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Viewing cable 07PARIS312, OECD: MISSION VIEWS ON ENLARGEMENT
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 07PARIS312 | 2007-01-26 14:47 | 2011-08-24 00:00 | UNCLASSIFIED | Embassy Paris |
VZCZCXYZ0001
OO RUEHWEB
DE RUEHFR #0312/01 0261447
ZNR UUUUU ZZH
O 261447Z JAN 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4461
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHBK/AMEMBASSY BANGKOK 0305
RUEHEG/AMEMBASSY CAIRO 0927
RUEHBJ/AMEMBASSY BEIJING 1397
RUEHBR/AMEMBASSY BRASILIA 1750
RUEHJA/AMEMBASSY JAKARTA 0599
RUEHKL/AMEMBASSY KUALA LUMPUR 0245
RUEHMO/AMEMBASSY MOSCOW 5719
RUEHSA/AMEMBASSY PRETORIA 1243
RUEHSG/AMEMBASSY SANTIAGO 0428
RUEHTV/AMEMBASSY TEL AVIV 0602
UNCLAS PARIS 000312
SIPDIS
FROM USOECD PARIS
SENSITIVE - NOT FOR INTERNET DISTRIBUTION
SIPDIS
STATE FOR E, EB, EUR/ERA AND IO/S, NSC FOR MCCORMICK
E.O. 12958:N/A
TAGS: ECON EFIN ETRD OECD AORC
SUBJECT: OECD: MISSION VIEWS ON ENLARGEMENT
REF: (A) PARIS 160 (B) 06 PARIS 7864 (C) 06 PARIS 7734 (D) 06 PARIS
7438 (E) 06 PARIS 7053 (F) 06 PARIS 6944 (G) 06 PARIS 6848
¶1. (SBU) Summary: USOECD reiterates the importance of having the
OECD's impending enlargement include a major emerging economy to
ensure the Organization's viability and its effectiveness as a tool
to promote a U.S.-friendly global economic system. As a virtual
invitee since 1997, Russia presents a special case in this regard.
Though not supportive of the desired diversity and global reach we
should try to engineer, admission of at least one of the "EU 8" will
probably be the price of enlargement that EU members exact from
non-EU members. Mission has made progress in winning a new
assessment framework that would freeze our contribution in real
terms, even as financing requirements - linked to enlargement and
enhanced engagement - increase. This progress is, however,
contingent on a successful outcome to the enlargement exercise.
Meanwhile, members are converging on a framework for enhanced
engagement that supports partnership with major economies, maintains
our work in the MENA and African regions, and serves as a "farm
system" for prospective members among emerging economies. End
summary.
¶2. (SBU) USOECD understands that the interagency will meet January
29 to discuss OECD enlargement. Mission believes that a
well-considered enlargement and enhanced engagement process is
crucial to the continuing relevance of the OECD and to its ability
to play a significant role in shaping rules for economic cooperation
and development on a global level. This cable provides USOECD's
views on some of the key outstanding questions that the interagency
will address:
* which, if any, of the BRICS (Brazil, Russia, India, China, South
Africa) should be considered for inclusion in a first round of
enlargement?
* what conditions for membership/accession might we wish to impose
so that those tapped will not accede until they share our values and
make a significant contribution to the work of the OECD?
* how should the aspirations for membership by the eight EU members
that are not now in the OECD be addressed?
* how can we ensure the diversity of representation that
non-European members such as Australia, Canada, Japan, Korea, Mexico
and New Zealand demand reflects the dynamic character of today's
global economy?
* how can the OECD best employ its model of enhanced engagement to
expand its influence with strategically important non-member
countries and to help prepare some key countries for membership?
¶3. (SBU) While the OECD has been focused on enlargement for the
past several years, Council discussion of this critical issue only
moved into full gear in September. Over the course of a number of
sessions, the Council has made assessments of individual potential
candidates in light of the so-called "Noburu criteria" -
like-mindedness, significant player, mutual benefit, and global
considerations (i.e., geographic diversity) -- and discussed the
Secretary General (SYG)'s "Way Ahead" paper (see reftels). In
SIPDIS
addition, the Council has asked the Special Group on Financing
Enlargement and Enhanced Engagement to review and make
recommendations on the financial arrangements that enlargement will
require of OECD members (both current and potential). At the same
time, the External Relations Committee (ERC) has developed a model
for enhancing the OECD's engagement with countries of strategic
interest to the OECD that are not members of the Organization.
