International Trade Agreements and Trade Organizations; EU, OECD

By: Seoyeong Lee, Hyunjin Cho

European Union (EU)

After the World War II, moves towards Euro-pean integration began.

One attempt was the European Coal and Steel Community, starting with Belgium, France, Italy, Netherlands and West Germany.

In 1957, these six countries created European Economic Community (EEC), later referred as European Communities (EC) within the Euro-

pean Coal and Steel Community.

History of EU

In 1973, the Communities enlarged to include Denmark, Ireland and the United Kingdom. In 1981, Greece joined in, and Spain and Por-

tugal in 1986. In 1986, the European flag began to be used. After the fall of the Iron Curtain, in 1990, the former East Germany became part. The EU was formally established in 1993 when

the Maastricht Treaty came into force.

History of EU

In 1995, Austria, Sweden and Finland joined. In 2002, euro notes and coins replaced na-

tional currencies in 12 of the member states.

In 2004, Malta, Cyprus, Slovenia, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, and Hungary joined the Union and

Romania and Bulgaria in 2007. Iceland is now on the process of being part

of EU

History of EU

Member states

The EU created European single currency, euro to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates.

The EU has established a single economic market which involves the free circulation of goods, capital, people and services within the territory of all its members.

the EU generated an estimated nominal GDP of US$18.39 trillion in 2008, amounting to over 22% of the world's total economic output.

What the EU affects

EU GDP in 2002 was 1.8% higher (€164.5 billion) than it would have been without the Single Market. Over ten years, the Single Market has boosted the EU’s GDP by €877 billion. This represents €5,700  of extra income per house-

hold. EU Employment has grown (1992-2002) by 1.46% (an extra 2.5 million jobs) thanks to the Internal Market.  Up to 3 million British jobs are linked to exports to the EU, around ten percent of the to-

tal workforce. Intra-EU trade has increased as a percentage of GDP from less

than 25% in 1993 to 35% in 2005 Foreign direct investment in the Single Market has risen from €23 billion in 1992 to €159 billion in 2005. 60 Million customs clearance documents per year no longer need

to be completed, cutting bureaucracy and reducing costs and de-livery times.

The benefit of EU

Liberalizing trade in goods and services could bring a potential 20% boost to bilateral trade and GDP gains of up to $12 billion for Canada by 2014.

In 2008, Canadian goods and services exports to the EU totalled $52.2 billion, an increase of 3.9% from 2007, and imports from the EU amounted to $62.4 billion.

the EU is the second largest source of foreign direct investment (FDI) in Canada, with the stock of FDI amounting to $133.1 billion at the end of 2008.

Impact of EU on Canada

Spanish prime minister Jose Luis Rodriguez Zapatero says the EU’s relationship with Moscow will be his top priority during a meeting with Russian president Dmitri Medvedev.

‘‘If future security depends on one key factor, it’s the relations between Russia and the European Union,’‘ said Zapatero.

Spain is due to take over the EU’s rotating presidency from 2010 and Zapatero’s comments came at a summit for global security in the Russian city of Yaroslavl.

EU and Russian relations have suffered recently, partly because of January’s gas crisis and Moscow’s support for Georgia’s break-away republics of Abkhazia and South Ossetia.

Recent news on the EUEU Russian relations Zapatero’s top priority

Sept. 14, 2009

Immigration has raced up the European agenda. Italy, one of the easiest routes into Europe, was being left

in the lurch to deal with the problem appears to have been heard, even if the tone of the complaint has angered many.

The result is that the European Commission has presented a draft law that will increase the total number of immigrants and refugees into the EU.

All member states will be required to take some, thus spreading the burden, although this will be on a voluntary basis, and will also require approval from all 27 members.

A pilot project is currently seeking to relocate refugees in Malta around the EU.

Recent news on the EUEU moves to share out the burden of immigration

Sept. 3, 2009

The European Union must do more to boost long-term growth.

A new report on structural reform by the Organization for Economic Cooperation and Development says it should spend more on research and development where expenditure lags behind the US and Japan.

