Canada OECD Info

April 2014

Views from the Ambassador - Ambassador Judith LaRocque

In the first few months of 2014, the OECD has been hard at work providing insight on global economic developments and providing advice to its membership. The OECD’s Interim Economic assessment released in March showed that the recovery is continuing in G7 countries but that the situation in emerging economies is mixed.  For the recovery to continue, the OECD encourages structural reforms particularly in many of the European economies hit hard by the crisis.

Ambassador Judith LaRocqueHowever, OECD work goes beyond merely encouraging recovery.  To ensure that the OECD derives policy lessons from the global economic crisis and can update its analytical frameworks accordingly, the Organisation launched the New Approaches to Economic Challenges (NAEC) project.  Ministers will be given a progress report on how the OECD is approaching this vast question at the May Ministerial meeting. 

In the past months, the OECD also provided ongoing support for the work of the G20 under the Australian Presidency on financial consumer protection, taxation (base erosion and profit shifting), investment and trade, to name a few.  The OECD is responding to the G20 Finance Ministers commitment to raise growth rates by 2% by recommending targeted labour market policies.

As Canada’s Ambassador to the OECD, it is my responsibility to ensure that Canadian priorities are reflected in the OECD Programme and Budget.  The input provided by Federal Departments contributed towards drafting the OECD Ambassadors Convergence paper summing up Member priorities for the next biennium. This paper was transmitted to all OECD directorates along with the Secretary General’s Strategic Orientations Paper to be used by Committees when preparing their future work programmes.

It is also my responsibility to ensure that the OECD operates within Canada’s foreign and trade policy objectives. The OECD Council recently agreed to postpone the accession process with the Russian Federation to reflect concerns about Russia’s actions in Crimea. This decision is in line with the Government of Canada’s response to the situation.

I also work to ensure that the OECD continues to be an efficient and effective international organisation.  Canada is co-chairing the governance review of the OECD which is examining all aspects of decision-making and working methods both in Council and in Committees.  An interim report will also be made at the May Ministerial.

In the months ahead, the Canadian delegation to the OECD is looking forward to welcoming many Canadian delegates attending upcoming meetings, including those participating in the Global Forum on Women’s Leadership in Public Life and Canadian parliamentarians from the Canada-Europe Parliamentary Association.

We look forward to receiving Minister Fast and the Parliamentary Secretary to the Minister of Finance (tbc) at the May Ministerial.  Chaired by Japan and co-chaired by the United Kingdom and Slovenia the theme this year is “Resilient Economies and Inclusive Societies – Empowering People for Jobs and Growth”.  It will also be an opportunity for the OECD to present the 2014 Global Economic Outlook, to work on strengthening the multilateral trade system and to promote a better business climate. Finally, in June we look forward to receiving the 2014 Economic Review of Canada.

The Permanent Delegation of Canada to the OECD welcomes your questions and values your input.  If we can do more to support you please do not hesitate to let us know.

Global Partnership for Effective Development Cooperation

At the 2011 Fourth High Level Forum on Aid Effectiveness in Busan, more than 150 countries and 45 international organisations agreed on the need to form an inclusive alliance of the many state and non-state actors engaged in development cooperation; the aim was to maximize the impact of the annual global flow of around $200 billion in development cooperation assistance.  This alliance is known as the Global Partnership for Effective Development Cooperation (GPEDC).  The OECD, together with the UNDP, provides secretariat support to the GPEDC.

Global Partnership for Effective Development CooperationThe first High Level Meeting of the GPEDC will take place April 15-16.  Over a thousand development leaders - including Heads of State and Government, ministers, parliamentarians, executives from international organizations, business, civil society and foundations - will join the Mexican President, the UN Secretary General and the OECD Secretary General in Mexico City to reconfirm the importance of effective development cooperation in meeting the Millennium Development Goals and as a key part of the “how” of a post-2015 global development framework.  Canada will be represented by its Minister of International Development.