Taken together, how the OECD deals with enlargement, financing
arrangements and enhanced engagement will go a long way toward
determining the OECD's future relevance and usefulness to U.S.
global economic interests.
Which of the BRICS - Brazil, Russia?
------------------------------------
¶4. (SBU) USOECD has argued that the BRICS need to be part of any
enlargement and enhanced engagement scenario. If the OECD is to
serve as a "hub for globalization," to extend the reach of its
(clear pro-U.S.) policymaking model, these major emerging economies
belong in its work. An enlargement that does not include
recognition of their growing influence will be widely viewed as
inconsequential and evidence of the Organization's insularity and
decline. Of the BRICS, several members (including France, Turkey,
and the Nordics) and the SYG are pushing for Russia to join in a
first tranche; Mexico and other non-European members look favorably
at Brazil as a non-European "diversity" candidate. While Mission
appreciates that both countries raise a host of concerns, we firmly
believe that including at least one on the list of invitees offers
the only possibility of securing the Organization's role in the
emerging global economic order and gives the U.S. a well-tested tool
to help engineer it.
¶5. (SBU) Mission supports sending a strong signal to Brazil that
the OECD wants to engage and would be open to Brazil's membership.
Bringing this important regional and growing global player closer to
OECD standards is worth the investment. Brazil's role in Latin
America as well as the international trading system makes it a prime
candidate for eventual OECD membership. Both Korea and Mexico did
more than change the organizations to which they belonged when they
joined the OECD: Korea signed on to ILO rules, while Mexico gave up
its G-77 membership. As we hear from their representatives on a
regular basis, these were part of changes overall in the way that
they looked at and participated in the international economic
system. It is important to see Brazil's potential in this light:
inviting Brazil to begin accession talks is just the start of a
process that will take years to complete - and only if Brazil meets
the OECD aquis.
¶6. (SBU) Russia's status is unique, being the only country with
which the Organization has formalized a "shared objective" of
membership. Its absence from the group identified for membership
would thus send Moscow a clear and negative signal. We leave to
others to assess the effect this will have on Russia's reformers and
reform efforts. It would, however, be a clear break with the status
quo; USOECD believes it preferable to clarify it. Without conceding
anything, the eventual May Ministerial statement could reasonably
reaffirm the 1997 exchange of letters, yet make clear that
negotiations on accession will not begin until Russia has
demonstrated greater fulfillment of certain measures (e.g., Noburu
criteria -- notably that of like-mindedness - or undertakings on the
energy front, etc). Ministers might then task the Organization with
elaborating concrete measures that could pave the way toward
launching accession negotiations (these, again, could take an
extended period and follow Russia's fulfillment of these
conditions).
The other BRICS - China, India and South Africa
--------------------------------------------- --
¶7. (SBU) OECD members recognize that the other BRICS - China, India
and South Africa - have demonstrated their significance, although
they may not yet be ready to embark on the accession path. We
would recommend that these countries be considered as prime
candidates for enhanced engagement as defined by the ERC and
approved by Council and consider their accession at the earliest
opportunity.
The EU Aspirants and Diversity
------------------------------
¶8. (SBU) Mission believes that the EU will insist on some signal
that the eight EU member states not currently in the OECD will
eventually join. EU country Ambassadors appear ready to move away
from the position that all eight are ready now and should receive
invitations. The sense here is that inclusion in an enlargement
package of at least one EU member will be essential to EU member
state agreement. Non-EU members, including Canada, Japan and
Australia, are likely to object at first, but in the end would
probably agree, as long as other regions were well represented.
USOECD would recommend supporting such an outcome as long as there
was no implied automaticity for eventual membership by all of the
eight and that the Noburu criteria be fulfilled in all cases.
