline the importance of widely spread knowledge, especially technological, for economic development. It behooves governments not only to foster efficient educational institutions towards this end, but also to permit individual companies to share and apply knowledge as rapidly and thoroughly as possible. This is best achieved, OECD argues, if subsidies to both rising and declining industrial sectors are avoided, and if the work force is sufficiently well trained. The emphasis is therefore on the "micro-economic level" of the economy, ie the company and its environment. Both have to be conducive to innovation and creativity. This does not, however, free society from its crucial obligation to engage in fundamental research which can later on benefit development and all economic actors.

54.       The development of information technology has been driven more by the extreme expansion of technological opportunities than by demand and the needs of end users, and this might be part of the explanation why this growth sector has run into trouble. Consumers have had great problems in keeping up with the very rapid rate of change in products presented to them on the market. This becomes a problem because many information technology products only become useful after a period of consumer learning.

55.       A similar problem is reflected in the use of information technology by firms and organisations and in its limited effects on productivity. Sectors that invested heavily in information technology in the 1980s — such as banking and insurance — did not increase productivity to the extent expected. The reason appears to have been that the technical novelties were not integrated "organically" into the life of the Organisation, permitting each individual to realise all of his capabilities. Only a satisfactory interplay between technology and man can bring about the desired results as regards productivity.

56.       If we live in a knowledge-intensive society already it will be even more so in the future. New forms of infrastructure for teaching and learning — of particular concern to the Assembly's Committee on Culture and Education — will form cornerstones in our future economies. Consequently the "capacity for learning" will be even more crucial for tomorrow's citizens. The nature of the relationship between firms will also change. With the emphasis on knowledge, formal ownership of companies is likely to be less important than permanent informal, mutual exchanges of information.

57.       It was pointed out that the fact (clearly demonstrated in the TEP programme) that the tendency of innovation and knowledge to become increasingly important in the economy raises a series of fundamental questions about economic theory and economic policy. Knowledge differs from other resources in many ways. The more it is used the more you receive out of it. It is not easily transacted in pure markets and, even if it is sold, the seller still has access to it. A fundamental policy question is whether institutions could be designed in order to better support the production, distribution and use of knowledge in the economy.

3.       Facing the challenges of a new world: OECD membership. Central and eastern Europe. Development co-operation

58.       As these lines are written, in May 1993, three new member states (Estonia, Lithuania and Slovenia) have joined the Council of Europe, which now encompasses twenty-nine countries. Many more are waiting in the wings.

59.       By contrast, OECD has maintained its twenty-four country membership1 for many years. Such prudence of course preserves a relative homogeneity among the participating countries. However, OECD countries are increasingly influenced by a number of rapidly rising nations outside the Organisation. The co-operation it establishes with these nations — all the way to full membership — will therefore more and more determine the success OECD will have in solving domestic problems, as well as in helping to solve those of the rest of the world.

60.       The last point is important. OECD advises member countries. But these are increasingly affected by countries and regions in the world that are outside the organisation. If OECD member countries are thus to have an influence over such events, then a dialogue with non-members becomes ever more necessary. And what better setting for such a dialogue than OECD? The 1993 OECD Ministerial Communiqué rightly says that the organisation "should consider broadening its knowledge and understanding of the economies" [of a number of non-member countries]. (On the other hand, one can have doubts as to how well OECD would be able to function with, say, fifty member countries. The balance between representativeness and efficacy will therefore be both important and difficult to uphold in the future.)

61.       This being said, OECD does maintain increasingly close contacts with in particular Mexico — of special importance considering the recently concluded North American Free Trade Agreement between that country and the United States and Canada. It is not unreasonable to expect Mexico to become a member within the next year or so. Indeed, the June 1993 OECD Ministerial Meeting invites the Organisation "to examine with Mexico the terms and conditions of its membership with a view toward early entry of Mexico into the OECD".

62.       The Republic of Korea may be next in line, perhaps in two to three years, as OECD ministers consider that Korea's involvement in OECD activities paves the way for early membership, provided of course that democracy can be more firmly entrenched in that country. Paradoxically enough, however, this may not go down well with part of the Korean public, who are not expected to accept easily their country's sudden elevation from a developing to an OECD country.

