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Organisation for Economic Co-operationand Development*

History) Aims) Structure

Qrganisation for Economic Co-operationand Development j

CONTENTS

Chapter I

HISTORY

The Origins of OECD. . . . . . . . . . . . . 5A Western Summit Meeting . . . . . . . . . . 6The Special Economic Committee . . . . . . . . 7The Group of Four on Economic Organisation . . . 8Conference on the Reconstitution of the Organi-

sation . . . . . . . . . . . . . . . . . 10Work of the Preparatory Committee . . . . . . . 11Signature of the OECD Convention . . . . . . . 11OECD Ministerial Meetings .. . . . . .. . . 12Later Accessions to OECD Membership . . . . . . 12

Chapter 11

AIMS AND TASKS

The Convention . . . . . . . . . . . . . . . 13Co-ordination of Economic Policy . . . . . . . . 14Environment . . . . . . . . . . . . . . . . 15Aid to Developing Countries . . . . . . . . . . 1 6Trade . . . . . . . . . . . . . . . . . . . 17Financial Affairs . . . . . . . . . . . . . . . 17Science and Education . . . . . . . . . . . . 1 8Manpower and Social Affairs. . . . . . . . . . 18Industry aind Energy . . . . . . . . . . . . . 1 9Agriculture and Fisheries . . . . . . . . . . . 1 9Nuclear Energy . . . . . . . . . . . . . . . 20

Chapter III

;STRUCTURE AND FUNCTIONS

Council ........... . 21Executive Committee . . . . . . . . . . . . . 22Economic Policy Committee . . . . . . . . . . 23Economic and Development Review Committee 23Environment Committee . . . . . . . . . . . . 24Development Assistance Committee . . . . . . . 24Technical Co-operation Committee . . . . . . . 25Development Centre . . . . . . . . . . . . . 25Trade Committee . . . . . . . . . . . . . . 26The Board of Management of the European Mone-

tary Agreement . . . . .26Committee for Invisible Transactions . . . . . . . 27Payments Committee . . . . . . . . . . . . . 27Committee on Financial Markets....... . 27Group of Financial Statisticians... . . . . . . 28Committee on Fiscal Affairs... . . . . . . . 28Insurance Committee . .. . . . . . . . . . . 28Tourism Committee . . . .... . . . . . . . . 28Committee of Experts on Restrictive Business

Practices ............... . 28

Maritime Transport Committee ..... . . . . 29Consumer Policies Committee... . . . . . . 29The Greek and Turkish Consortia... . . . . . 29Committee for Scientific and Technological Policy 30Committee for Education.......... . 30Centre for Educational Research and Innovation. . 31Steering Committee on Road Research .... . 31Manpower and Social Affairs Committee... . . 32Industry Committee . .. . . . . . . . . . . 32Energy Committee . .. . . . . . . . . . . . 32Oil Committee . .. . . . . . . . . . . . . 33

Committee for Agriculture . .. . . . . . . . . 33Fisheries Committee . .. . . . . . . . . . . 33European Nuclear Energy Agency... . . . . . 33Budget Committee . .. . . . . . . . . . . . 35The Secretariat . .. . . . . . . . . . . . . 35Countries with Special Status... . . . . . . . 36National Delegations to OECD... . . . . . . 36Relations with other Organisations... . . . . . 36

Appendix

The OECD Convention . . . . . . . . . . . . 39

Illustrations

Mr. Emile van Lennep, Secretary-GeneralThe Signature of the OECD ConventionStructural Diagram

Chapter I

HISTORY

The Origins of OECD

HE Organisation for Economic Co-operation andDevelopment began its official existence on30th September, 1961.

At that date it succeeded its predecessor, the Orga-nisation for European Economic Co-operation (OEEC),whose original tasks-the administration of MarshallPlan Aid and the co-operative effort for European recoveryfrom the economic disaster of the Second World War-hadlong been completed, though many of its activities hadcontinued or had been adjusted to meet the needs ofEuropean economic expansion. During the closing yearsof OEEC's existence changing general economic conditionsthroughout the world, and in particular the increasingdrawing together of the industrialised countries, calledfor new arrangements for international economic co-operation. The once seemingly ineluctable dollar gaphad disappeared, quantitative restrictions on trade withinEurope had virtually been eliminated, and the return hadbeen successfully made to an advanced degree of currencyconvertibility. As the result, it was becoming increasinglythe case that the policies of any individual country had adirect and unavoidable influence for good or bad oneconomic conditions in every other country.

This increased interdependence of the industrialisedcountries made it logical to plan for an Organisation in whichthe North American countries would participate on anequal footing. Such a grouping would be enabled,moreover, by acting together to give a higher prioritythan in the past to the problems of helping the less-developed countries of the world. Finally, many trade

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problems remained unsolved, among them those arisingfrom the creation of smaller European groupings whosemembers belonged at the same time to the wider circle ofOEEC.

It was therefore felt on both sides of the Atlantic thatthe time was opportune for an extension of the successfuleconomic co-operation which had grown up among theEuropean countries of OEEC to include Canada and theUnited States.

A Western Summit MeetingThe Presidents of France and the United States of

America, the Chancellor of the Federal Republic of Germanyand the Prime Minister of the United Kingdom met inParis in December 1959 to take the first practical steps inthis direction. A communique issued at the close of thismeeting on 21 st December reads as follows:

"The Heads of State and Government have discussedthe important changes that have taken place in the inter-national economic situation. Recognising the great econo-mic progress of Western Europe, they have agreed thatvirtually all of the industrialised part of the free world isnow in a position to devote its energies in increased mea-sure to new and important tasks of co-operative endeavourwith the object of:

"(a) furthering the development of the less-deve-loped countries, and

"(b) pursuing trade policies directed to the sounduse of economic resources and the mainte-nance of harmonious international relations,thus contributing to growth and stability inthe world economy and to a general improve-ment in the standard of living.

"in their view these co-operative principles shouldalso govern the discussions on commercial problems aris-ing from the existence of European economic regionalorganisations, which are or will be constituted within theframework of the GATT, such as the European EconomicCommunity and the European Free Trade Association.Their relations both with other countries and with eachother should be discussed in this spirit.

"The Heads of State and Government, recognisingthat the method of furthering these principles requires

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intensive study, have agreed to call an informal meetingto be held in Paris in the near future. They suggest thatthe members and participants of the Executive Committeeof OEEC and the Governments whose nationals are mem-bers of the Steering Board for Trade of OEEC should berepresented at this meeting.

"It is proposed that an objective of such a groupshould be to consider the need for and methods of continuingconsultations dealing with the above-mentioned problems."

The Special Economic Committee

Representatives of thirteen countries' and the Euro-pean Economic Commission (the "Six") met on 12th-13th January, 1960, as the Special Economic Committee,and adopted a Resolution expressing the desire to proceedwith an examination of improved organisational arrange-ments which could best accomplish the objectives ofcontinued economic co-operation, the pursuit of economicpolicies which would contribute to stability and growthin the world economy, sound trade policies and the increaseof efforts to further the development of less-developedcountries. The Committee proposed:

"1. That a meeting of senior officials of the twentyGovernments, Members or Associate Members of OEEC,and to which the European Communities should also beinvited, be convened in Paris on April 19, 1960 to considerthe question of appropriate arrangements to achieve theobjectives stated above;

"2. That, in order to facilitate the work of such ameeting, a group of four persons should be appointed toprepare a report which would:

"(a) examine the most effective methods for achiev-ing the objectives referred to above and makeappropriate recommendations with respectthereto;

(b) submit a draft of articles of agreement, shouldtheir examination of this question indicate thedesirability of bringing about an appropriatelyimproved organisation for economic co-opera-tion;

1. Belgium, Canada, France, Denmark, the Federal Republicof Germany, Greece, Italy, the Netherlands, Portugal, Sweden,Switzerland, the United Kingdom, the United States.

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"(c) identify those functions at present performedby OEEC which should continue to be thesubject of international economic co-operationunder the aegis of the proposed improvedorganisation, including appropriate organisa-tional arrangements with respect thereto;

"3. That the group named above should consultwith all twenty Governments and the European Communi-ties and appropriate international organisations duringthe preparation of their report without, however, commit-ting any Government as to the content of the report,which would be submitted by them in their personal capa-cities and which would be open for discussion and nego-tiation at the meeting envisaged in paragraph 1 above."