¶9. (SBU) While recognizing that neither of the Asian BRICS is ready
for or has shown a strong interest in beginning an accession
process, Australia, Japan, Korea and New Zealand continue to argue
that all of the BRICS should be priority countries for eventual
membership. To meet some of their diversity concerns, we should
look closely at key regional players (e.g., Thailand, Indonesia,
Malaysia and Egypt) as prime candidates for enhanced engagement,
possibly through regional programs along the lines of MENA. This
would signal to these countries as well as the non-EU OECD Members
that the Organization is serious about addressing today's global
economic challenges.
Enhanced Engagement
-------------------
¶10. (SBU) The ERC has developed a well defined model for enhanced
engagement (EE) that the OECD should be able to employ once
decisions have been taken by Members to move forward the enlargement
and engagement process. The EE model currently has two main
components - EE for individual countries, which we consider to be
the most important component - and a regional component. As now
defined, the individual country model would provide for an agreement
negotiated with each selected partner country with the following
elements: (1) a periodic peer-reviewed economic survey (every 18-24
months) like those currently done on member countries; (2) a series
of sectoral peer reviews with a focus on encouraging adherence to
OECD instruments (investment, anti-corruption, corporate governance,
competition, environment, capital movements, taxation, etc.); (3) a
series of policy dialogues to promote capacity building in areas
where the partner country is not yet ready to accept OECD
disciplines; (4) participation in OECD bodies - usually as
observers; (5) access to OECD documentation through the
Organization's online system (restricted to selected policy areas);
(6) participation in OECD global forums and regional programs; and
(7) opportunities for officials of partner countries to serve in
training or expert capacity in the OECD for limited periods.
¶11. (SBU) The agreement negotiated with partner countries and
approved by the Council would be for a 3-5 year period. It would be
renewable if there had been sufficient progress by the partner
country, but could likewise be allowed to lapse if there had not
been suitable progress toward convergence with OECD principles and
practices. Partner countries would accept responsibility for their
progress under the agreement and would shoulder a significant
portion of the costs. A number of delegations support our view that
EE for individual countries is a resource intensive effort and
should be limited to countries of "strategic interest" to the OECD.
This could include BRICS that are not yet ready for accession talks,
as well as other countries deemed to be of "strategic interest."
The goal would be primarily to enhance the OECD's policy influence
among non-member countries and to encourage adherence to OECD
principles and practices. It would, however, also be an excellent
vehicle for helping countries prepare for future membership.
¶12. (SBU) Proposals for the regional approach to EE are not yet as
well developed or as broadly accepted as those for individual
programs. Based on current thinking (still to be developed in more
detail), regional EE programs would include many of the same
elements as elaborated above, but would be geared to the needs and
circumstances of selected geographic regions, including continuation
or expansion of existing programs for the Middle East and North
Africa, Africa and Southeast Asia - with the establishment of new
programs for regions such as Latin America where no regional program
currently exists. Such regional programs would, by virtue of their
nature, be better suited to spreading OECD influence regionally, but
would be less effective in helping individual countries make rapid
progress in convergence toward OECD disciplines.
Financing Questions
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¶13. (SBU) While Council has been considering which countries to
invite to begin the accession process and while the ERC has been
developing enhanced engagement, the Special Group on Financing has
developed options for financing both. We have urged, apparently
successfully, that financing enlargement and enhanced engagement
should not be separated from the issue of long-term financial
sustainability of the OECD. For years the largest contributors have
carried the financial burden. USOECD, and a number of other "large"
countries believe that it may be time to shift some of that burden -
in particular as both enlargement and engagement will make
additional financial demands. The major contributors have argued
that contributions must reflect the reality that OECD membership
involves benefits, obligations and costs and that all Members should
strive to cover recurring costs of participation (although special
consideration would be provided to the smallest members who would
otherwise see ten-fold increases to cover their recurring costs). A
key element would include holding large countries' (including the
U.S.) contributions at their current level, resulting in a declining
share for them. This debate is tied intimately to enlargement and
would not be occurring without it.
Morella