63.       Independent of the question of membership, OECD is enlarging its contacts with non-member countries. In 1989, OECD launched an informal dialogue with the Dynamic Asian Economies — Hong Kong, Korea, Malaysia, Singapore, Taiwan and Thailand — which have become the OECD countries' most important economic partners in the non-OECD region. This dialogue is being extended this year to several Latin American countries, namely Argentina, Brazil, Chile and Mexico, and will be known as the "Informal Dialogue with the Dynamic Non-Member Economies". Common to participating countries is that they will have to meet the implicit — criteria such as market economy and support for the multilateral open trading system, as well as democratic rule and respect for human rights — a clear parallel to the principles of the Council of Europe.

64.       OECD has made it one of its principal tasks to help central and eastern Europe. And rightly so, for the region's integration into Europe in particular, and the world in general, is of paramount importance to us all.

65.       Started in 1990, the Centre for Co-operation with European Economies in Transition is already using 10% of OECD's resources, employing eighty full-time staff and a multitude of consultants in the field. Resources are divided roughly equally between the General Programme of Work Partners in Transition Programme (PIT) — specially directed toward the Czech Republic, Hungary, Poland and Slovakia — and the NIS (Newly Independent States) project, aimed at the republics of the former Soviet Union (especially Belarus, Kazakhstan, the Russian Federation, Turkestan, Ukraine and Uzbekistan).

66.       PIT is now in full operation, with a impressive number of meetings, expert visits and exchanges — ranging from anti-trust legislation and franchising techniques to the restructuring of the banking sector, education in the agro-food industry and conversion of the military industry toward civilian production. As regards the latter, OECD co-operates with the European Bank for Reconstruction and Development.

67.       The PIT countries have accepted to form the subject of OECD "country reviews", that is regular independent scrutiny of their economic policies and development enabling them, if need be, to carry out corrections to reforms. In addition, with financial support from the European Communities PHARE programme, OECD has launched the so-called SIGMA project (Support for Improvement in Management and Government) aimed at helping the civil services of the countries concerned face the new situation.

68.       Finally, OECD's current efforts to streamline and improve statistics in the economic field among its member countries — and generally to adopt a higher profile in this sector of activities — will also be of benefit to the countries of central and eastern Europe and to the Newly Independent States, where statistics are often incomplete, for instance on price developments and national accounts.

69.       Generally speaking, the role of the Centre for Co-operation with European Economies in Transition — with well over 200 individual activities — is to organise and co-ordinate all OECD's co-operative activities with the reforming countries of central and eastern Europe and the NIS — adapting itself to the different paces of reform, from the higher gears chosen by for example Poland, Hungary or the Czech Republic (where the focus is on training programmes) to the slower ones, where the emphasis is on policy advice.

70.       OECD has also built up a special register, to which the Council of Europe contributes as a donor reporting its technical assistance to central and eastern Europe and the NIS (Newly Independent States). The register is an important aspect of the centre's work and is the centrepiece of the Organisation's efforts to fulfil its ministerial mandate as the international clearing house for information on technical assistance to the NIS. As the only database of its kind, it makes an important contribution to the co-ordination of technical assistance to central and eastern Europe and the NIS.

71.       OECD's action thus usefully complements that of the Parliamentary Assembly in this field, including that of the Committee on Economic Affairs and Development, as highlighted also at the Assembly's Conference "Progress of Economic Reform in Central and Eastern Europe: Lessons and Prospects", held in Helsinki from 2 to 4 June 1993, and to which OECD gave a much appreciated contribution.

72.       One of the main conclusions of the Helsinki Conference was that the success of the reforms in central and eastern Europe to a large degree depends on their trade access to western Europe and the OECD area in general. OECD countries need to reduce substantially and progressively any protectionism in their trade relations with these countries, thus preparing for the eventual creation of a pan-European market spanning the continent's confines. This is echoed by the OECD ministers when they stress, in their June 1993 Communiqué, the "need to intensify efforts to provide these economies with better access to OECD member countries' markets".