A second Resolution of the Special Economic Com-mittee noted that eight governments1 intended to meetto discuss aspects of development assistance, and invitedother capital exporting countries to participate in thiswork. The Committee also decided to propose to thetwenty governments that they should constitute them-selves, together with EEC, a committee with power toestablish one or more informal working groups for theconsideration of trade problems arising from the existenceof EEC and of the convention for a European Free TradeAssociation (the "Seven").

The following day these Resolutions were unani-mously approved by the Ministers of the twenty OEECMember and Associate Countries2, together with arepresentative, as before, of EEC.

The Group of Four on Economic OrganisationThe group of four mentioned in the Special Economic

Committee's Resolution was shortly afterwards selectedand began its meetings in Paris under the chairmanshipof Ambassador W. Randolph Burgess; they agreed tocall themselves the Group of Four on Economic Organisa-tion3.

1. Belgium, Canada, France, the Federal Republic of Germany,Italy, Portugal, the United Kingdom and the United States.

2. The present OECD Members (less Australia, Finland andJapan).

3. The other three were M. Bernard Clappier (France),Sir Paul Gore-Booth (United Kingdom), and Mr. Xenophon Zolotas(Greece).

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The group invited the twenty governments, EEC,and a number of international organisations to put for-ward their views on the most appropriate means of attain-ing the objectives set forth in the resolution. Frequentmeetings were also held with the senior officials of OEEC.

The Report of the "Four Wise Men", as they weregenerally called, was published on 7th April, 1960, itsauthors drawing special attention in their preamble to thefollowing points:

1. There had been extraordinary progress by theWestern European countries and the two asso-ciates from North America since the end ofWorld War 11 in working together. This success-ful venture in co-operation had taken manyforms, but everybody agreed that one of themost effective had been OEEC, and everybodyalso believed that this co-operation should becontinued and strengthened.

2. A turning point had now been reached. Europehad largely recovered from war-time destructionand disorganisation and enjoyed a new prosperity.New types of problems had arisen not lessdemanding in terms of the effort required to dealwith them.

3. Countries with great economic power recognisedtheir responsibilities towards their neighbours,the less-developed countries.

The group's report "A Remodelled Economic Orga-nisation", after sketching the historical background ofOEEC, and defining aims and tasks for the new Organisa-tion, made proposals for its Membership and name. Onthe first point, the authors suggested that the foundingMembership of the new Organisation should be openinitially to the twenty governments which were Membersor Associates of OEEC, that is, with the inclusion ofCanadian and United States membership. Provisionwas also made for the accession of other countries, byunanimous invitation, which were prepared to assume theobligations of the Organisation and to sign its Convention,a draft for which was included in the report. It was alsoproposed that the Convention should provide for thepossibility of establishing special relations with non-member countries, short of full membership, or of invitingtheir participation in one or more of the Organisation's

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activities. Finally, a draft Protocol was annexed to the draftConvention contained in the last part of the Report, fixingthe terms for the participation of the European Communities.

With regard to the name of the remodelled Organisa-tion, the Report suggested "Organisation for EconomicCo-operation and Development", which would not onlyemphasise its concern for the economic growth of allMember countries, but would also affirm the active interestof the Organisation in the well-being of less-developedcountries, both Member and non-member.

The report went on to define obligations of member-ship, structure, relations with other international organisa-tions, and legal considerations, and devoted a chapter tothe solution of transitional problems. In the last-named,it was proposed that a Preparatory Committee for the newOrganisation, consisting of representatives of the twentygovernments and of EEC, should be set up under thechairmanship of the Secretary-General Designate. ThisCommittee would not only study the structure and tasksof the future Organisation, but would also review:

which acts of OEEC should be allowed to lapse;which should be adopted by the Council withoutchange; andwhich should be adopted with modifications.

Conference on the Reconstitution of the Organisation

The next step was the calling of a Conference todiscuss the reconstitution of OEEC. This took place on24th-25th May, 1960, when it was decided to set up aWorking Party of Representatives of the Twenty Govern-ments and the European Communities to draw up a DraftConvention remodelling the Organisation, basing its work onthat of the Group of Four; and to survey the Acts of OEEC.

A full Ministerial meeting took place on 22nd-23rd July, when the work of the Working Party wasreviewed and a number of resolutions adopted.

The first of these formally established the proposedPreparatory Committee under the chairmanship of theSecretary-General Designate (Mr. Thorkil Kristensen),instructed to complete the draft Convention and to carryout further work on the detailed reconstitution of theOrganisation into OECD. It was also resolved that thenew Organisation should include a Trade Committee,

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and that the Development Assistance Group which hadbeen set up on the proposal of the Special EconomicCommittee in January (see above) should be constitutedas the Development Assistance Committee of OECD.

Work of the Preparatory Committee

The Preparatory Committee began its work on14th September and was in virtually continuous sessionuntil 23rd November. By this date the Committee hadaccomplished its tasks: the Draft Convention was com-plete, the structure of the reconstituted Organisation hadbeen defined, and a list had been drawn up of those Actsof OEEC to be recommended to the Council of OECD fortheir approval.

The final stage in the negotiations was reached at aMinisterial meeting held in Paris on 13th December, 1960,when the Ministers decided to "approve the Report of thePreparatory Committee and accept the recommendationscontained therein."

Signature of the OECD Convention'

On 14th December the Convention setting up theOrganisation for Economic Co-operation and Developmentwas signed by Ministers of the twenty Member countriesin the Salon de l'Horloge at the Quai d'Orsay, where theConvention establishing OEEC had been signed more thantwelve years before.

During the first nine months of 1961, work continuedon the remodelling of the Organisation, still under its oldname of OEEC. By 30th September, however, sufficientratifications of the signature of the Convention (seventeenof the possible twenty) had been received by the DepositoryGovernment (France) to enable the reconstituted Organi-sation to come into being officially. The remaining threeratifications were added at a later date.

Thanks to the detailed preparatory work that hadalready been carried out, the transition from OEEC toOECD went with exemplary smoothness, though a num-ber of problems affecting the new structure remained forfurther study before settlement.

1. See Appendix.

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OECD Ministerial MeetingsIn December 1961, Ministers of the twenty countries

met for the first time as the Ministerial Council of OECD.At this meeting, during which economic prospects andthe aims of the reconstituted Organisation were discussed,a growth target was set for attainment during the decade1960-1970 of 50 per cent in real gross national product forthe Member countries taken together.

Meetings at Ministerial level have since taken placeonce a year. At the 1970 meeting a new growth targetwas set for the OECD area as a whole of the order of65 per cent for the decade 1970-1980; at the same timeMinisters stressed that increased attention must be givento the qualitative aspects of growth. At the 1971 meet-ing the main emphasis was placed on greater liberalisationof international trade (for which a high level group toanalyse trade and related problems in a longer-termperspective was decided upon); and economic policyco-operation to ensure that Member countries wouldconcert their short- and medium-term policies in theinterests of them all and taking into account their respon-sibilities towards the developing countries as set forthin the OECD Convention.

Later Accessions to OECD MembershipIn accordance with the provisions of Article 16 of

the OECD Convention, the Council invited the Govern-ments of Japan (1963), Finland (1968) and Australia(1971) to accede to the Convention and to becomeMembers of the Organisation.

Japan thus became a full Member in 1964, andFinland in 1969. Australia, which had previously heldfull membership only in the Development AssistanceCommittee (see page 16) officially acceded to theConvention, and thus to full membership in June 1971.

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Chapter /1

AIMS AND TASKS

The Convention

HE final form of the statement of aims of the Organi-sation contained in the Convention signed by theMinisterial Council in December 1960 reads as

follows:Article 1

"The aims of the Organisation for Economic Co-operation and Development (hereinafter called the 'Orga-nisation') shall be to promote policies designed:

"(a) to achieve the highest sustainable economicgrowth and employment and a rising standardof living in Member countries, while maintain-ing financial stability, and thus to contributeto the development of the world economy;

"(b) to contribute to sound economic expansion inMember as well as non-member countries inthe process of economic development; and

"(c) to contribute to the expansion of world tradeon a multilateral, non-discriminatory basis inaccordance with international obligations."

