Latvia on the path to OECD membership
Guest lecture at Stockholm School of Economics -Riga University
Remarks by Angel Gurría,
Secretary-General, OECD Riga
12 September 2014
Ladies and Gentlemen,
I am honoured to be in Riga at the Stockholm School of Economics. Its creation twenty years ago and accomplishments since then are a testimony to Latvia’s dynamism and growing integration in the global economy. It is a great place to talk about the future and the cooperation between the OECD and Latvia.
2014 is an important year for Latvia, marking the tenth anniversary of Latvia’s accession to the EU and NATO, while you prepare to hold the EU Presidency in the first half of 2015 and to join the OECD.
The OECD’s strong relationship with the Baltic States
We are delighted that Latvia is on the path towards OECD membership, building on our collaboration stretching back over some twenty years. As early as 1996, Latvia, along with Estonia and Lithuania, set out a long-term objective of achieving full membership of the OECD. We have made important headway towards this goal. Estonia has been an OECD Member since 2010, Latvia’s accession process was launched in October last year and, in 2015, the OECD will take a decision on opening accession discussions with Lithuania.
This is a testimony of our Members’ confidence in the Baltic Region, built over many years of intensifying co-operation. Today, Latvia is actively participating in seventeen OECD committees and projects and has adhered to a number of key OECD standards. Accession to our organisation is therefore a natural next step which stands to benefit both Latvia and the OECD.
OECD: a forum to exchange best practices, and more
The OECD stands out from a number of other international organisations. We do not provide loans, grants, or funds to finance investment. What we provide instead is expertise and advice, as well as standards in a number of areas, to improve public policies and good governance, thereby promoting growth and a better quality of life.
Indeed, the OECD’s mission can be summed up by our motto: ‘Better Policies for Better Lives.’ The OECD promotes effective multilateral dialogue by bringing together countries to share their expertise and policy experiences and seek evidence-based solutions to global problems. This knowledge is ‘distilled’ by our experts in the Secretariat resulting in globally-accepted indicators, cutting-edge international standards and policy recommendations.
When Chile became an OECD Member in 2010, President Bachelet said her country was joining “the club of best practices”. The former President of Costa Rica, Laura Chinchilla, said that “the OECD will help us become a better version of ourselves”. I cannot think of more appropriate and concise descriptions of what the OECD does.
How does the OECD contribute to better policies?
Let me give you just a few examples of how the OECD is contributing to the good governance of the global economy and improving public policies worldwide and how Latvia is already contributing to some of our key initiatives.
The OECD is the leading voice in the fight against corruption and in particular transnational bribery, through the OECD Anti-Bribery Convention. Thanks to the OECD’s innovative work in this area, bribery of foreign public officials is now a criminal offence in all Parties to the Convention and companies can also be held liable. We were delighted to see Latvia take an important step on the road to OECD membership by completing the process to become a party to the Convention in May this year.
On education, the OECD’s Programme for International Student Assessment (PISA) has become the benchmark for policy making and reform in education; and has advanced the agenda for quality education by defining a set of skills that students need in a globalised context. Over 70 countries now participate in PISA. Latvia has seen improvements in performance in several areas since it first participated in PISA in 2000.
In addition, our Principles of Corporate Governance are recognised as the international benchmark, and one of the key standards of the Financial Stability Board – the international coordination body in charge of updating financial regulations in the world. The OECD also leads the way in ensuring responsible business conduct through its Guidelines for Multinational Enterprises to which Latvia adhered even before the accession process began.
And, on tax matters, the OECD is spearheading the G20’s efforts to combat tax evasion. Our ambitious BEPS project (Base Erosion and Profit Shifting) seeks to ensure that big multinationals pay their fair share of tax on their profits. As an OECD accession country, Latvia is actively participating in that work. The OECD has also developed the Convention on Mutual Administrative Assistance, which promotes tax transparency and the exchange of tax-related information between countries, with the aim of moving to automatic exchange of tax information in the near future. Latvia became a party to the Convention in July this year and also joined the early adopters group that has committed to automatic exchange.
