The UN Climate Change Conference in Bali in early December 2007 may have raised new hopes of progress, but as everyone knows, dealing with climate change will require more than just political goodwill. Providing for abundant, affordable, clean energy will require considerable investment in new power generation–more than US$11 trillion to 2030, based on an estimate in the IEA’s World Energy Outlook 2006.

There has been a rapid rise of goods and services exports from large emerging economies in recent years, in particular, Chinese manufactured goods and Indian business services. In 1980, goods trade between the OECD and India and China was relatively small, representing in total only 2% of total OECD trade.

Something new is happening in Africa. Once talk of investment in the continent’s countries was dismissed as idealism. Now global investors are turning their eyes–and their funds–to a new investment frontier. Is this short-term euphoria?

Fake goods are not cheap. In fact, they exact a heavy cost on industry, governments and the general public. There is a strong case for public action across OECD countries against counterfeiting. The question is how to make progress? Want to buy an expensive Swiss watch? Not everyone can afford a real one–a Patek Philippe timepiece can be worth many thousands of dollars, and some very exclusive makes, such as a Vacheron Constantin, can cost over a million!

Egypt has become the first Arab and first African country to sign the OECD Declaration on International Investment and Multinational Enterprises. Egypt has made impressive progress in reforming its investment policies in recent years–foreign investment in manufacturing has been fully liberalised, for instance, with the exception of defence-related industries–but significant barriers to both foreign and domestic businesses remain. According to a new report on the country’s investment policies presented at the signing ceremony in July, barriers to entry have been eased for both domestic and foreign investors, customs procedures streamlined and a dedicated ministry set up in 2004 to promote and manage investment. The tax system in particular has been streamlined, with the corporate income tax rate cut from between 32% and 40% to a uniform 20% and the approximately 3,000 different types of exemptions eliminated.

Globalisation may have accelerated, but how big is international trade in a country’s income? For some major countries, the answer is not much bigger than before.

Is China becoming more restrictive towards foreign investment? New rules on foreign mergers and acquisitions issued in 2006 suggest that it might be, even if those rules also include significant improvements.

After two years of slow growth and rising unemployment, GDP in Poland finally turned around in 2004 and is set to pick up to around 4.5% in 2006-07. According to the latest OECD Economic Survey of Poland (June 2006), the long process of convergence with EU partners may have resumed, though with GDP per head still under 45% of the EU average, there is much to be done.

The Doha round of trade negotiations was launched in November 2001, but stalled in July this year. It should be relaunched. International trade may be stronger today than ever, but the global marketplace remains littered with barriers and restrictions that hold back potential, not least in developing countries.

If ever you are unsure about the advantages of open trade, why not take a lead from students in economics and consider the story of Robinson Crusoe. Generations of students have discovered how Crusoe, shipwrecked on a desert island and cut off from the outside world, improved his welfare as he became economically re-integrated into the wider world.

Foreign direct investment (FDI) into OECD countries jumped by 27% to reach US$622 billion in 2005, up from $491 billion in 2004 and $465 billion in 2003, according to the latest estimates from the OECD. These are the highest inflows since 2001. The near-term outlook for FDI remains strong.

I am in contact with leaders and officials both from the world’s most developed nations and from developing countries. When the Doha Development Round talks collapsed in July, I was struck by the gap between what officials say when they meet at the OECD in Paris and how they define their positions in the WTO talks in Geneva.

China has dominated policy and business thinking since the start of the century. Much has been written about its economic transformation and governance, about its huge business potential, and more recently about its influence as a major player in the wider world economy. But what is it actually like to do business there? Joerg Wuttke is vice-president of the European Chamber of Commerce in China and has been doing business there for 16 years, formerly with ABB China and now with BASF China. We asked Mr Wuttke for some personal insights.

A dangerous new trend is emerging in many industrialised countries. Widespread pockets of anti-globalisation sentiment, furthered by alleged national security concerns and a perceived need to protect “strategic” sectors have led to a resurgence of protectionism. Even in countries that have long promoted and benefited from global markets, politically-motivated barriers are being resurrected. These winds have temporarily chilled economic progress.

Waste processing is nothing new. In ancient Greek legend, Hercules is said to have charged a fee to clean out the Augean stables by diverting water from two rivers through a hole he created in the cattle yard, flushing the waste out the other end. Nowadays, processing waste is a major enterprise, but does it qualify as a good or as a service?