The Convention goes on to state that Member coun-tries, both individually and jointly, agree to:

(a) promote the efficient use of their economicresources;

"(b) in the scientific and technological field, pro-mote the development of their resources,encourage research and promote vocationaltraining;

"(c) pursue policies designed to achieve economicgrowth and internal and external financial

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stability and to avoid developments whichmight endanger their economies or those ofother countries;

" (d) pursue their efforts to reduce or abolishobstacles to the exchange of goods and ser-vices and current payments and maintain andextend the liberalisation of capital movements;and

" (e) contribute to the economic development ofboth Member and non-member countries inthe process of economic development byappropriate means and, in particular, by theflow of capital to these countries, havingregard to the importance to their economiesof receiving technical assistance and of secur-ing export markets:"

Co-ordination of Economic Policy

A major objective of economic policy is to combinesustained economic growth and full employment withmonetary stability. Achievement of this objective by theindustrialised countries is an essential condition for conti-nuous growth in the world economy as a whole; assistanceto the less-developed countries can only be effective ifbased on sustained growth in the highly-developedlands.

The OEEC had already instituted annual reviews ofeach Member country's economic situation and prospects;and had also carried out more general analyses of overalleconomic developments and trends.

The annual review procedure has been continued.Under this procedure each country submits its economicsituation and policies to the examination of its partners,thus providing for discussion of major problems andreceiving an informed view on the impact of its policieson its neighbours. One of the results of this procedureis the publication of an annual Survey for each country,the text of which is approved by all Members, includingthe country under consideration.

Inspection of more general economic trends inMember countries as a whole has also become morerigorous. One field in which OECD has become parti-cularly active is the forecasting of short-term trends and

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assessment of their implications for policy. Nationaleconomic policies are necessarily far more sensitive tochanges in world trends and to measures taken by othercountries than in former days; independent pursuit byeach country of its own objectives risks provoking seriousdisequilibria in the world economy, and may also preventthose objectives being attained. It is therefore of thefirst importance to maintain and improve the co-ordina-tion of Member countries' economic policies. This isachieved through the meetings of the Economic PolicyCommittee, composed of the high officials responsiblefor general economic policy in their respective countries,and of central bankers. This committee is assisted bycertain important subsidiary bodies (see Chapter 111).A major preoccupation of the Organisation has alwaysbeen the preservation and strengthening of monetarystability, without which adequate growth rates are unlike-ly to be achieved on a continuing basis; thus particu-larly close and continuous watch is devoted to balanceof payments developments and the trend of prices. TheOrganisation has also become increasingly involved inidentification of the major problems that accompanygrowth in industrialised countries-the inconvenienceswhich accompany the advantages of material progress-and in the policy implications to be drawn therefrom.

The Environment

While not specifically included in the Convention asan objective of the Organisation's work, studies on technicalaspects of environment problems-pollution, aircraft noise,traffic congestion and so on-have been carried out for anumber of years under the general scientific researchprogramme of OECD. At a later stage, it was recognisedthat governmental interest in maintaining or promotingan acceptable human environment must now be developedin the framework of policies for economic growth.

In pursuing its work in this field OECD puts emphasison the economic and trade implications of environmentalpolicies, relating such policies to qualitative objectives ofgrowth policies and formulating concerted solutions toproblems having substantial international implications.Work on the technical aspects of these problems has beencontinued and expanded.

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Aid to Developing Countries

Parallel with the efforts of the OECD countries tosolve, through co-operation, the economic problems facingthem at national and international levels, are their endea-vours to discharge, in the most effective way possible,their responsibilities towards the developing countries ofthe rest of the world. These responsibilities derive fromthe fact that OECD countries form by far the largest sup-pliers of aid both financial and technical-some 95 per centof the global total of such aid from official and privatesources together.

As regards total financial flows (including official aid,private investment and export credits) the donor countriesare committed to the attainment of the target of 1 per centof gross national product. At the same time they endea-vour to transfer a major portion of such resources to thedeveloping countries in the form of official developmentassistance. They are also committed to increased contri-butions to multilateral agencies.

But efforts must also be made to improve the qualityof aid. Improved geographical distribution of aid; afairer adjustment of the financial terms of assistance to theeconomic and financial situation of the recipient countries;the "untying" of aid from conditions which tend to reduceits effectiveness; the study of ways to encourage privateflows; and the consideration of the obstacles in the way ofmore effective implementation of aid. These are some ofthe problems which concern OECD Members and ensurethat they and developing countries alike are partners indevelopment.

This work is carried out in the Development AssistanceCommittee (see page 24) which comprises all the majordeveloped countries of OECD: Australia, Austria, Belgium,Canada, Denmark, France, Germany, Italy, Japan, theNetherlands, Norway, Portugal, Sweden, Switzerland, theUnited Kingdom, the United States-together with theCommission of the European Communities. The DAC wasset up to augment the flow of financial resources to theless-developed countries and to increase its effective-ness. To this end, among other means, it carries out anAnnual Aid Review of each of its members' performanceand policies.

Some of the OECD Member countries are themselves

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at a stage of economic development (Greece, Portugal,Spain and Turkey) and an operational programme for theirbenefit is carried out by the OECD Technical Co-operationCommittee. Yugoslavia, a non-member of OECD, alsobenefits from this programme.

TradeThere is still much scope for reduction of obstacles

to trade as regards the classical instruments of protection,i.e. quantitative restrictions and tariffs. But trade expan-sion is also hampered by various other kinds of obstacle:import procedures, discriminatory taxes, technical regula-tions, restrictive rules and practices in government procure-ments, and the like. In addition, all state interventionwhich distorts trade competition and the allocation ofresources is increasingly taken into account-e.g. offi-cially supported export credits and sectoral aids-withthe result that trade policy embraces an ever-wideningrange of issues.

Trade policies designed to help increase the exportearnings of developing countries have been recognised asa necessary complement to financial and technical assi-stance extended to these countries. The Organisationtherefore examines the measures applied and the policiesenvisaged by Member countries to facilitate imports fromdeveloping countries; for example, OECD plays a centralrole as regards the introduction of a system of generalised,non-reciprocal and non-discriminatory tariff preferencesfor the benefit of developing countries.

Financial AffairsBroadly speaking, the task is to foster free international

flows of payments, services and capital, globally and withparticular attention to some service industries, and tomaintenance of a competitive climate.

In the international payments field, OECD has anestablished mechanism-the European Monetary Agree-ment-from whose European Fund credit facilities can begranted on a short-term basis to Member countries intemporary balance-of-payments difficulties; and whichprovides the possibility of settling inter-country paymentbalances at guaranteed exchange rates through a systemof multilateral settlements.

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Furthermore the Organisation has taken over fromthe OEEC the two Codes for the Liberalisation of CapitalMovements, and of Current Invisible Operations, the aimof which is to ensure the highest attainable degree offreedom for transactions and transfers between Membercountries in the fields of capital movements and currentoperations. The Organisation is engaged also in co-operative activities designed to improve the capital marketsof Mertiber countries, with a view to increasing the availa-bility of savings for investment and promoting balance ofpayments equilibrium.

There are other related activities which are essentialto the main objectives of OECD: fiscal matters, restric-tive business practices, insurance, maritime transport,tourism and consumer policy are among them.

Science and EducationBoth economic growth and development depend

greatly on human skills and on the application of newknowledge. OECD is therefore concerned with the qualityand utilisation of human resources and the various aspectsof science policy at national and international levels. Theseaspects include links between science and economicgrowth, the expansion of research, development and inno-vation to meet social needs and the more effective manage-ment and control of technology in the public interest.

Educational planning needs to be related more closelyto educational policy. As such, it must develop the toolsnecessary to serve the practical needs of policy analysisand provide guidance in decision-making and the allo-cation of resources in education. Subjects studied in thiscontext relate to the growth in educational demand andequality of educational opportunity, together with theneeds for structural changes and for innovation throughoutthe educational system, through which education can beenabled to respond to modern needs.

