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The OECD and the examination of EC economic policies

Community economic policies are set in a global context and must, therefore, be analysed accordingly: the regular examination of the OECD * members' economy by the Economic Development Review Committee (EDRC) is the cornerstone of the OECD's system of economic surveillance. The fact that the EC Member States are examined individually by the EDRC and not as a Community unit means that Community policies are not analysed as such but in a fragmented and sometimes repetitive manner. In the communication the Commission addresses this issue and suggests setting up an examination by the EDRC of Community economic policies.

ACT

Communication from the Commission to the Council: Establishment of an OECD EDRC examination of EC economic policies alongside the Euro Area Survey [COM(2005) 150 final - Not published in the Official Journal].

SUMMARY

In the communication, the Commission replies to the request made to the OECD by Australia, Canada, Korea, the United States, Japan and Mexico to widen the economic examination carried out by the EDRC so as to include Community policies that have an impact on the EU's economic performance. For the time being, there is no overall annual review for the euro area *, and the OECD's economic reviews are restricted to individual country examinations. The Commission accepts that a Union review should be carried out, provided that a number of conditions are met.

The EC and the OECD EDRC review

The EDRC is an OECD committee. It prepares country-specific economic reviews that are published every one to two years for each of the 30 OECD members. The reviews are designed:

  • to assess how authorities can improve economic performance;
  • to encourage the participating economies to strengthen their policies with a view to enhancing productivity and to promote growth.

The review leads to formal recommendations which are not legally binding on members.

Since the reviews are country-specific, there is no genuine EDRC review of Community policies from a global viewpoint. The 19 Member States of the European Union which are also OECD members are reviewed individually, with Community-wide policies often being addressed, albeit in a fragmented and repetitive manner. This does not allow official EC representatives to comment properly on such policies in a way that reflects their Community nature. However, since 2001 the EDRC has carried out an annual self-standing review of the euro area because of the particular characteristics of its economy.

This situation is unsatisfactory, both from an internal EC perspective and from the perspective of the other OECD members. Accordingly, the Commission suggests that the EC accept the establishment of a separate and distinct review by the EDRC of Community economic policies alongside the existing euro-area survey.

Establishing an EDRC review of Community economic policies

The Commission proposes that:

  • a separate and distinct EU-25 review of Community structural and sectoral policies be established;
  • the existing euro-area review continue and be confined to macroeconomic policy issues.

The Commission stresses that the two exercises should be kept separate since the euro-area review concerns only twelve Member States (all OECD members), while the EU-25 review concerned all the Member States (which are not all OECD members). The Commission considers that the advantages of an EU-25 review would be the transparency and overall visibility of Community policies.

Community conditions

Establishing an EU-25 review would necessitate appropriate procedural devices which must take account of the uniqueness of the Community, and in particular the division of competencies between the Community and its Member States, the rules on the external representation of the Community and the status of the Community within the OECD. These arrangements will be negotiated within the OECD.

The Commission stresses that acceptance by the Community of an EDRC review is dependent on certain guarantees being given, namely:

  • the six Member States that are not currently OECD members (Cyprus, Estonia, Latvia, Lithuania, Malta and Slovenia) will be granted observer status for the EU-25 review;
  • the Community policies will be examined during the EU-25 review and no longer analysed during the separate reviews of Member States;
  • the EU-25 review could alternate with the euro-area review, given the considerable coordination that would be required at various levels of the Union;
  • the Commission will have a clear mandate to negotiate the specifications and arrangements for any EU-25 review with the OECD;
  • the Commission will represent the EC Member States for the purposes of the review;
  • the examination procedure of the review will follow the same model as the euro-area review and will be subject to consensus within the EDRC;
  • the Community be granted a status that allows for equality of treatment with regard to other examinees, which have a right of veto within the EDRC.
Key terms used in the act
  • OECD (Organisation for European Cooperation and Development): The OECD is a forum within which governments collaborate in response to the economic, social and ecological challenges posed by globalisation. In 1961 it replaced the Organisation for European Economic Cooperation (OECE), which was set up in 1947 under the Marshall Plan.
  • Euro area: At present, twelve Member States make up the euro area, i.e. they have introduced the euro as their official currency. The Member States concerned are: Germany, Austria, Belgium, Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, the Netherlands and Portugal. Three countries, viz. Denmark, Sweden and the United Kingdom, have not yet introduced the euro. The Member States that joined the Union on 1 May 2004 are to introduce the euro once they are ready to do so.
Last updated: 07.07.2005

See also

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