OECD debate: fair trade and market regulation

2 October 2008

OECD debate: fair trade and market regulation

On the initiative of SP Senator Tuur Elzinga, parliamentarians from the Organisation for Economic Cooperation and Development (OECD) voted almost unanimously for a fairer system of world trade and more regulation of the financial markets.

This week the Parliamentary Assembly of the Council of Europe (PACE) debated the world economy together with delegations from other OECD countries and from the European Parliament. The current head of the OECD is Mexican Angel Gurría. Señor Gurria was present for the debate, accompanied by his deputy general secretary Aart Jan de Geus, former Christian Democrat Minister of Social Affairs and Employment in the Netherlands.

The annual OECD debate on economic policy advice in Strasbourg had already been planned and prepared for before the summer. Senator Tuur Elzinga, speaking on behalf of the United European Left group in PACE, said: “Before us is a proposed resolution from times which have disappeared like smoke. In broad terms, it supports primarily neoliberal OECD prescriptions. In the committee, however, we had the chance, luckily, to bring the report more up to date." The resolution which was subsequently discussed in the debate with Secretary Gurría called on OECD countries to come up with stricter regulation of financial markets. Thanks to an amendment from the SP Senator, added to this was a reference to the need for stricter capital demands for private equity and hedge funds.

As might have been expected, the debate focused primarily on the recent crisis in the financial markets. "In my contribution I emphasised that this didn't only concern the nationalisation of the debts of banks and other financial institutions," said Senator Elzinga. "We also need to reestablish adequate democratic control of the financial markets. These markets must be made to serve the real economy again. And state authorities must demand a decisive role in monetary and financial policy.”

Elzinga called on the OECD countries and Secretary General Gurria to work together to curb shareholder capitalism and to establish a sort of New Deal or a new Bretton Woods: “During the last few weeks we have seen a great deal of evidence of the perverse remuneration structures operating in the financial institutions which have led to the taking of irresponsible risks," said Elzinga. "But these remuneration structures are nothing more than an effect of the short-sighted outlook of quick profits and shareholder value which is irrevocably tied to the shareholder capitalism of Wall Street.”

In addition to this discussion, debate centred in the food crisis and its enormous consequences, primarily for the world's poorest countries. The resolution called on the OECD member states and others to fulfil their international responsibilities in relation to development aid, to organise additional support for the worst affected countries, and to get the WTO Doha Development Round moving again. “The original text of the resolution before us was, however, on the whole not critical of these WTO negotiations and took far too rosy a view of the possible outcomes," said Elzinga. "For this reason I have introduced a number of amendments to add the nuances needed.”

The almost unanimously accepted amendments from Senator Elzinga ensured, therefore, that the resolution now calls on the OECD countries to in turn ensure that developing countries are not pressured into premature opening of their markets, that these countries maintain adequate room for manoeuvre in relation to policy in order to be able to protect sensitive economic sectors and that Aid for Trade is no longer employed to enforce market liberalisation.

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