Manpower and Social AffairsFor a number of years OECD has urged Member

governments to adopt "an active manpower policy" as anintegral part of their economic policy under due consider-ation for social equity and welfare aspects. The generaltask is to improve the matching of supply and demand

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in the labour market. The use of overall economic policyinstruments for promoting full and stable employment mustbe supplemented by selective activities, such as job creationin labour surplus areas and measures to facilitate andstimulate the adaptation of the labour force to the rapidlychanging needs of the economy. Success with suchadoptive measures should contribute to the economicproblem of harmonising full employment with reasonableprice stability.

Industry and Energy

Major developments in the field of industry whichrequire co-operation among Member governments, theirindustrial policies, and problems of industrial adaptationare kept under constant review in OECD. Special workis undertaken on such matters as regional development,multinational companies, small and medium-sized busi-nesses, and management education.

The energy policies of Member countries are system-atically examined and the estimated trend of supplyand demand of the various types of energy are reviewedin order to keep these factors in balance. The specialposition of oil as a source of energy has resulted in thesetting up of a separate Oil Committee.

Agriculture and Fisheries

Agriculture presents Member governments with someof their most complex and intractable problems. Theexpansion of trade in agricultural products on a multilateralbasis is difficult to achieve unless there is some interna-tional co-ordination of policies. To ensure this, the proce-dure of confrontation and consultation between Membercountries has been introduced into this sector of activitiessince 1955. Particular attention has to be paid to theproblems of those Member countries whose economiesdepend mainly on agriculture, and whose exports consistalmost exclusively of agricultural products. Work onagricultural problems is integrated with the more generalproblems of stability and growth. The Organisation alsoconcerns itself with fisheries problems affecting itsMember countries.

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Nuclear Energy

OECD activities in the field of nuclear energy arecarried out through the European Nuclear Energy Agency(ENEA) which was set up in December 1957 and whichcomprises eighteen European Member countries of OECD,Canada, Japan and the United States as Associate Mem-bers, and the Commission of the European Communities.The aim of ENEA is to foster the use of nuclear energy forpeaceful purposes, in particular:

* by setting up joint undertakings in which researchinstallations are jointly built and operated;

* by the promotion of closer scientific and technicalco-operation between the OECD countries, parti-cularly through jointly sponsored research pro-grammes and the provision of common services;

* by the solution of administrative and regulatoryproblems affecting the development of nuclearindustry in Europe, so helping to evolve uniformatomic regulations especially in the fields ofhealth and safety, liability and insurance for nuclearrisks, transport of radioactive materials, wastemanagement and disposal;

* by study of the economic aspects of nuclearenergy with a view to optimising its contributionto meeting Europe's future energy demands.

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Chapter 111

STRUCTURE AND FUNCTIONS

HE component bodies of the governmental and Secre-T tariat structure of the Organisation are shown in

the structural diagram. The following paragraphsprovide more detailed information on the compositionand functions of these bodies.

COUNCIL

The Council is the supreme body of the Organisation;it is composed of representatives of all Members, and meetsfrom time to time at Ministerial level and regularly atPermanent Representative level; in either case, it exercisessimilar powers. The Council designates annually a Chair-man and two Vice-Chairmen at Ministerial level; atPermanent Representative level the Secretary-General isChairman.

The Council is the body from which all general oradministrative decisions taken by the Organisation derive:

(a) all questions of general policy which arise in theOrganisation fall within its competence and itis the Council which considers the preparatorystudies submitted by the different bodies of theOrganisation or the Secretariat. Finally, it cantake decisions which are binding on Members;

(b) the Council decides on the measures to be takento ensure the proper working of the Organisation.To this end, it may at any time set up commit-tees or any other bodies which appear necessaryfor the performance of the tasks of the Organisa-tion. In addition, the Council is the final autho-rity in administrative matters; it approves the

21

budget of the Organisation, and the Staff Rulesand Regulations laid down by the Secretary-General.

The Rules of Procedure of the Organisation indicatethe different categories of acts which the Council mayadopt. These are:

(a) "Decisions" which, within their strict meaning,are Acts binding on Members and which must beimplemented by them in accordance with theConvention of 14th December, 1960, after theappropriate constitutional procedure has beenfollowed by each of them;

(b) "Agreements" with Members, non-memberstates or international organisations;

(c) "Recommendations" for consideration by Mem-ber or other governments or international organi-sations in order that these may, if they considerit opportune, provide for their implementation;

(d) "Resolutions" concerning the work of the Orga-nisation, and in particular requests for informa-tion from Members.

All Acts of the Council must be agreed by all theMembers, that is to say that the powers of the Council areexercised in accordance with the rule of unanimity. Never-theless, in order to allow for the special situation of certainMembers, two exceptions have been made to this rule:

(a) the first provides that the Council may unani-mously decide to adopt a different voting rule incertain special cases;

(b) the second provides for the abstention of aMember country which, for reasons of its own,does not wish to take part in a given decision,or declares itself not to be interested in itsadoption. This does not invalidate the decision,which may be implemented by the other Mem-bers between themselves.

THE EXECUTIVE COMMITTEE

The Executive Committee consists of representativesof twelve Members designated annually by the Council;from this number the Council designates annually a Chair-man and one or two Vice-Chairmen.

22

Questions to be submitted to the Council, whetherrelating to the general policy of the Organisation or to theprogress of its work, are first examined by the ExecutiveCommittee. The Executive Committee is not, however,competent to take decisions except on the authority ofthe Council, and can act only in accordance with theinstructions and directions of the Council, to which it mustreport. It may be called upon by the Council to carryout specific tasks as, for example, when there is a needto co-ordinate certain particularly extensive and protractedstudies.

ECONOMIC AFFAIRS

Economic Policy Committee

This Committee, composed of senior officials respon-sible for the formulation of general economic policies, keepsthe economic developments in all Member countries underreview, together with the policies they are following tohelp attain the objectives of the Convention.

The Committee pays special attention to the inter-national repercussions of national policy measures. Theseare particularly important now that many of the obstaclesto the free movement of goods and capital have beenremoved.

The Committee has Working Parties on longer-termproblems of economic growth, on the promotion of betterinternational payments equilibrium and on the policiesthrough which governments seek to solve the problemof rising costs and prices.

Economic and Development Review Committee

The Economic and Development Review Committeeis responsible for the annual economic survey of individualMember countries and of Yugoslavia. Every country'seconomic situation and policies are examined by a panelof representatives of other Member governments and theresults of each examination are published in a regular series.

The Committee is also responsible for advising theCouncil on the special growth problems of Membercountries in the course of development, i.e. less-industrial-ised OECD countries.

23

ENVIRONMENT

Environment Committee

The study of environmental problems, notably thoseassociated with water, air, pesticides, noise and urbandevelopment, has been a feature of the OECD programmeof work for many years. More recently, an EnvironmentCommittee has been set up responsible for the overalldirection of the work of OECD Sector Groups dealingwith water, air, transportation and urban policies; otherSector Groups are to be set up as appropriate.

Certain urgent issues of a multi-disciplinary natureare to be studied by ad hoc Groups designed to carry out arapid analysis of the existing situation in the sector con-cerned, and to indicate what practical measures may betaken for its betterment, the costs involved, and the pos-sible repercussions of these-measures on policies in othersectors. Such issues include detergents and water pol-lution, pollution from the pulp and paper industry, fuelcombustion and air pollution, air pollution from motorvehicles, urban traffic congestion, the economics ofvehicle noise abatement, urban waste collection anddisposal, and so on.

The 1971 programme includes studies on the impactsof the motor vehicle, pollution from stationary powersources and pollution from the pulp and paper industry.

DEVELOPMENT ASSISTANCE

Development Assistance Committee

The Development Assistance Committee (DAC) hasas its fundamental objective the expansion of the aggregatevolume of resources made available to the less-developedcountries and the improvement of their effectiveness(see page 16). DAC Members have acted together ina number of ways to improve their aid policies, for example:

- to accept a minimum target for the level of their aid;- to relate the terms of aid to the debt-servicing

capacity of recipient nations;- to improve the flow and increase the effective-

ness of private investment in the developingcountries;

24

- to broaden the geographic distribution of aid;and

- to increase understanding of the performance andother factors affecting effectiveness of the deve-lopment process at the country level.