The GPEDC High Level Meeting will mark an important milestone in the global fight against poverty.  It will be a key moment for the global community to:

  • Review and drive progress on effective development cooperation;
  • Take action to boost tax collection, eliminate illicit financial flows and shape tax policy to reduce poverty more effectively;
  • Exchange practical ideas on how to increase support to poverty reduction efforts and to inclusive growth in middle-income countries;
  • Commit to support development cooperation with and between developing countries, including through knowledge and know-how exchange;
  • Define a road map for increased, improved development cooperation between business and government up to and within a post-2015 framework; and,
  • Expand voluntary alliances to advance initiatives on themes such as fragile states, effective institutions and triangular cooperation.

Canada played an active role in the creation of the Global Partnership and has since been a strong supporter.  Its objectives complement Canada’s own efforts to improve the effectiveness, impact and accountability of its development cooperation efforts.  Canada is particularly committed to the work of the Partnership underpinning domestic resource mobilization efforts, bolstering engagement with civil society and strengthening the positive impact of business in development.  These work streams are well-aligned with DFATD’s focus on stimulating sustainable economic growth and setting countries on a path to self-sufficiency, and reinforce Canada’s own significant efforts to engage the private sector in the delivery and achievement of common development goals.

For Canada, the GPEDC is also an additional avenue through which it can influence the post-2015 discourse and help implement its eventual agenda.  By unpacking issues such as private sector engagement, domestic resource mobilization, and knowledge sharing, the GPEDC is already helping to build consensus in the international debate.  Importantly, its multi-stakeholder character will facilitate the types of partnership that will be needed to meet the challenge of ending poverty.  Canada will take full opportunity of the timeliness of the High Level Meeting to help shape how the Partnership can optimally contribute to a post-2015 development framework.

More information on the GPEDC.

OECD Spring Ministerial Meeting

“Resilience” is the theme of this year’s annual Meeting of Council at Ministerial level to be chaired by Japan with the UK and Slovakia as Vice Chairs.  Resilience refers to the ability of an economy to withstand or bounce back quickly after being hit by a shock.  In Japan, the bamboo tree is a symbol of resilience. In winter, snow falls on the bamboo trees and they bend, but they never break. After the snow melts away, the trees start to grow straight again. This is the image of resilience that Japan hopes will inspire Ministerial discussion on how to develop effective strategies to build strong, sustainable and inclusive economies.

OECD Spring Ministerial MeetingThe two day meeting will feature sessions on the Economic Situation, Resilience Economies and Societies, Promoting Sustainable growth, Development, and Trade.  A Synthesis of the OECD’s work on New Approaches to Economic Challenges will be presented as well as an update on the OECD’s work on tax, including the state of play of the Base Erosion and Profit Shifting initiative.  The OECD will deliver its new OECD Service Trade Restrictiveness Index (STRI) which can support trade liberalization efforts globally. The South East Asia Regional Programme will be officially launched at the Ministerial meeting with a special ceremony lead by the Prime Minister of Japan.  Ministers from OECD and ASEAN countries will discuss how to enhance the relationship between the Organisation and the Southeast Asia Region. 

Canada will be represented at the Ministerial meeting by Minister Fast and the Parliamentary Secretary to the Minister of Finance (tbc).  At the meeting, Canada will engage in frank discussion on policies mixes to promote economic growth.  Canada will express support for the OECD’s unique contributions to promoting structural reform.  Canada will share our experience and vision in Global Value Chains, trade liberalization and reform. Canada will highlight our commitment to the OECD and its outreach efforts in South East Asia – making the Organisation a more relevant and global player.

The OECD Forum, a parallel conference with civil society will take place on May 5 – 7. The overarching theme is “Resilient Economies for Inclusive Societies” with a strong focus on inclusive growth, jobs and trust.  Forum sessions will touch on many of the themes on the MCM Agenda – skills, empowerment and resilience, aging and inequality, and climate change.  Current and former heads of state and government, Nobel Prize winners, top CEOs, leaders of key non-governmental organisations and trade unions, prominent members of academia and media will participate in Forum panels and debates. 