73.       Development co-operation with the South continues to occupy a prominent place on OECD's agenda, and the Organisation has been among the first to sense what some officials have dubbed "a new era in donor-recipient relations" following the end of east-west confrontation and the near-universal recognition of the advantages of the market-oriented economy. This became abundantly clear as Mr Ray Love, Chairman of OECD's Development Assistance Committee (DAC), participated in a hearing organised by the Parliamentary Assembly in April 1993 on the theme "Human Development and Freedom in the Developing World" (at the initiative of the Economic Affairs Committee's Sub-Committee "North-South: Europe's Role", of which your Rapporteur also happens to be the Chairman.)

74.       OECD — as did the hearing — lays emphasis on "participatory development, that is one which involves all layers of the populations in developing countries, and on the link between democracy, human rights and accountable government on the one hand, and sustainable economic development on the other. The so-called "conditionality debate" continues among OECD member countries. But it has moved beyond the general question of whether official development assistance should be made contingent on things like economic reform, environment protection, democratisation, respect of human rights and reduced defence spending, to the question of how and to what extent these criteria should apply in particular cases.

75.       This is, of course, in line with the Assembly's Resolution 981 (1992) where four criteria — apart from the absolute requirement to help where absolute poverty reigns — are listed as conditions for continued assistance to developing countries:

      — th       e human rights criterion;—

      —th       e economic and social reforms criterion;—

      —th       e military expenditure criterion;—

      —th       e environmental criterion.76

76.       However, as regards the poverty criterion, OECD's Development Assistance Committee — which guides and co-ordinates official development assistance of all member countries — is facing a "definitional dilemma", namely how to decide whether a given country is in fact "developing". Should "newly rich" countries like Singapore or Brunei really stay on the DAC list of ODA-receiving countries? Should countries like Romania or Bulgaria (indeed a Council of Europe member state) be included? What about the Caucasian and Central Asian successor republics to the Soviet Union?

77.       However that may be, the DAC now also reports disbursement figures for new recipient countries from the ex-Soviet bloc whether or not officially recognised as a developing country. But of far greater concern than the question of nomenclature is of course the need to ensure that ODA contributes to broad-based growth of benefit to poor people in developing countries. Expenditures on human development (such as basic education, primary health care, safe drinking water and family planning) need increased priority.

78.       OECD in its development co-operation thinks less and less in terms of a "developing world" and more and more in terms of individual countries and regions. It sees the developing world as increasingly differentiated. Countries which in the 1980s (if not earlier) turned away from rather ill-fated, import-substitution industrialisation efforts and have joined the dynamic parts of the world economy (such as many countries in South East Asia and Latin America) and are attracting increasing flows of private finance, including foreign direct investment. Those on the other hand which did not manage that transition (for instance in Sub-Saharan Africa) remain dependent on official financing, including debt relief. Many countries are in the middle of economic and political reforms that will require years of persistence to consolidate and pay off.

79.       Along with this development — in which multinational corporations for better or for worse play a significant role — the emphasis of north-south co-operation has, in the eyes of OECD, shifted from project development to human capital and institutional ("good governance") development. The previously mentioned "participatory development" implies the building of a "civil society" capable of ensuring democracy and combatting corruption. Latin America has indeed been swept by a wave of democratisation, while in East Asia progress has been more uneven.

80.       The "chicken and egg" question arises; what comes first — economic or political development? OECD does not seem to have any ready-made answer. What remains is, however, that donor countries can do much to assist progress on both fronts, and the Rapporteur believes that here OECD and the Council of Europe have another mission in common.

4.       Rural development

81.       OECD's painstaking work over many years on behalf of rural development has paid off in many ways, not least by having the rural development dimension introduced into many governmental policies. Your Rapporteur fully supports this principle, especially since rural development goes more and more beyond the domain of agriculture proper. This is becoming abundantly clear in the OECD's new study "What Future for Our Countryside?", which can be recommended for anybody interested in the subject. The report distinguishes between rural areas that are well integrated with urban ones (presenting the least problems), intermediate rural areas further away from cities, often with a faltering agriculture and a declining population; and remote areas, little populated and often situated in mountainous or island regions (requiring particular policy efforts).