Members' technical aid programmes are reviewed atthe same time as their financial aid programmes. Thediscussion extends therefore to such questions as therecruitment of experts to implement technical co-operationprogrammes, facilities for students and trainees fromdeveloping countries and the contributions which privateorganisations make to technical assistance efforts.

Technical Co-operation Committee

This Committee is responsible for drawing up andsupervising the programmes of technical assistance arrang-ed for the benefit of certain Member countries, or areasof such countries in the process of development. Theseprogrammes involve national and regional economic plan-ning, agricultural development, vocational training, plan-ning for manpower and scientific needs and industrialdevelopment.

The OECD Development Centre

The Centre, directed by an international staff, is in aposition to draw upon the experience, knowledge andstatistical data available in other branches of OECD.It carries out a programme of:

- research into the basic economic problems ofdeveloping countries, including seminars withrepresentatives of the developing countries them-selves, to examine more deeply and broaden under-standing in the Organisation of important aspects ofthe development process from the recipients' side;

- co-operation with (and between) research andtraining institutes;activities within the general framework of thetransfer of experience and know-how, in responseto precise requests from the authorities of deve-loping countries, for example the determinationof means designed to correlate educationalplanning and manpower needs;

25

provision of documentary information in replyto specific questions raised by policy-makers inthe developing countries.

In addition, the Centre has since 1968 carried outa programme of demographic activities designed to drawthe attention of Member and non-member countries tothe importance of the demographic aspects of economicdevelopment.

INTERNATIONAL TRADE

Trade Committee

Within the framework of the Trade Committee and itssubsidiary bodies, and with a view to contributing to theexpansion of world trade on a multilateral, non-discrimi-natory basis, Member countries consider questions relat-ing to trade policies and practices which are selected fortheir practical interest and topical character, or consultwith each other on particular trade issues. Any Membercountry may obtain prompt consideration and discussionby the Committee of trade measures taken by anotherMember which adversely affects its interest, with theobject of minimising or removing such adverse effects.

The Committee is used also as a forum for mutualinformation, consultation and co-ordination on trade policyissues arising in relations with non-member countries.

FINANCIAL AFFAIRS

The Board of Management of the European MonetaryAgreement

The European Monetary Agreement was signed bythe eighteen Member countries of OEEC in 1955. It wasdesigned to replace the European Payments Union underconditions of convertibility and it came into force at theend of 1958 when most of the OEEC countries establishedexternal convertibility for their currencies. When OEECwas reconstituted as OECD in 1961 this entailed no changesin the EMA, which is a separate international agreement,and all the Member countries of the OEEC continued asContracting Parties to the EMA; but the countries which

26

joined OECD, Canada and the United States at the startand Australia, Japan and Finland later, have not, up tonow, acceded to the EMA.

The general objective of the EMA is to foster theachievement and maintenance of full multilateral trade andconvertibility by providing a framework for monetary co-operation between governments and between centralbanks. It has two parts: the European Fund, which hasa capital of S 600 million and can grant credits in gold forperiods of up to five years to aid Member countries toovercome temporary balance-of-payments difficulties;and a Multilateral System of Settlements, under which eachMember country's central bank is assured of obtainingsettlement in dollars, at a guaranteed exchange rate, ofits holdings in other Members' currencies.

The operation of the EMA is supervised by the Boardof Management, a group of eight financial experts nomi-nated by Member countries and appointed by the Council.The execution of the operations is entrusted to the Bankfor International Settlements acting as Agent for OECD.

Committee for Invisible TransactionsThis is a restricted Committee of twelve experts pri-

marily responsible for the progressive removal of restric-tions, within the framework of the general objectives ofthe Organisation, on the international movement ofservices and capital. The Committee watches over theimplementation of the Codes of Liberalisation of CurrentInvisible Operations and of Capital Movements anddeals with all matters relating to them.

Payments Committee

This plenary Committee reviews reports of the tworestricted Committees mentioned above-the Committeefor Invisible Transactions and the Board of Managementof the European Monetary Agreement-and forwards tothe Council any comments of all governments on thosereports.

Committee on Financial MarketsThis Committee is another plenary body which studies

the operation of national financial markets of Member coun-

27

tries as well as of the international market with a view totheir long-term improvement and to their liberalisation.Among its main subjects at present are mutual funds andthe Eurobond market.

Group of Financial Statisticians

Set up as part of the work of the Organisation oncapital markets, this group has advised on the contentsand publication, on a regular basis, of the OECD Bulletinof Financial Statistics.

Committee on Fiscal Affairs

The Committee on Fiscal affairs has prepared DraftConventions for the avoidance of double taxation onIncome and Capital in 1963 and on Estates and Inheri-tances in 1966 and works on adding to and improvingthese Drafts. It also studies other international fiscalquestions, such as double taxation Conventions withdeveloping countries and value-added taxes.

Insurance Committee

The Insurance Committee deals with insurancequestions which concern Member countries internationallyand in particular with liberalisation of international insu-rance operations. In the latter context it works on variousstudies aiming at some degree of harmonisation of nationalgovernmental insurance supervision in Member countries.

Tourism Committee

The Tourism Committee is responsible for problemsconnected with the development of tourism in Membercountries. In its annual report, it surveys the trends ininternational tourist traffic and tourist receipts and expen-diture in foreign currencies and comments upon the mea-sures affecting international tourism taken by OECD Mem-ber countries.

Committee of Experts on Restrictive Business Practices

The Committee studies problems connected withmonopolies, cartels and other restrictive business practices.

28

It reviews developments in Member countries and Euro-pean regional organisations, particularly with regard tolegislation and its application. It is responsible forpublishing and keeping up to date the "Guide to Legislationon Restrictive Business Practices".

Maritime Transport Committee

The Maritime Transport Committee keeps the Organi-sation informed of significant developments regardingmaritime transport. It is responsible for organising consul-tations on the shipping policies of Member and non-member countries and serves as a forurr for OECD Membercountries concerning questions raised in the United NationsConference on Trade and Development (UNCTAD). Anannual report is published covering developments in inter-national shipping policies, freight markets, shippingsupply and demand, and other matters of topical interest.

Committee for Consumer Policies

Set up within OECD at the end of 1969 for an initialperiod of two years, the Committee is preparing a compa-rative survey of legislation and activities in the field ofconsumer protection and information in Member countrieswhich will form the basis for the mutual exchange ofideas and experience between Member countries andthus help to develop more comprehensive consumer poli-cies. Comparative testing of products and product-related services, labelling of products, the internationalaspects of consumer policy and the question of productsafety and protection of consumers are among the Com-mittee's projects.

The Consortia for Greece and Turkey

Two special bodies set up to co-ordinate effortsof some Member countries to secure long-term financialassistance to the countries concerned in addition to thenormal work of the Organisation with regard to theirdevelopment. The International Monetary Fund, theInternational Bank for Reconstruction and Developmentand the European Investment Bank participate in the workof the Consortia.

29

SCIENCE AND EDUCATION

Committee for Scientific and Technological Policy

Replacing the former Committee for Science Policy,this Committee is responsible for encouraging co-opera-tion among Member countries in the field of scientific andtechnological policies with a view to contributing to theachievement of their economic and social aims, in par-ticular:

* promoting the exchange of experience and infor-mation on, and facilitating the definition of, policiesfor science and technology;

* proposing means for the more effective coordi-nation of national and international efforts inscientific and technical research and development;

* calling attention to areas where innovation is ofspecial importance, with a view, particularly, tomeeting new needs in the public sector and inthe light of the appropriate contribution of thesocial sciences;

* studying foreseeable developments of technologyand their economic, social and cultural conse-quences;

* examining the implications of new developmentsin the field of scientific and technical informationand documentation and of computer sciences.

Committee for Education

Established to replace the Committee for Scientificand Technical Personnel, and to study problems of educa-tional growth and development policies, with particularreference to resource allocation and use in education.Specific substantive issues under consideration includeproblems of resources and finance to meet educationaldemand; the structural consequences which the growthresulting from this demand has on the educational system,and its relation to the labour market and the educationalprocess. The special problems of the developing countriesin these respects receive separate attention.