Southeast Asia Regional Programme – Regional Forum in Bali

At the OECD Ministerial in May 2013, OECD Ministers underlined the importance of Southeast Asia as a strategic area of priority for the OECD and agreed to launch a Southeast Asia Regional Programme.  Canada is very supportive of increased OECD engagement with this dynamic region. 

Southeast Asia Regional Programme – Regional Forum in BaliThe programme itself will aim to foster the exchange of good practices and mutual learning, bring countries closer to OECD standards and practices, and facilitate access to OECD expertise.   It also aims to support domestic reform processes and contribute to regional integration initiatives.  The programme intends to build on and expand ongoing OECD collaboration with regional institutions including ASEAN, the ADB, APEC, and UNESCAP.  For the OECD, this programme will help to enhance and broaden the OECD’s knowledge of the region; foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries.  It will provide Members with a new, more insightful view of Southeast Asia and of the global economy.

The substance of the Programme will be developed by Regional Policy Networks (RPNs), which will build on the work programme of substantive OECD and Southeast Asian bodies and processes. The initial areas of focus for the Programme will be tax, investment, education, small and medium-sized enterprises (SMEs), regulatory reform and public private partnerships (PPPs) to support connectivity.  There is also interest in work on trade, innovation and gender.

To build support for the programme and to work with partners in defining the scope, the OECD hosted the OECD Southeast Asia Regional Forum, on 25-26 March 2014 in Bali, Indonesia. This event served to give the OECD visibility in the region, enhance the understanding and engagement of regional partners in OECD activities, and provide an opportunity to hear views from the region to help define the direction of the Programme.

On March 25th an Expert Seminar discussed Key Themes & Priorities for the OECD Southeast Asia Regional Programme in two consecutive sessions following an introductory session. A private sector session elaborated recommendations to the Forum and a Women’s Business Brainstorming lunch discussed ways to strengthen women’s role in the economy.

On March 26th H.E. Mr. Muhammad Chatib Basri, Minister of Finance of Indonesia and the OECD Secretary-General  launched the debates.  The main Forum day was structured around three high level panels. Each panel drew upon the conclusions of the expert seminar sessions held the previous day as well as private sector input; a final session allowed stakeholders and partners to comment on the substance of the Programme.

Canada’s Ambassador to Indonesia participated in the Forum.  Danielle Thibault, Minister Counsellor and Deputy Permanent Representative at the Canadian Delegation to the OECD, Vice Chair of the OECD External Relations Committee also attended.  Ms. Thibault was a panellist sharing Canadian experience in investment promotion.  Canada’s objective at this event was to show support for the OECD’s outreach efforts and to ensure that the Forum helps capture input from SEA partners into the Program.

The Bali Forum was the first important meeting on the path to increased cooperation and engagement between the OECD and Southeast Asia. 

German Chancellor visits the OECD

German Chancellor Angela Merkel addressed the OECD on February 19, providing an overview of the opportunities and challenges facing the German, European, and global economies. Highlighting such topics as corporate taxation and social wellbeing, she also looked ahead at what further issues need to be addressed domestically and internationally, including energy and sustainable economic growth. OECD Secretary General Angel Gurría congratulated Germany on its productivity, its exports, and its overall economic performance, but also noted its challenges including environmental concerns, skills, and aging.

German Chancellor visits the OECDOn the issue of corporate taxation, Merkel questioned how companies can avoid taxes in the jurisdictions where value is added. To this end, she lauded the OECD’s work on standards regarding base erosion and profit shifting (BEPS). Noting that the world has not completely emerged from the global financial crisis and the ensuing Eurozone crisis, she argued that markets need rules of the game in the form of international agreements. The economy, she said, needs to be at the service of people, and not the other way around. She highlighted the importance of competitiveness and innovation, and questioned the sustainability of a situation in Europe where some countries only direct one percent of their GDP to research and development, while others, like Germany, dedicate three percent.

Challenges identified by the Chancellor included long term unemployment, especially among youth; transport infrastructure; a need to promote digitization and broadband; a services sector that remains too isolated from the world; and, above all, energy. Despite renewables providing one-quarter of Germany’s energy mix, she noted that renewables can be intermittent and therefore not fully reliable. She also argued that the digital sector of the economy needs attention, namely a pan-European effort to avoid being dependent on Asia and the US.

