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Mon, May 22, 2006 - Page 10 News List

OECD forum to tackle oil, trade

GLOBAL ECONOMY Other items on the agenda include the installation of a new secretary general, as well as interest rates and the prospects for the global economy


Ministers from 30 countries and key economic policymakers meet in Paris this week for the annual conference of the Organization for Economic Cooperation and Development (OECD), with the incoming secretary general, Mexico's Angel Gurria, set to take the reins.

The two-day OECD forum tackles the challenges to the global economy, with ministers expected to discuss high oil prices, evidence of growing inflation, the outlook for interest rates, as well as stalled negotiations on a global trade deal.

On Wednesday, the current Secretary General of the OECD Donald Johnston, of Canada, is to preside over a ceremony to hand power to his successor, Gurria, who was named after an international contest for the job last November.

The OECD is an international economic think-tank that undertakes research and issues advice to its 30 member countries, which are all industrialized countries.

The organization is to publish its spring world economic outlook tomorrow, an influential document outlining the prospects for the global economy, including detailed analysis of the economic situation in the US, Japan, the eurozone and other major economies.

Of key interest for observers will be comments on the possibility of further increases in global interest rates following data in the US and eurozone recently that indicated that the near doubling of oil prices in the last 12 months is beginning to create inflationary pressure.

Global stock markets were rattled in the last week, with a broad sell-off in the US, Europe and Asia sparked by fears that further rises in interest rates could dampen economic growth.

Nevertheless, the forecasts from the OECD are likely to indicate that robust growth will continue this year for the fourth successive year owing to expansion in the US, evidence of a recovery in Japan and ongoing demand from Asian powerhouses China and India.

Other talks are to focus on the subject of imbalances in the global economy and economic reforms, with ministers and policymakers given the opportunity to discuss progress made in other member countries.

Introducing flexibility into the labor market remains a challenging reform to implement in many developed economies where opposition from trade unions and fear about job insecurity are major hurdles, not least in host country France where the center-right government had to abandon a labor market reform last month because of widespread protests.

The meeting is to be chaired by Greek Prime Minister Kostas Karamanlis.

WTO Secretary-General Pascal Lamy is also expected to attend.

The latest round of WTO negotiations aimed at agreeing a global deal to lower barriers to commerce and increase international trade to the benefit of poor countries are currently deadlocked because of differences between the EU and US as well as conflict between developed and developing countries.

Negotiations are likely to be handicapped by the absence of the foreign minister of Brazil, Celso Amorim, whose country along with India is one of the main representatives of emerging countries.

EU Trade Commissioner Peter Mandelson, who negotiates on behalf of the EU, and US trade chief Rob Portman will be at the event however and are expected to tackle their differences at an informal meeting tomorrow.

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