30

The Centre for Educational Research and Innovation

CERI was set up in 1968 for an initial period ofthree years; the Council has taken a decision of principlethat its activities should continue for another period offive years. Its role is to promote and support the deve-lopment of research activities in education as well asexperiments of an advanced nature with a view to intro-ducing and testing innovation in educational systems andto stimulate co-operation in research and developmentin education. Current activities in its Programme focuson equality of educational opportunity, with specialreference to educational programmes for socially disadvan-taged groups; innovation and improved management inhigher education; the content and methods of educationat all levels and policies and structures designed to promoteinnovation in education.

Steering Committee on Road ResearchA Steering Committee on Road Research was set up in

1968 for an initial period of three years which has sincebeen renewed by the Council. Its programme has twomain fields of activity:

* promotion of international co-operation in construc-tion, safety and traffic, by means of the researchfacilities available to Member countries and thescientific interpretation of the results of jointexperiment;

* the International Road Research Documentationscheme for the systematic exchange of informa-tion and of current research programmes in Mem-ber countries.

The present programme is designed to define thescientific and technological bases needed by governmentsfor decision-making on the most urgent road problems:

* planning, design and maintenance of the roadinfrastructure, taking account of economic, socialand technical developments and needs;

* formulation, planning and implementation ofcommon strategies for road safety;

* improvement of present traffic control systems,both on motorways and in cities, and integrationof existing and new transport systems and facili-ties.

31

MANPOWER AND SOCIAL AFFAIRS

Manpower and Social Affairs Committee

The Manpower and Social Affairs Committee studiesand compares the progress in Member countries asconcerns manpower and labour market problems andpolicies, industrial relations developments and aspects ofsocial planning. It also co-operates with workers' andemployers' organisations so as to engage them in thiswork and to deepen its own understanding of industrialrelations, manpower and other social issues.

INDUSTRY AND ENERGY

Industry Committee

The Committee has overall responsibility for all theOrganisation's work in the field of industry: major deve-lopments and trends, the industrial policies of Membergovernments, and problems of industrial adaptation.Examinations of industrial policies have thrown light ongovernment relations with industry, policies of structuraladaptation, investments, and industrial disutilities. Inthis framework, special studies have been undertaken onregional development policies, multinational companies,small and medium-sized enterprises, management educa-tion, etc.

Energy Committee

The energy policies of Member governments aresystematically considered at confrontations organisedby the Energy Committee. The Committee's analysis ofevents and acquired experience help it to prepare energypolicy decisions and to harmonise measures to balancethe estimated trend of supply and demand of energy inWestern Europe, North America and Japan. Specialstudies are also undertaken on international powerexchange, natural gas and coal supplies and on environ-mental questions.

32

Oil Committee

The Oil Committee keeps Member countries' oilpolicy under review and studies supply and demandprospects for the OECD area. It is also responsible for theregular monitoring of the OECD stockpiling programmewhich was set up as a consequence of the Suez Crisis in1956.

AGRICULTURE AND FISHERIES

Committee for Agriculture

The Committee for Agriculture considers, advises andmakes recommendations to the Organisation on agriculturalproblems, including the confrontation of such policies. Tothis end its Working Party on Agricultural Policies discussesproblems facing Member countries in developing theirpolicies in this field, especially as regards their internationalimplications.

It also deals with the short-term market outlook, thelong-term problem of adjusting supply and demand andthe promotion of trade. The adaptation of farm structures,education, research advisory services, marketing, andtechnical assistance to Member countries in process ofeconomic development are other problems falling withinthe competence of the Committee. The implications forOECD of food problems in the rest of the world are alsounder study.

Fisheries Committee

Economic developments affecting national and inter-national fisheries and the confrontation of fishing policiesare the main concerns of this Committee. Among thequestions studied are exploitation of the sea's fisheryresources and utilisation, marketing and international tradein fishery products.

EUROPEAN NUCLEAR ENERGY AGENCY

Steering CommitteeThe controlling body of ENEA is a Steering Committee

comprising representatives of all Member and Associate

33

Member countries and of Euratom. To help it in its work,the Steering Committee has set up a number of sub-committees and study groups, in particular a Top-levelGroup on Co-operation in the Reactor Field, Study Groupson Experimental Reactors, the Long-term Role of NuclearEnergy in Western Europe, Nuclear Ship Propulsion, EnergyProduction from Radioisotopes, and Food Irradiation, aHealth and Safety Committee, and a Group of Experts onThird Party Liability.

A Control Bureau has been established to applyEN EA's Security Control Convention of 20th Decem-ber 1957. Under this Convention, a European NuclearEnergy Tribunal has been set up to decide questions anddisputes arising from application of the control, as well asfrom the Paris Convention on Third Party Liability in thefield of Nuclear Energy (signed by the majority of Membercountries and in force since April 1968) and the Conventionconstituting the Eurochemic Company (see below).

Scientific and Technical Co-operationENEA-sponsored scientific and technical co-operation

is carried out largely through specialist committees, whichcover such subjects as reactor safety technology, reactorphysics, nuclear data (measurements of the nuclear proper-ties of materials), direct conversion of heat into electricityby magneto-hydrodynamic (MHD) and thermionic pro-cesses, miniaturised isotopic generators and other appli-cations of radioisotopes. Some of these committees,particularly those on reactor physics and nuclear data, areconcerned with research co-ordination in all OECDcountries.

Joint Undertakings and Common Services

ENEA has set up three joint undertakings: the Euro-chemic Company for chemical processing of irradiatedfuels at Mol (Belgium), an international shareholdingcompany established under a diplomatic Convention of1957; the Halden Project for joint exploitation of theboiling heavy water reactor at Halden (Norway), whichdates from an Agreement signed in 1958; and the DragonProject at Winfrith (United Kingdom) which was set upin 1 959 for the construction and exploitation of an advancedtype of high-temperature gas-cooled reactor.

34

Two common services were established in 1964, theENEA Computer Programme Library at Ispra (Italy) andthe ENEA Neutron Data Compilation Centre at Saclay(France), which act as centralised "clearing houses" forthe collection, checking and diffusion of computer pro-grammes for nuclear reactor calculations and for scientificdata needed in such calculations.

An international project for wholesomeness testingof irradiated foodstuffs, set up under an Agreement signedon 14th October, 1970, was launched on 1st January,1971, under the auspices of ENEA and the InternationalAtomic Energy Agency in Vienna.

BUDGET COMMITTEE

The Budget Committee, which is composed of therepresentatives of all Member countries, advises theCouncil on all matters involving the finances of the Orga-nisation and examines the draft budgets prepared by theSecretariat before they are submitted to the Council.

THE SECRETARIAT

The international Secretariat exercises all the functionsnecessary for the efficient administration of the Organisa-tion assigned to it under the Convention, or entrusted toit by the Council and the Executive Committee in thecourse of their work.

The Secretary-General acts as Chairman of the Councilat official level, and attends or is represented at meetingsof the Executive Committee and other bodies of the Organi-sation. He prepares the meetings of the Council and theExecutive Committee, may submit proposals to them, andensures the execution of their decisions in accordance withtheir general instructions and directives. He also maintainsrelations with other international organisations, andfurnishes information to the press concerning the work ofthe Organisation.

In these activities the Secretary-General is assistedby two Deputy Secretaries-General, three Assistant Secre-taries-General and a staff of international civil servantsresponsible solely to the Organisation.

35

COUNTRIES WITH SPECIAL STATUS

Two countries have special status in the Organisa-tion:

Yugoslavia is a full Member for confrontation ofeconomic policies, scientific and technical matters, agri-cultural and fisheries questions, technical assistance andproductivity; and has observer status in other matters,

New Zealand is a full Member of the Committee forAgriculture.

NATIONAL DELEGATIONS TO OECD

The government of each Member country is represent-ed by a Permanent Delegation, with offices in Paris. TheHead of each Delegation normally holds ambassadorialrank and represents his government at meetings of theCouncil except when these take place at Ministerial level.