Finally, Chancellor Merkel emphasized the need for work-life balance, and highlighted Germany’s improvements in child care, women’s employment, and universities. She remarked that while GDP is relatively easy to measure, measuring “quality of life” presents challenges. For this reason, her new government wishes to develop representative indicators through its statistics agency. She cited the importance of free time, flexible working hours, and gender equality, noting that childcare and nursing capacities are just as important as tax benefits.  

Spotlight on the Territorial Development Policy Committee

Spotlight on the Territorial Development Policy CommitteeIn recent months, the work of the Territorial Development Policy Committee (TDPC) – which brings together regional development policymakers – has included a Ministerial meeting and the adoption of its first Recommendation of the Council. Held in Marseille, France, in early December, the most recent TDPC Ministerial was convened under the theme “Regions and Cities: Where Policies and People Meet.” Ministers called on the OECD to adopt principles for effective public investment, design national urban policy frameworks to meet economic, social, and environmental needs in cities of all sizes; and promote dialogue between governments at all levels. Canada was represented by senior officials from several regional development agencies, and Atlantic Canada Opportunities Agency President Paul Leblanc delivered closing remarks as the Chair of the TDPC. In Marseille, the OECD Secretary General launched the biennial report Regions at a Glance as well as Investing Together: Working Effectively Across Levels of Government.

Meanwhile, the TDPC recently finalized its work on the Draft Recommendation of the Council on Effective Public Investment Across Levels of Government to Council. This recommendation aims to help governments at all levels set priorities in the area of public investment and improve multi-level governance of public investment. Its constituent Principles are organized around three pillars: 1) co-ordinating public investment across levels of government and policies; 2) strengthening capacities for public investment and promoting policy learning at all levels; and 3) ensuring sound framework conditions for public investment at all levels of government. In a dialogue with the OECD Council in mid-March, TDPC Chair Leblanc presented this recommendation, which garnered support and approval from Ambassadors. The OECD will now develop an implementation toolkit which will provide indicators and good practices for each Principle based on some examples from countries.

Canada Economic Development for Quebec Regions currently represents Canada on the TDPC.

Going for Growth

Going for Growth 2014 was launched in Sydney in February by Secretary-General Gurria and the Australian Treasurer during a press conference ahead of the G20 Finance Ministers and Central Bank Governors meeting.  

Going for GrowthThe SG highlighted the study as a key OECD contribution to the structural reforms elements of the Framework process and to the development of G20 Growth Strategies. Going for Growth is indeed the OECD flagship report analyzing structural policy settings and economic performance with the view to develop concrete reform recommendations for members and key non-OECD countries.  This edition focuses mainly on taking stock of reforms enacted over the last two years.

For Canada, weak productivity growth is identified as the main challenge and recommendations are to:

  • Reduce barriers to entry and enhance capacity in network sectors and professional services to stimulate competition and investment
  • Reduce barriers to FDI in key sectors and clarify the net benefit test.
  • Reform the tax system by shifting the burden from direct to indirect taxes.
  • Enhance tertiary education outcomes to better respond to future labour market needs
  • Further improving R&D support policies

In terms of monitoring of actions taken, the report notes that:

  • The federal corporate income tax rates has been gradually reduced to 15%
  • Targeted support to raise tertiary graduation rates of underrepresented groups was increased
  • R&D tax credits were streamlined and part of the savings used to increase direct grants

More broadly, concerning the whole of countries covered, the report finds that the pace of reforms in areas seen as priorities to boost growth has been slowing since the aftermath of the crisis. The process of reform is often piecemeal and incremental, raising doubt that economic performance challenges can fully be met.  Actions taken so far in countries facing the largest current account imbalances are overall deemed as unlikely to contribute to a substantial narrowing of imbalances. The intensity of reforms in euro area countries under financial assistance programs has however remained higher than elsewhere.  In the case of large EMEs, the main challenges are to improve access to education, address physical and infrastructure bottlenecks and bring more workers into formal employment.

