The Organization for Economic Cooperation and Development (OECD)
The OECD has its historical roots in the Organization for European Economic Cooperation (OEEC), which was formed in 1948 to assist in the administration of the Marshall Plan in post-war Europe. In 1961, the OEEC was reorganized as the OECD pursuant to the Convention on the Organisation for Economic Co-operation and Development of December 14, 1960. The OECD has thirty member states each of which, with a few exceptions, has a high gross domestic product, a well-developed market economy and a shared commitment to democratic governance. Article 5 of the OECD Convention empowers the organization to take decisions that are binding on its members, to make recommendations to its members, and to enter into agreements with its members, non-member states, and international organizations. Article 6 of the OECD Convention provides that decisions are taken and recommendations made on a consensus basis, and that decisions are not binding on a member state until it has complied with its own constitutional procedures.
||Keywords: Global financial crisis, Financial Stability Forum, Financial Stability Board, transparency
Based in Paris, the OECD gathers data and conducts policy research and analysis covering the full spectrum of economic, environmental and social issues. The primary function of the organization is to provide
a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and co-ordinate domestic and international policies. It is a forum where peer pressure can act as a powerful incentive to improve policy and which produces internationally-agreed instruments, decisions and recommendations in areas where multilateral agreement is necessary for individual countries to make progress in a globalised economy.
There are three main institutions of the OECD. The Council, as the governing body, provides "oversight and strategic direction" to the organization. It consists of representatives of the thirty member countries and the European Commission and operates by consensus. The Secretariat is directed by the Secretary-General with the assistance of four Deputy Secretaries-General. The Secretariat is organized primarily in a series of subject-matter based directorates, centers, and special bodies which function as "think-tanks": collecting data, performing analyses, monitoring and developing forecasts of economic and political trends, and generating policy recommendations for consideration by the member states. Finally there are the Committees which provide further sites for intergovernmental communication within the OECD and also facilitate interaction between member-state officials and outside experts. More than seventy non-member countries currently participate, in varying degrees, in the work of the OECD.
Recent Development: Addressing the Global Financial Crisis
Addressing financial crises is not a new role for the OECD. When the finance ministers and central bank governors of the G-7 countries formed the Financial Stability Forum in the aftermath of the East Asian financial crisis in 1997 and the Russian financial crisis in 1998, the OECD became a key member of that network, along with the World Bank, the International Monetary Fund, the Bank for International Settlements, the Basel Committee on Banking Supervision, the International Organization of Securities Commissioners, and the International Association of Insurance Supervisors. The Financial Stability Forum was reestablished in June 2009, with an expanded membership, as the Financial Stability Board (FSB). Since that time, the FSB has acted to coordinate policy recommendations designed to enhance global financial stability on behalf of the G20. The FSB has reported to the G20 finance ministers and central bank governors on such topics as: "The Financial Crisis and Information Gaps"; "Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: Initial Considerations"; "Exit from Extraordinary Financial Sector Support Measures"; and "Progress since the Pittsburgh Summit in Implementing the G20 Recommendations for Strengthening Financial Stability."The FSB has also promulgated a set of Principles for Sound Compensation Practices, and a Framework for Strengthening Adherence to International Financial Standards.
The OECD's strategic response to the crisis has been to promote the realignment of regulations and market-based incentives in the financial sector to encourage better risk management. See, e.g., "Report on the Strategic Response - Finance, Competition and Governance: Priorities for Reform and Strategies to Phase Out Emergency Measures," and "Report on the Strategic Response - Strategies for Aligning Stimulus Measures with Long-Term Growth." In addition, the OECD has promoted changes in national policies, supported by improved international coordination, that will restore and improve the conditions for economic growth, emphasizing so-called "green growth."
The OECD has emphasized the restoration of trust in the globalization process by such means as promoting transparency, fighting corruption, increasing tax compliance, and addressing climate change. The OECD has also advocated improved social justice. Many of these concerns have been bundled into a single initiative proposed under the Italian G8 presidency, which is called the "Global Standard." Efforts to manage the global financial crisis have also substantially benefitted from the OECD's capacity to collect, analyze, and report on a broad range of financial and economic indicators. A variety of statistical reports shedding light on the economic crisis have been made available through the OECD's extensive website, www.oecd.org.
Despite its publication of numerous statistical and policy reports, and its public sponsoring of various policy initiatives, the chief value of the OECD may remain its role as a private, non-transparent setting for frank policy discussions among representatives of the wealthy, industrialized countries. One of the few scholars to have studied the OECD extensively has noted:
The OECD is, primarily, an exclusive club whose members produce two-thirds of the world's goods and services. The OECD provides a private setting for wealthy industrialized governments to share experiences, identify issues of common concern, and coordinate domestic and international policies. ... The OECD occupies a unique position in the constellation of IGOs, with membership broader than the E.U., Nordic Council, or NAFTA, yet much more restrictive than the U.N. or WTO, with topic coverage as broad as any IGO. As a result, the OECD provides a restricted forum on virtually unrestricted topics.
The lack of transparency of this "talking-shop" function, and a general lack of public accountability, makes it difficult to assess the degree to which the OECD has been of substantial assistance in addressing the current economic crisis.
The OECD is a paradigmatic example of an institution engaged in global governance through networks comprised of traditional states (most often acting through senior officials or policy-setting subdivisions of governments), IGOs, NGOs, and other interested parties with particular areas of expertise. This global governance process has begun to be studied by a number of scholars as an area of increasing interest. Evan though the OECD is seldom involved in "legal" decisions as such as it is more orientated toward policy discussions, its influence on global affairs is substantial. As understudied organization, noted for its lack of transparency, further study of its involvement in global affairs is necessary.
Mark E. Herlihy
Georgetown University Law Center
888 UNTS 179, available at http://www.oecd.org/document/7/0,3343,en_2649_201185_1915847_1_1_1_1,00.html.
THE OECD (2008), at 7, available at http://www.oecd.org/dataoecd/15/33/34011915.pdf.
Further information on the Financial Stability Board is available at http://www.financialstabilityboard.org/.
All reports and documents can be found at http://www.financialstabilityboard.org/list/fsb_publications/from_01012008/index.htm.
C/MIN(2009)9/ANN1 (June 5, 2009), available at : http://www.olis.oecd.org/olis/2009doc.nsf/LinkTo/NT00003082/$FILE/JT03266178.PDF.
C/MIN(2009)9/ANN2 (June 17, 2009), available at: http://www.olis.oecd.org/olis/2009doc.nsf/LinkTo/NT00003096/$FILE/JT03266865.PDF.
See, e.g., "Report on the Strategic Response - Fostering Innovation for Sustainable Growth" C/MIN(2009)9/ANN3 (June 8, 2009), available at: http://www.olis.oecd.org/olis/2009doc.nsf/LinkTo/NT0000308E/$FILE/JT03266275.PDF.
Materials relevant to this initiative, and a link to the "Global Standard" blog can be found at: http://www.oecd.org/globalstandard.
James Salzman, Decentralized Administrative Law in the Organization for Economic Cooperation and Development 68 Law & Contemp. Probs. 189 at 191-192 (2005) (footnotes omitted).
For example see Ann-Marie Slaughter, A NEW WORLD ORDER (2004) and the Global Administrative Law Project at http://iilj.org/GAL/.
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The Reports on International Organizations (RIO) is a publication of the International Organizations Interest Group of the American Society of International Law (ASIL). The views expressed in the publication are those of the individual authors and do not necessarily reflect those of the Interest Group, the ASIL, or the international organizations profiled.