RELATIONS WITH OTHER ORGANISATIONS

OECD has established formal relations with a numberof international Organisations.

Under a 'Protocol to the OECD Convention, theCommission of the European Communities fully parti-cipates in the work of the Organisation. In addition, theSecretary General of the European Free Trade Associationmay send representatives to attend meetings of variousOECD Committees. Special arrangements govern therelations with the Council of Europe, and the EuropeanConference of Ministers of Transport whose Secretariatis located at OECD headquarters..

OECD has official relations with most of the UnitedNations agencies, i.e. the International Labour Organisa-tion, the Food and Agriculture Organisation, the Interna-tional Bank for Reconstruction and Development, theInternational Monetary Fund, the UN Conference onTrade and Development, the International Atomic EnergyAgency, the Office of the United Nations High Commis-

36

sioner for Refugees, the General Agreement on Tariffs andTrade, the Economic Commission for Europe, and theUnited Nations Educational, Scientific and Cultural Orga-nisation. Somewhat similar relations have been estab-lished by arrangement with the Organisation of AmericanStates, the Inter-governmental Committee for EuropeanMigration, the Customs Co-operation Council and theBank for International Settlements, which in certainfields have objectives similar to those of OECD.

The Trade Union Advisory Comm.ttee and the Businessand Industry Advisory Committee to OECD are regularlyconsulted by the Organisation as representative bodiesof labour and management respectively. The Organisa-tion also consults with a certain number of internationalnon-governmental organisations: the International Cham-ber of Commerce, the International Union of Crafts andSmall and Medium-sized Enterprises, the EuropeanConfederation of Agriculture and the International Fede-ration of Agricultural Producers.

37

Mr Emile van Lennep, Secretary-General

Signature of the OECD Convention at the Quai d'Orsay, 14th December 1960

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1X.

APPENDIX

CONVENTION

ON THE ORGANISATION

FOR ECONOMIC CO-OPERATION

AND DEVELOPMENT

CONVENTIONON THE ORGANISATION

FOR ECONOMIC CO-OPERATIONAND DEVELOPMENT

The Governments of the Republic of Austria, theKingdom of Belgium, Canada, the Kingdom of Denmark,the French Republic, the Federal Republic of Germany,the Kingdom of Greece, the Republic of Iceland, Ireland,the Italian Republic, the Grand Duchy of Luxembourg,the Kingdom of the Netherlands, the Kingdom of Norway,the Portuguese Republic, Spain, the Kingdom of Sweden,the Swiss Confederation, the Turkish Republic, the UnitedKingdom of Great Britain and Northern Ireland and theUnited States of America;

Considering that economic strength and prosperityare essential for the attainment of the purposes of theUnited Nations, the preservation of individual liberty andthe increase of general well-being;

Believing that they can further these aims mosteffectively by stengthening the tradition of co-operationwhich has evolved among them;

Recognising that the economic recovery and pro-gress of Europe to which their participation in the Organi-sation for European Economic Co-operation has made amajor contribution, have opened new perspectives forstrengthening that tradition and applying it to new tasksand broader objectives;

Convinced that broader co-operation will make avital contribution to peaceful and harmonious relationsamong the peoples of the world;

Recognising the increasing inter-dependence oftheir economies;

41

Determined by consultation and co-operation to usemore effectively their capacities and potentialities so asto promote the highest sustainable growth of their econo-mies and improve the economic and social well-being oftheir peoples;

Believing that the economically more advancednations should co-operate in assisting to the best of theirability the countries in process of economic development;

Recognising that the further expansion of worldtrade is one of the most important factors favouring theeconomic development of countries and the improvementof international economic relations; and

Determined to pursue these purposes in a mannerconsistent with their obligations in other internationalorganisations or institutions in which they participate orunder agreements to which they are a party;

Have therefore agreed on the following provisionsfor the reconstitution of the Organisation for EuropeanEconomic Co-operation as the Organisation for EconomicCo-operation and Development:

Article 1

The aims of the Organisation for Economic Co-opera-tion and Development (hereinafter called the "Organisa-tion") shall be to promote policies designed:

(a) to achieve the highest sustainable economicgrowth and employment and a rising standardof living in Member countries, while maintain-ing financial stability, and thus to contributeto the development of the world economy;

(b) to contribute to sound economic expansion inMember as well as non-member countries inthe process of economic development; and

(c) to contribute to the expansion of world tradeon a multilateral, non-discriminatory basis inaccordance with international obligations.

Article 2

In the pursuit of these aims, the Members agree thatthey will, both individually and jointly:

42

(a) promote the efficient use of their economicresources;

(b) in the scientific and technological field, promotethe development of their resources, encourageresearch and promote vocational training;

(c) pursue policies designed to achieve economicgrowth and internal and external financialstability and to avoid developments whichmight endanger their economies or those ofother countries;

(d) pursue their efforts to reduce or abolish obstaclesto the exchange of goods and services andcurrent payments and maintain and extend theliberalisation of capital movements; and

(e) contribute to the economic development ofboth Member and non-member countries inthe process of economic development by appro-priate means and, in particular, by the flow ofcapital to those countries, having regard to theimportance to their economies of receivingtechnical assistance and of securing expandingexport markets.

Article 3

With a view to achieving the aims set out in Article 1and to fulfilling the undertakings contained in Article 2,the Members agree that they will:

(a) keep each other informed and furnish the Orga-nisation with the information necessary for theaccomplishment of its tasks;

(b) consult together on a continuing basis, carry outstudies and participate in agreed projects; and

(c) co-operate closely and where appropriate takeco-ordinated action.

Article 4

The Contracting Parties to this Convention shall beMembers of the Organisation.

43

Article 5

In order to achieve its aims, the Organisation may:(a) take decisions which, except as otherwise

provided, shall be binding on all the Members;(b) make recommendations to Members; and(c) enter into agreements with Members, non-

member States and international organisations.

Article 6

1. Unless the Organisation otherwise agrees unani-mously for special cases, decisions shall be taken andrecommendations shall be made by mutual agreement ofall the Members.

2. Each Member shall have one vote. If a Memberabstains from voting on a decision or recommendation,such abstention shall not invalidate the decision orrecommendation, which shall be applicable to the otherMembers but not to the abstaining Member.

3. No decision shall be binding on any Member untilit has complied with the requirements of its own constitu-tional procedures. The other Members may agree thatsuch a decision shall apply provisionally to them.

Article 7

A Council composed of all the Members shall be thebody from which all acts of the Organisation derive. TheCouncil may meet in sessions of Ministers or of PermanentRepresentatives.

Article 8The Council shall designate each year a Chairman,

who shall preside at its ministerial sessions, and two Vice-Chairmen. The Chairman may be designated to serveone additional consecutive term.

Article 9The Council may establish an Executive Committee

and such subsidiary bodies as may be required for theachievement of the aims of the Organisation.

44

Article 10

1. A Secretary-General responsible to the Councilshall be appointed by the Council for a term of five years.He shall be assisted by one or more Deputy Secretaries-General or Assistant Secretaries-General appointed bythe Council on the recommendation of the Secretary-General.

2. The Secretary-General shall serve as Chairmanof the Council meeting at sessions of Permanent Repre-sentatives. He shall assist the Council in all appropriateways and may submit proposals to the Council or to anyother body of the Organisation.

Article 1 1

1. The Secretary-General shall appoint such staff asthe Organisation may require in accordance with plans oforganisation approved by the Council. Staff regulationsshall be subject to approval by the Council.

2. Having regard to the international character ofthe Organisation, the Secretary-General, the Deputy orAssistant Secretaries-General and the staff shall neitherseek nor receive instructions from any of the Members orfrom any Government or authority external to the Organi-sation.

Article 12

Upon such terms and conditions as the Council maydetermine, the Organisation may:

(a) address communications to non-member Statesor organisations;

(b) establish and maintain relations with non-member States or organisations; and

(c) invite non-member Governments or organisationsto participate in activities of the Organisation.

Article 13

Representation in the Organisation of the EuropeanCommunities established by the Treaties of Paris andRome of 18th April, 1951, and 25th March, 1957, shall

45

be as defined in Supplementary Protocol No. 1 to thisConvention.