Regarding productivity-enhancing reforms, the report notes that actions have tended to focus on public sector efficiency, education and product market regulations to the detriment of tax reforms and spending on public infrastructure. This likely reflects intentions to avoid reforms with substantial up-front fiscal costs in light of consolidation efforts.  The report also notes that labour market reforms mainly focused on dealing with high unemployment (vs raising participation), with measures such as early retirement schemes, activation mechanisms for unemployed and employment protection legislation.

The report finally provides update on “classic” OECD indicators, such as product-market regulations (chapter 2) and a large suite of other structural policy indicators (chapter 3).

Global Forum on Women’s Leadership in Public Life:

Global Forum on Women’s Leadership in Public Life:The OECD Global Forum on Public Governance took place in Paris April 2-4 under the theme Women’s Leadership in Public Life: Fostering Diversity for Inclusive Growth. This Forum saw leading actors from government, civil society and business explore concrete actions on key challenges including: gender gaps in public life, strengthening women’s voice, and increasing the inclusiveness of policy making and programme delivery. The opening session was chaired by Joe Wild, Assistant Secretary to the Cabinet (Machinery of Government), in his capacity as Chair of the OECD’s Public Governance Committee. Deputy Minister of Public Works and Government Services, Michelle d’Auray, participated on a panel addressing inclusive and gender-responsive policies, programmes, and budgets. Her Excellency Ms. Catherine Samba-Panza, the Interim President of the Central African Republic delivered a powerful closing keynote address wrapping up the discussions.  

These issues were further considered in a report released by the OECD during the Forum, entitled Women, Government, and Policy Making in OECD Countries: Fostering Diversity for Inclusive Growth.

G20 Finance Ministerial -- perspectives from the OECD

G20 Finance Ministerial -- perspectives from the OECDAt the February G20 Finance Ministers and Central Bank Governor’s Meeting, the OECD once again brought valuable contributions to the table in two specific areas of expertise – tax policy and structural reforms. In the period leading up to the Ministerial, SG Gurria released two pieces of work foreshadowing what the OECD now sees as its main contributions to the February meeting: its new Common Reporting Standard for automatic exchange of information and its flagship publication on structural reforms, Going for Growth.

The Standard presented by the OECD calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. The OECD was very pleased with the strong support given by Ministers to the new Common Standard. While the U.S. decision to move on with FATCA clearly provided key impetus to this initiative, the OECD is pleased that the G20 was able to grasp this as an opportunity to boost international tax cooperation for the sharing of data on a “reciprocal” basis. Secretary-General Gurria called this “a real game changer” to protect the integrity of tax systems and fight tax evasion. The added weight given by the G20 to this initiative is also generating helpful “peer pressures” dynamics within the OECD membership. Media for instance reports that typically reluctant Switzerland will join consensus despite historical ties to banking secrecy.

OECD tax work continues to make important inroad with non-OECD/non-G20 countries, which can serve as inspiration for other policy areas where more ambitious policy coordination is required. OECD Tax Director, Pascal St-Amans, was reportedly saying on the margins in Sydney that the ambition “is to level the playing field to make sure that allcountries and all financial centres around the world exchange tax information on an automatic basis”. In terms of next steps, the OECD is expected to deliver a detailed commentary on the new standard for automatic exchange of information as well as technical solutions to implement the actual information exchanges at the September 2014 G20 Finance ministerial meeting.

The public release of Going for Growth in Sydney provided the OECD with a platform to highlight the need for a push for structural reforms to boost medium-term growth. Secretary-General Gurria made a direct link between the OECD recommendations on that front and the G20 objective of returning to strong, sustainable and balanced growth. The report analysis was indeed presented as the basis for the OECD’s wider contribution to the Framework Working Group. Key messages by Gurria were that despite signs of recovery, both advanced and emerging countries currently “face the risk of falling into a low-growth trap”, which can be avoided if OECD structural reforms recommendations are implemented in a comprehensive and timely manner. 