82.       While it is for other Assembly committees to cover this topic in greater detail, the Rapporteur welcomes the attention given by the 1992 ministerial meeting to the rural problem. The mandate for OECD's future work in this area has been made clearer, and will draw on the work in several of the Organisation's areas of specialisation including: agricultural, environmental and regional policy; public management; tourism; labour markets; structural adjustment; and overall economic development. The organisation will continue to collect and develop information about rural areas, their economic resources, current conditions and trends, and the possibilities for establishing a common set of rural indicators.

83.       Work in the rural area is especially important in the light of impending agricultural policy reform and its potential impact on rural areas. Many areas continue to stagnate economically and some are losing population. But concern with rural areas and interest in rural development has also parallels with multiplying environmental concerns, issues of national heritage, and society's interest in a wider distribution of opportunities, especially in education.

5.       Environment

84.       Again another Assembly committee — that of the Environment, Regional Planning and Local Authorities — will cover environmental issues in greater length. It is sufficient to mention here only that the OECD aims at integration of environmental and economic policies in key economic sectors (for example, agriculture, transport and energy); enhancement of the use of market mechanisms for environmental purposes; improving environmental performance within the OECD region; and strengthening international co-operation. In order to systematically monitor and evaluate the performance of member countries in fulfilling their domestic and international commitments in the environmental field, OECD has recently launched a new programme of environmental performance reviews.

85.       Another aim is to reduce pollution in OECD countries, through better waste management, the control of chemical products, air quality management, the promotion of clean technologies and the improvement of energy efficiency. A final objective is to promote international co-operation, both with non-member countries (developing countries, the countries of central and eastern Europe and of the Commonwealth of Independent States (CIS); and the Dynamic Asian Economies) or with other international organisations such as the United Nations, to tackle such worldwide problems as "global warming".

86.       The guiding principles — similar to those identified in rural policies — is that the "environmental dimension should form part and parcel of the whole gamut of economic policies". "The State of the Environment" is also published regularly, concerning such global environmental problems as ozone depletion, climate change, marine pollution, deforestation, desertification, soil degradation and loss of biological diversity. In conclusion, the Rapporteur encourages OECD to incorporate environmental considerations in all policies under consideration, and to pursue the integrative study of environmental problems which it has pioneered. The aim should be to provide governments with tools, with which they can give environmental concerns their rightful, and much more central, place on the political agenda.

6.        OECD follow-up to the 1992 Ministerial Communiqué, and to the Assembly's Resolution 988 (1992)

87.       It would be slightly unfair to OECD to hold it accountable for any policy action pledged, but subsequently not delivered, by its members countries in their yearly OECD Ministerial Communiqués. For OECD is more an instrument of — and not a master of — its constituting member governments, and it can only help prepare action and point to virtues and risks. The reproach against OECD governments concerns three fields in particular: agriculture, where far too little has been done to realise the pledges made in the OECD Ministerial Communiqué of 1987; the GATT Round; and the failure in the struggle against unemployment (see section I:2).

88.       Indeed, OECD sees the implementation of the May 1992 Ministerial Communiqué as being rather hampered by the recession. However, as far as the tasks given by ministers to OECD itself, the Organisation cites progress — whether it be the ambitious unemployment study now well under way, the integration of domestic and trade policies described in Section I:2 above, or the possibilities of membership extension.

89.       As concerns the Assembly's own recommendations in last year's report on OECD activities (Resolution 988, especially paragraphs 14.i-xiv), key suggestions are being followed in the north-south development co-operation field (paragraph 14.i and xii); the social effects of unemployment and poverty (14.iii-vi); the globalisation of capital movements (paragraph 14.vii); and contacts with non-member countries, including central and eastern Europe (paragraph 14.viii-xi).

90.       The Rapporteur likewise notes the growing importance given to the OECD's International Futures Programme, which the Assembly (paragraph 14.xiii) saw as "essential to fulfilling OECD's role of identifying in time long-term trends, new opportunities and problem areas." Over the last twelve months the programme has provided a platform for two major high-level conferences on issues of strategic importance to the economic development of member countries in the years ahead — the future of international air transport, and infrastructure policies for the 1990s — and further conferences are planned on key social and economic topics. In this context, the Rapporteur notes with satisfaction that at their OECD ministerial meeting in June this year, ministers welcomed "the OECD's ongoing support in evaluating the long-term problems bound to confront member countries, and in devising appropriate policy responses ...".

