*{BIAC STATEMENT TO THE 1997 OECD COUNCIL MEETING AT MINISTERIAL LEVEL
26 - 27 May 1997}

1. The Business and Industry Advisory Committee to the OECD is pleased to present this
statement to the 1997 OECD Council Meeting at Ministerial Level. We recognise that this is a
historic meeting for the OECD as it celebrates the 50th Anniversary of General George Marshall’s
speech at Harvard University, a singularly important event which launched a half-century of
economic co-operation among the world’s industrialised nations.

2. The international business community has been working closely with the OECD since its
inception, as we worked with its predecessor, the OEEC. We believe the Organisation has played
an essential role in promoting peace and prosperity among Member countries.

3. We applaud the fact that the Czech Republic, Hungary, Poland and Korea have now joined
the OECD and we understand that accession discussions are or will soon take place with other
candidates for membership. This expansion of the OECD’s membership, together with the
increasing involvement of other important actors in the world community, demonstrates that the
OECD is not just an international organisation, but a dynamic process for meeting the policy
challenges of an evolving global economy.

4. As is our custom, we are now pleased to provide you with our views on the specific items
to be discussed by OECD Ministers.

*partie=titre 1997 Ministerial Highlights: *partie=nil

• *partie=titre Multilateral Agreement on Investment (MAI): *partie=nil The business community commends OECD
Member governments for their exceptional efforts to negotiate a high-standard Agreement
under intense time pressures. We are generally pleased with the results thus far. One major issue
which concerns us is the potential carve-out of tax measures which could permit signatories to
circumvent their MAI obligations. We are also very concerned about the pressure to link this
Agreement with environment and labour matters through, for example, the proposed association
of the voluntary OECD Guidelines for Multinational Enterprises to the binding MAI. As an
investment agreement, the MAI should not have negative consequences on either environmental
protection or labour standards. Indeed, we believe the effects will be positive. Any reference to
environment or labour issues must not be interpreted as undercutting the basic purposes of the
Agreement, i.e., high standards of up-front liberalisation, protection and non-discrimination for
international investments. We call on Ministers to endorse the progress made on this landmark
instrument and to mandate its completion as soon as possible, with the overall objective of
reaching a clear consensus on the major issues still under consideration. BIAC will continue to
monitor and contribute to the remaining phase of negotiations. Subject to our examination of
the final text, we hope to strongly support accession by the broadest possible number of both
OECD and Non-Member Governments.

• *partie=titre Regulatory Reform: *partie=nil The business community is also pleased with the results of the OECD’s
extensive analysis, conclusions and recommendations on the subject of regulatory reform. We
believe it is essential that Ministers not only endorse the results of this ongoing work, but offer
a firm commitment to implement the results. The OECD should monitor the progress of
implementation as a follow-up activity, but the responsibility for taking the appropriate action at
the national level falls on individual Member governments.

• *partie=titre Jobs Strategy Implementation: *partie=nil One of the surest means to strengthen social cohesion in an
evolving economy is to promote meaningful employment opportunities for all those who wish
to work. Although there is still much progress that can be made, we are pleased that some
Member countries are seeking to implement the recommendations of the OECD Jobs Strategy
which outline appropriate policy reforms for this purpose. However, we are also concerned that
some governments are not implementing their respective recommendations, which is effectively
condemning certain segments of their populations to high unemployment rates for the
foreseeable future. We call on OECD Ministers to reaffirm their strong support for the Jobs
Strategy, and to commit their Governments to work towards full implementation of their
respective recommendations as soon as possible.

*partie=titre Assessing the Current Economic Situation: *partie=nil

5. We are pleased that an increasing number of Member countries are laying the foundation
for sustainable, non-inflationary growth by keeping inflationary pressures under control, by
continuing their drive towards fiscal consolidation where necessary, and by making appropriate
structural reforms.

6. However, we are aware that some Member countries seem to be trapped in slow growth
situations. We are concerned that many of these countries seem unable to develop the political
support for policies which favour the general population as distinct from specific interest groups.
We note that some groups argue that globalisation is a major cause of painful adjustments in
domestic markets. We believe there are considerable risks for the world economy if governments
attribute difficulties arising from domestic policy deficiencies to the global market.

7. We thus call on Member governments to promote policies which benefit their populations
as a whole, and to resist the urge to criticise trading partners, including emerging economies,
instead of implementing the necessary domestic reforms.

*partie=titre Improving the international business environment: *partie=nil

8. In addition to the MAI and regulatory reform work cited above, there are a number of very
important issues on the Ministerial agenda with an impact on the climate for conducting
international business operations.

9. We continue to support the OECD’s efforts to combat bribery and corruption. Extortion
and bribery result in substantial economic and social costs both for companies and for countries in
which illicit payments are frequently encountered. We call on Ministers to support further work to
address this serious global problem with the aim of achieving comparable national rules and
regulations for all countries.

10. We welcome the results of the Singapore WTO Ministerial, particularly the assurances of
full implementation of the Uruguay Round disciplines and liberalisation programmes, completion
of the remaining sector work and the launching of a work programme to study new issues (i.e.,
investment and competition) and continuing challenges (i.e. government procurement, trade
facilitation, regional free trade agreements). We also fully agreed with the decision that the ILO
should be the body to address principles of labour rights.