As an OECD Member, Latvia will benefit from the vast reservoir of OECD expertise, advice and best practices to support its policymakers. Latvia will have access to the OECD’s research and analysis, it will participate in policy discussions on cutting edge issues and it will contribute to the OECD’s work in setting new global standards. It will benefit from reviews of its own and other countries’ policies in a vast number of areas, which will in turn help identify policy options and monitor progress in their implementation.
Crucially, Latvia will have a seat at the table alongside the world’s most developed economies and will have the opportunity to influence the design and implementation of key initiatives and instruments to improve global economic, social and environmental governance. This will include the update of the Principles of Corporate Governance, now underway, in which Latvia is participating, and instruments to combat Base Erosion and Profit Shifting by multinationals. Becoming an OECD Member is also a signal to investors that Latvia’s policies are in line with the latest standards in key areas such as corporate governance, investment, competition, and financial markets.
Last but not least, Latvia will be systematically included in all of the OECD’s analytical material and flagship publications such as the “Economic Outlook”, “Going for Growth” and the “Employment Outlook”. For the first time, this year’s “Education at a Glance” which was launched last Tuesday, includes a large set of data about Latvia. These new comparisons of Latvia with OECD countries will enable Latvian policymakers to compare and evaluate their policies, institutional frameworks, regulatory schemes and structural reforms against the best international practices in a wide range of sectors.
This is a process that will help Latvia advance its own policy goals and improve the lives of its people. Like any good partnership, however, the relationship must be mutually beneficial: Latvia also has much to contribute to the OECD.
The accession of Latvia will further strengthen our efforts to transform the OECD into a more diverse and inclusive Organisation. At the OECD, each country brings its own unique experiences to enrich the discussion and identify the best options for achieving common policy goals.
Latvia’s impressive recovery after the global financial crisis in 2008-2009 is a prime example of a quick rebound and of in-depth structural reforms. Following a deep recession in 2009, the country bounced back and is now the European Union’s fastest growing economy, according to the IMF and the European Commission. This is a valuable experience that can be shared within the OECD and its member countries, many of which are exiting the crisis and returning to growth very slowly and gradually.
Furthermore, Latvia is leading the way at European level in areas such as the digital economy, broadband development and opening access to data. This is an area in which the OECD is also at the forefront and we were pleased to hear that digital policy issues will be among Latvia’s priorities during its upcoming Presidency of the EU in the first half of 2015.
So what is Latvia doing to join the OECD? Accession is not merely a prize awarded for having ticked certain boxes; it is a rigorous process which will act as a catalyst for domestic reform.
The accession process assists countries in identifying how they can deliver better results for their people by moving closer to OECD standards and best practices. It entails a 360° in-depth analysis of a candidate country’s legislation, policies and practices in a broad range of policy areas. The expertise and experience of 21 OECD technical committees is being mobilised to evaluate Latvia’s policies and to recommend changes to move closer to OECD standards and best practices.
Thus, the accession process is meant to support Latvia’s domestic agenda for reform and can help it move faster towards its own policy priorities: maximising trade and investment; fostering innovation; reducing unemployment and inequalities; fighting corruption; improving the tax system; and enhancing the effectiveness of education, health and labour markets.
Ladies and Gentlemen:
The decision of the OECD Council in 2013 to invite Latvia to begin the process of joining the Organisation is a strong statement by OECD countries. It shows their confidence in the strategic directions, achievements and capabilities of the Latvian government. It is a message which will be translated into more and better investments in Latvia; more and better jobs for Latvians; and more and better opportunities for the youth of this country.
Naturally, there is still a lot of hard work ahead of us. Accession does not come with a set timetable or a deadline – the speed of the process depends on the responsiveness of Latvia and the pace of reform. We urge all of you to put your energy and enthusiasm behind this process. Rest assured that we will assist you in moving towards our mutual goal of making Latvia a full member of the OECD.
Thank you very much