The study said efforts have to be stepped up to liberalize energy markets and areas such as port services to boost free trade.

The OECD says the EU must use the opportunity pre-sented by the global recession to continue to pursue structural reform to help support long-term growth and the sustainability of public finances.

Recent news on the EUOECD urges EU growth efforts

Sept. 21, 2009

OECD (Organization for Economic Co-operation and Development)

OECD

It originated in 1948 as the Organization for European Economic Co-operation (OEEC), led by Robert Marjolin of France, to help administer the Marshall Plan for the reconstruction of Europe after World War II.

Later, its membership was extended to non-European states. In 1961, it was re-formed into the Organization for Economic Co-operation and Development by the Convention on the OECD.

History of OECD

Founding members (1961):

Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States

Admitted later (listed chronologically with year of admission):

Japan (1964), Finland (1969), Australia (1971), New Zeal-and (1973), Mexico (1994), Czech Republic (1995), South Korea (1996), Hungary (1996), Poland (1996), Slovakia (2000)

Membership

International organization of 30 coun-tries that accept the principles of rep-resentative democracy and free-mar-ket economy. Most OECD members are high-income economies with a high HDI and are regarded as devel-oped countries.

Purpose of OECD

OECD and soft lawUnlike other inter-governmental organizations like the United Nations or the European Commission, the OECD cannot edict laws and doesn't have the power to co-erce a country, member or not, to alter its policy. How-ever, it can have an influence on national policies through soft laws, by issuing "recommendations", "guidelines" and other "manuals", that countries or companies can refer to. Some of these guidelines have become de facto standards, such as the OECD Guide-lines for the Testing of Chemicals or the OECD Model Tax Convention. Also, negotiations and agreements be-tween representatives of member countries can hap-pen at the OECD, and have direct consequences in na-tional laws. Finally, the OECD publishes reports and statistics that may present countries in a questionable position.

Controversy Surrounding OECD

1) OECD warns 25m jobs at risk from crisis By Brian Groom in London - September 16 2009

Up to 25m people in high-income countries will have lost their jobs by the end of next year as the recession pushes the unemployment rate towards a record 10 per cent, the Organisation for Economic Co-operation and Development forecast on Wednesday. The Paris-based OECD said that, while recent signs of economic recovery might mean unemployment peaked earlier and at a slightly lower level than its forecast, govern-ments must intervene “quickly and decisively” to pre-vent the sharp rise turning into long-term joblessness.

Recent news on the OECD

2) OECD Sees Faster Global Recovery BY GABRIELE PARUSSINI - THURSDAY, SEPTEMBER 3,

2009

With global trade flows set to recover, the Paris-based think-tank said it now expects the combined gross domestic product of the Group of Seven leading economies to contract by 3.7% this year, having fore-cast in June that it would shrink by 4.1%, but it warned that, with bank lending continuing to fall, the pace of recovery will continue to be modest "for some time to come.“ "The kind of recovery we foresee is a weakish one," Mr. Elmeskov said. "It's not as if as all the prob-lems are behind us.“ The OECD said it is now less likely that further fiscal stimulus will be needed to re-store growth.

Recent news on the OECD

3) OECD Agrees to Strengthen Tax Forum By BOB DAVIS - SEPTEMBER 3, 2009

WASHINGTON -- Delegates to an Organization for Economic Cooperation and Development conference agreed to turn the Global Forum on tax-information sharing, a loose group-ing of 84 nations, into a more powerful institution that could crack down on tax cheating internationally. At a Wednesday meeting in Mexico, the delegates approved a plan for the Global Forum to have its own staff and an annual budget of about $4 million. The forum would review whether members are aiding one another in cases involving tax evasion inter-nationally. In particular, the forum would examine whether members are living up to their obligations under tax-ex-change agreements. Strengthening the forum is part of the effort by the Group of 20 industrialized nations to restrict tax havens and boost tax collection.

Recent news on the OECD