In this context, the Communiqué’s pledge to boost growth by an additional 2 per cent above current trend is more than welcomed by the Secretariat as it clearly reinforces the Organization’s message. With countries facing increasingly constrained macro policies space, the OECD hopes that the commitment will provide more visibility to structural reforms in general.

While “traditional” reforms such as product market reforms and measures to enhance labour force participation are seen as obvious recommendations the Organization will continue to highlight among the most promising to meet the 2 per cent objective, the OECD will also continue its active promotion of other lines of work seen as fundamental to raise potential growth. These include follow-up work on financing for investment (i.e. effective approaches to implement OECD high level principles on long-term investment financing by institutional investors) and the “Global Value Chains” work the OECD is contributing to the G20 trade narrative. Given that investment is still lagging the recovery and that many countries face infrastructure investment gaps, they will continue to emphasize the need to unlock credit channels and to better mobilize non-financial corporations’ important amount of hoarded cash. Likewise, they will continue to argue that the global trade engine requires an extra boost given the mitigated performance of trade since the crisis unfolded.

The G20 call to implement structural reforms to boost growth echoes the OECD mantra of recent years.  The OECD stands ready to contribute to more specific policy recommendations and analysis.

OECD Global Forum on Trade

The OECD Global Forum on Trade took place on February 11th and 12th, focussing on “Reconciling Regionalism and Multilateralism in a Post-Bali World”.  The event sought to address the changing nature of global commerce (GVCs), post-economic crisis structural reforms and employment challenges.  Discussion covered a range of subjects, including WTO issues, bilateral and regional agreements, the G20 and relevant OECD analytical work. 

On WTO issues, participants emphasized the importance of implementing the outcomes of MC9 in Bali.  With regard next steps in developing a new WTO work plan, China, India, Brazil and Argentina advocated close adherence to the existing Doha parameters, while OECD members tended to be more open to the examination of new issues.  

The overview from Geneva was contrasted with a discussion of the opportunities and threats of deep provisions in regional trade agreements, (including the mega-regional TPP and TTIP, as well as the proliferating network of accords containing WTO-plus provisions).  The economic impact and utilization of such pacts were reviewed, and participants were queried as to how RTAs might eventually be reconciled with the WTO system.  One school of thought saw RTAs complementing and stimulating multilateralism.  Others commentators were concerned that regional and plurilateral initiatives constituted obstacles on the road back to Geneva. 

A third theme related to the G20 trade agenda, and the focus on structural growth strategies (country-specific actions to support growth and jobs).  The OECD will once again convene a G20-OECD GVC stocktaking session on the margins of the OECD’s May 6-7 MCM, and participants noted that the next B20 meeting will take place on 17-18 July, preceding the 19 July G20 Trade Ministerial. 

Overall, the OECD's Global Forum on Trade confirmed that the nature of global commerce is changing.  Going forward, the OECD Trade Committee's programme of work will continue to pursue evidence-based analysis in support of trade liberalization on all fronts.

Near-term outputs will include: (i) an assessment of gains from implementing the Trade Facilitation package; (ii) an updated GVC paper (with UNCTAD and the World Bank) to be contributed to the G20, identifying implications for developing countries; (iii) launch of the OECD's services trade restrictiveness index in May; and (iv) a report on "multilateralizing regionalism" cataloguing the current stock of RTAs and identifies WTO-plus provisions.  Beyond immediate Trade Committee deliverables, ongoing OECD work includes a range of issues with interlinkages to trade (agriculture, investment, SOEs, competitive neutrality, the digital economy, cross-border data flows, energy and the environment). 

Background documents and presentations from the OECD’s Global Forum on Trade.

Recent OECD publications

The OECD’s biennial overview of social indicators, Society at a Glance, was released on March 18, 2014. The 2014 edition focuses on the financial and economic crisis and its aftermath, and groups social indicators under to five themes: general context (e.g. household income), health, self-sufficiency, equity, and social cohesion. The report notes that Canada effectively used both discretionary and automatic policy adjustments to mitigate impacts of its recession. For example, Canada introduced longer benefit durations for the long-term unemployed. In the rankings for individual indicators, Canada generally performs well, particularly in the areas of household income, health, and self-sufficiency.

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