C.       Concluding comments

91.       As was pointed out at the outset, the world finds itself in fundamental change. One OECD interlocutor recalled that it had taken it some seventy years before the nineteenth century inventions of electricity and the steam engine had become fully integrated into the then world economy. Would it take, he asked, a similarly protracted period of profound and perhaps traumatic mutation, before the by now twenty year-old "electronics revolution" will have become an integral part of our lives and economic fabric? If so, what will happen next to growth, unemployment and so on?

92.       OECD is in a unique position to answer questions such as these. It is a place where governments cannot only meet and deliberate, but also identify new problem areas ahead of time. OECD has a tradition of early detection of global economic problems, of defining new issues and of laying the conceptual foundation for overcoming them. In the future OECD will be called upon even more to take into consideration many problem areas originating outside its own membership, many of which have been referred to in this memorandum. These include:

      —th       e promising democratisation in the developing world, but also the alarming increase in population with its manifold consequences; —

      —th       e integration of central and eastern Europe into the world economy; —

      —th       e consequences of the economic rise of East Asia and other parts of the world;—

      —th       e world economy's rapid internationalisation through multinational corporations and information technology, and the integration of the latter into the economic fabric of our societies;—

      —th       e safeguarding and promotion of an open, multilateral trading system, and especially the issues to be included in future trade negotiations. 93

93.       Add to this the many problems besetting OECD countries themselves, such:

      —un       employment, especially long-term; —

      —po       verty; —

      —th       e inadequate level and quality of training and education in many countries; —

      —dr       ugs;—

      —ra       pid urbanisation and the decay of urban infrastructures; —

      —an       d the anxiety and doubts aroused by constant structural adjustment.94

94.       We, the Parliamentary Assembly, are part of this enterprise as the OECD's parliamentary forum. We have a duty continuously to add our contribution, to comment on and help orient OECD's work from our own unique viewpoint.

APPENDICES

      Reporting committee: Enlarged Committee on Economic Affairs and Development.

      Budgetary implications for the Assembly: none.

      Reference to committee: standing mandate.

      Draft resolution adopted on 29 September 1993 by the Committee on Economic Affairs and Development at its Enlarged Meeting with delegations from the parliaments of Australia, Canada, Japan and New Zealand, a representative from the European Parliament and with representatives from other committees concerned.

      Members of the Committee: Mr Holtz (Chairman), Dame Peggy Fenner, Mr Lotz (Vice-Chairmen), MM. Aarts, Becker (Alternate: Mészaros), Bjarnason, Bloetzer (Alternate: Mrs Robert), Bonnici, Borderas, Brach, Brunhart, Mrs Burbiené, MM. Colombo, Davis, Demiralp, Mrs Durrieu, MM. Efraimoglou, Fabra, Figel, Flückiger (Alternate: Columberg), Gasperoni, Goerens, Gregory, Mrs Haglund, MM. Hellström, Kempinaire, Kilic, Kittelmann, Kolar, Albrecht Konecny, Koritzinsky, Le Grand (Alternate: Mignon), Lewandowski, Mändmets, Mesoraca, Novak, Paire, Pinto, Pirinski, Rehn (Alternate: Toivonen), Rodrigues, Rokofyllos, Schwimmer (Alternate: Lanner), Mrs von Teichman, MM. Thoft, Toplak, Townend, Valleix, Mrs Verspaget, Mr Wintgens.

Delegations from non-European OECD member countries:

      Australia: MM Snow, Sinclair, Crichton-Browne, Gibson, Somlyay, Cleeland

      Canada: MM Clifford, Bolduc, Kenny

      Japan: MM Nakayama, Seko, Maejima, Kurimoto

      New Zealand: Mr Whittaker

European Parliament: Mr Metten

      NB: The names of those members who were present at the meetings are in italics.

      Secretaries to the committee: MM Torbiörn and Mezei.


1 1 1. Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.