Article 14

1. This Convention shall be ratified or accepted bythe Signatories in accordance with their respective consti-tutional requirements.

2. Instruments of ratification or acceptance shallbe deposited with the Government of the French Republic,hereby designated as depositary Government.

3. This Convention shall come into force:(a) before 30th September, 1961, upon the deposit

of instruments of ratification or acceptance byall the Signatories; or

(b) on 30th September, 1961, if by that datefifteen Signatories or more have depositedsuch instruments as regards those Signatories;and thereafter as regards any other Signatoryupon the deposit of its instrument of ratificationor acceptance;

(c) after 30th September, 1961, but not later thantwo years from the signature of this Convention,upon the deposit of such instruments by fifteenSignatories, as regards those Signatories; andthereafter as regards any other signatory uponthe deposit of its instrument of ratification oracceptance.

4. Any Signatory which has not deposited itsinstrument of ratification or acceptance when the Conven-tion comes into force may take part in the activities of theOrganisation upon conditions to be determined by agree-ment between the Organisation and such Signatory.

Article 15

When this Convention comes into force the reconsti-tution of the Organisation for European Economic Co-operation shall take effect, and its aims, organs, powersand name shall thereupon be as provided herein. Thelegal personality possessed by the Organisation for Euro-pean Economic Co-operation shall continue in the Organi-

46

sation for European Economic Co-operation shall requireapproval of the Council to be effective after the cominginto force of this Convention.

Article 16The Council may decide to invite any Government

prepared to assume the obligations of membership toaccede to this Convention. Such decisions shall be unani-mous, provided that for any particular case the Councilmay unanimously decide to permit abstention, in whichcase, notwithstanding the provisions of Article 6, thedecision shall be applicable to all the Members. Accessionshall take effect upon the deposit of an instrument ofaccession with the depositary Government.

Article 1 7

Any Contracting Party may terminate the applicationof this Convention to itself by giving twelve months' noticeto that effect to the depositary Government.

Article 18The Headquarters of the Organisation shall be in

Paris, unless the Council agrees otherwise.

Article 19The legal capacity of the Organisation and the privi-

leges, exemptions, and immunities of the Organisation,its officials and representatives to it of the Members shallbe as provided in Supplementary Protocol No. 2 to thisConvention.

Article 20

1. Each year, in accordance with Financial Regu-lations adopted by the Council, the Secretary-Generalshall present to the Council for approval an annual budget,accounts, and such subsidiary budgets as the Councilshall request.

2. General expenses of the Organisation, as agreedby the Council, shall be apportioned in accordance witha scale to be decided upon by the Council. Other expen-diture shall be financed on such basis as the Councilmay decide.

47

Article 21

Upon the receipt of any instrument of ratification,acceptance or accession, or of any notice of termination,the depositary Government shall give notice thereof toall the Contracting Parties and to the Secretary-Generalof the Organisation.

In witness whereof, the undersigned Plenipotentiaries,duly empowered, have appended their signatures to thisConvention.

Done in Paris, this fourteenth day of December,Nineteen Hundred and Sixty, in the English and Frenchlanguages, both texts being equally authentic, in a singlecopy which shall be deposited with the depositary Govern-ment, by whom certified copies will be communicated toall the Signatories.

48

SUPPLEMENTARY PROTOCOL No. 1TO THE CONVENTIONON THE ORGANISATION


The signatories of the Convention on the Organisationfor Economic Co-operation and Development;

Have agreed as follows:

1. Representation in the Organisation for EconomicCo-operation and Development of the European Commu-nities established by the Treaties of Paris and Rome of18th April, 1951, and 25th March, 1957, shall be deter-mined in accordance with the institutional provisions ofthose Treaties.

2. The Commissions of the European EconomicCommunity and of the European Atomic Energy Commu-nity as well as the High Authority of the European Coaland Steel Community shall take part in the work of thatOrganisation.

In witness whereof, the undersigned Plenipotentiaries,duly empowered, have appended their signatures to thisProtocol.

Done in Paris, this fourteenth day of December,Nineteen Hundred and Sixty, in the English and Frenchlanguages, both texts being equally authentic, in a singlecopy which shall be deposited with the Government ofthe French Republic, by whom certified copies will becommunicated to all the Signatories.

49

SUPPLEMENTARY PROTOCOL No. 2TO THE CONVENTIONON THE ORGANISATION


The signatories of the Convention on the Organisationfor Economic Co-operation and Development (hereinaftercalled the "Organisation");


The Organisation shall have legal capacity and theOrganisation, its officials, and representatives to it of theMembers shall be entitled to privileges, exemptions, andimmunities as follows:

(a) in the territory of the Contracting Parties to theConvention for European Economic Co-operationof 16th April, 1948, the legal capacity, privileges,exemptions, and immunities provided for inSupplementary Protocol No. 1 to that Convention;

(b) in Canada, the legal capacity, privileges, exemp-tions, and immunities provided for in anyagreement or arrangement on legal capacity,privileges, exemptions, and immunities enteredinto between the Government of Canadaand the Organisation;

(c) in the United States, the legal capacity, privileges,exemptions, and immunities under the Inter-national Organisations Immunities Act providedfor in Executive Order No. 10133 of 27th June,1950; and

50

(d) elsewhere, the legal capacity, privileges, exemp-tions, and immunities provided for in anyagreement or arrangement on legal capacity,privileges, exemptions, and immunities enteredinto between the Government concerned andthe Organisation.

In witness whereof, the undersigned Plenipotentiaries,duly empowered, have appended their signatures tothis Protocol.


51

PROTOCOL ON THE REVISIONOF THE CONVENTION FOR EUROPEAN

ECONOMIC CO-OPERATIONOF 16th APRIL, 1948

The Governments of the Republic of Austria, theKingdom of Belgium, the Kingdom of Denmark, theFrench Republic, the Federal Republic of Germany, theKingdom of Greece, the Republic of Iceland, Ireland, theItalian Republic, the Grand Duchy of Luxembourg, theKingdom of the Netherlands, the Kingdom of Norway,the Portuguese Republic, Spain, the Kingdom of Sweden,the Swiss Confederation, the Turkish Republic, the UnitedKingdom of Great Britain and Northern Ireland being theContracting Parties to the Convention for EuropeanEconomic Co-operation of 16th April, 1948 (hereinaftercalled the "Convention") and the Members of the Organi-sation for European Economic Co-operation;

Desirous that the aims, organs, and powers of theOrganisation be redefined and that the Governments ofCanada and the United States of America be Membersof that Organisation as re-constituted;


Article 1

The Convention shall be revised and as a consequencethereof it shall be replaced by the Convention on theOrganisation for Economic Co-operation and Developmentto be signed on today's date.

52

Article 2

1. This Protocol shall come into force when theConvention on the Organisation for Economic Co-operationand Development comes into force.

2. The Convention shall cease to have effect asregards any Signatory of this Protocol when the Conven-tion on the Organisation for Economic Co-operation andDevelopment comes into force.

In witness whereof, the undersigned Plenipotentiaries,duly empowered, have appended their signatures to thisProtocol.


53

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et a L.AUSANNE, NELJCHATEL, VEVEY,MONTREUX, BERNE, BAI LE, ZURICH.TURKEY - TURQUIEI ibrairie Hachette, 469 Istiklal Caddesi, Beyoglu,ISTAN,BUL et 12 Ziyaki6kalpCaddesi, ANKARA.UN'ITED KINGDOM - ROYIAUME-UNIH.M. Stationery Office, P.0.B. 569, LONDONS.E. I. 9 NHBranches at: FDINBCURGH, BIRMINGHAM,BRISTOL, MANCHESTER, CARDIFF,BELFAST.UNI'TED STAIES OF AMERICAOECD liublications Center, Suite 12(07,1750 Pennsylvania Ave, N.W.WASHINGiTON, D.C. 20)06. Tel.: (202)298-8755.6'ENEZUELALibreria del Este, Avda. F. Miranda 52,Edificio Galipan, CARACAS.YUGOSILAIA - YOUGOSLAVIEJugoslovenska Knjiga, Terazije 27. P.0.B. 36,Bl OCiRAD.

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No. 30,193. 1972. Printed in France.

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