11. We firmly believe that OECD Governments must continue to lead efforts to liberalise trade
under the WTO framework, including accelerated implementation of the Uruguay Round tariff
commitments and tariff elimination in agreed upon sectors, reduction of tariff peaks, extension of
tariff bindings, geographic expansion of zero-for-zero and tariff harmonisation agreements, as well
as non-tariff barriers.

12. We also hope OECD Member countries will push for accelerated implementation of the
WTO Intellectual Property Agreement (TRIPs), a strengthened GATS agreement (and in this
context, we would support the OECD being mandated to help prepare the next negotiation of
specific commitments on market access and national treatment under the GATS), the removal of
domestic regulatory obstacles to cross-border trade and foreign direct investment in professional
services, and a strengthened TRIMs agreement.

13. We would encourage Ministers to mandate the OECD to carry out a survey of the costs and
consequences of diverging intellectual property regimes in major OECD players.

14. We also urge OECD Governments to maintain their support for work on customs
modernisation in the WTO, WCO and in regional efforts such as APEC; and to instruct the OECD
to assist the WTO working group on transparency in government procurement practices.

15. We were pleased that WTO Ministers agreed to limit the scope of that body’s work on trade
and competition and to guard against premature efforts to negotiate on this linkage. In this regard,
we hope OECD Ministers will support continued OECD efforts to examine the linkage between
trade and competition policies and to make practical progress on certain aspects such as cartels,
price-fixing, market contestability and the appropriate use of competition principles in the
application of trade measures.

16. We fully support the objectives of the 1994 OECD Interim Report on Convergence of
Competition Policies, and encourage and support further work of the OECD in this area, in
particular with respect to convergence in the areas of objectives and principles of competition
policy, analytical tools, enforcement practices, and some substantive areas. We also endorse the
1995 Recommendation on international cooperation among competition authorities and encourage
future work in the area of merger review, information exchanges and cross-border computer
searches.

17. We are concerned that there has been so little progress in the WTO work on environmental
issues since there is a clear need for an understanding of how WTO rules apply to the use of trade
measures in Multilateral Environment Agreements. We are also concerned that there has been a
proliferation of multicriteria ecolabelling schemes, which can create trade barriers. We urge OECD
Ministers to support intensified work at the OECD in cooperation with other international
organisations on the issue of trade and environment, which can pave the way for meaningful work
at the WTO.

18. We were very pleased with the landmark WTO agreements on Information Technology and
basic telecommunications, and we hope they will provide strong motivation for successfully
concluding the on-going negotiations on financial services by the agreed deadline.

19. We generally welcome the progress made in raising cryptography policy as a global
commercial issue, despite the fact that some aspects of the Guidelines may not be beneficial to
international trade. We look forward to working with the OECD on implementation of the 1997
Guidelines in a way which will promote international trade.

20. We also strongly support the OECD Transfer Pricing Guidelines, which we believe embody
Governments’ commitments to the arm’s length principle and to avoiding double taxation, and we
call on Ministers to endorse BIAC’s involvement in developing and implementing an appropriate
monitoring mechanism to ensure proper application of the Guidelines. We also recommend that
further efforts be made towards eliminating international double taxation by strengthening the
mutual agreement process to the extent possible and implementing a workable arbitration
procedure.

21. We are concerned that the OECD Shipbuilding Agreement has not been fully ratified, and
urge OECD Ministers to work towards the earliest possible ratification and entry into force of the
OECD Shipbuilding Agreement.

*partie=titre Commitments by the International Business Community *partie=nil

22. The international business community recognises that it too bears certain responsibilities in
promoting a sound climate for economic growth and employment. For this reason, the international
business community commits to:

• Contribute appropriate business expertise to the development of international “best
practices” across the range of policy areas addressed by the OECD.

• Promote the conclusions and recommendations of OECD reports at the national level so that
public debates on complex policy issues will benefit from the Organisation’s analysis.

• Support the improvement of working conditions in every country, and in this context, BIAC
Member Organisations belonging to the International Organisation of Employers will
contribute constructively to the discussions on principles of labour rights at the ILO.

• Continue to support and promote the observance of the OECD Guidelines for Multinational
Enterprises as a voluntary set of “best practice” standards for management.

• Continue to contribute to the process of sustainable economic growth and development
through the promotion of environmentally sound practices, and to work with governments to
identify and implement the most appropriate policy approaches.

*{Conclusion:}

23. We appreciate the opportunity to present these views to the 1997 OECD Council Meeting
at Ministerial Level.

24. As evidenced by the issues and achievements under discussion by Ministers this year, we
firmly believe that the OECD has and will continue to be vital to the economic well-being of our
societies. We congratulate the OECD, and all who have contributed to its exceptional work over
the years, on helping to advance the vision of George Marshall, and we call on OECD Members to
build on this strong spirit of co-operation for the next half-century.

25. In this context, we look forward to continuing to assist Member governments with the
definition, analysis and implementation of policy priorities for OECD countries.