An anti-globalisation activist took the microphone at a 1999 protest in Washington and, after decrying corporate greed and forced child labour in third world sweatshops, she demanded, “Who made your T-shirt?” One of the observers, Pietra Rivoli, an economics professor at Georgetown University in the US, chose to pick up that gauntlet. She expected to prove both “the undeniable benefits of global free trade and the misguided tenets of the anti-globalisation movement”.

One characteristic of globalisation is the growing interdependency of countries and regions in all areas of international transactions. Take imports. According to the latest OECD Economic Globalisation Indicators, between 1995 and 2003 the share of demand met by imports in the OECD area increased from 34% to 41% for goods, and from 35% to 48% for services. Imports to the EU from other OECD countries remained very high, albeit easing slightly to 71% between 1995 and 2003.

The current round of trade negotiations, which are shaped by the development agenda set at Doha in 2001, hang in the balance. This should not be so. Naturally, after collapsed talks in Seattle in 1999 and Cancún in 2003, people are asking uneasy questions. Will Hong Kong, China be another failure? And if the talks collapse, will the multilateral trading system under the WTO survive?

Port cities can benefit from leisure cruises to boost their economies, while at the same time avoiding pitfalls and safeguarding the environment.

Developing countries and OECD countries have seen a boost in foreign investments, as FDI outflows from the US hit a record US$252 billion in 2004.

The OECD’s Guidelines for Multinational Enterprises, the only comprehensive government-backed instrument in the field of corporate social responsibility, received a boost in September when governments reaffirmed their commitment to help further promote their usefulness among multinational enterprises.

Private investment is a dominant force driving globalisation. Cross-border investment flows have tripled over the last decade alone and foreign capital stocks are now twice the size of global GDP. Private investment is acting as a powerful catalyst for growth and, as emerging economies from Asia to South America have shown, is one of the surest ways to sustained poverty reduction. But this requires having the right policies in place.

Globalisation brings benefits, though it has costs. Trade and structural adjustment help to maximise the first, and reduce the second.

Collective Investment Schemes (CIS) are a form of institutional investment through which individuals pool their funds and hire professionals to manage their investments, with each investor entitled to a share of the net benefits of ownership.

“There has never been an economic discontinuity of this magnitude in the history of the world–these powerful forces are allowing companies to rethink their sourcing strategies across the entire value chain”. So said Mark Gottfredson of Bain & Co., quoted in the New York Times (19 August 2004). This may be hype, but is there smoke without fire?

Ever feel like selling authentic used US baseball jackets abroad, or setting up a global business in second-hand German cars? The market opportunities may be more restricted than you think, and not necessarily because of quality.

In 2002, the textiles and clothing industry accounted for US$350 billion or 5.6% of total merchandise exports. The industry employs tens of millions of people, primarily in developing countries. But dramatic changes are afoot, with new regulations set to come into force in January 2005.

Latvia has signed up to the OECD Declaration on International Investment and Multinational Enterprises. The invitation from OECD members recognised Latvia’s general openness to foreign direct investment and will reinforce the Latvian government’s efforts to pursue investment-friendly economic reforms.

Extortion, bribery, kickbacks, political handouts – a lot is said about fighting corruption, but how is it being fought? The Annual Report on the OECD Guidelines for Multinational Enterprises 2003: Enhancing the Role of Business in the Fight Against Corruption has some answers.

The failure at Cancún risks a serious weakening of the multilateral trading system. And that includes sustained damage to the interests of poorer countries. It does not have to be so.

The multilateral trading system is under great strain. But the system is alive and will gain in significance after the setback at Cancún, argues Supachai Panitchpakdi, Director-General of the World Trade Organization.

Opening up markets is important, but only part of the challenge. More effort is needed to help developing countries trade in the first place. This is a complex challenge.

The breakdown of trade talks in Cancún showed, once again, the difficulty of achieving a multilateral consensus on agricultural trade reform. Many OECD countries are reluctant to reform their agricultural policies and dismantle protection, despite overwhelming evidence of the benefits. Why is reform so difficult to achieve and how can it be fostered?

It is easy to knock globalisation, but it is all too easy to forget the benefits globalisation has brought too. Slipping back into protectionism is not the way forward.

Services trade is an increasingly important part of world trade and is under the spotlight in the WTO talks at Cancún in September. OECD countries account for the bulk of world services trade by destination – some three-quarters in fact – according to a new OECD publication, OECD Statistics on International Trade in Services: Partner Country Data.

The prospect of joining the EU is acting as a powerful catalyst for improving the investment climate in south-east Europe, but a number of countries need to make faster progress on economic reform.

Hammering out the multilateral negotiations at Cancún in September will take the present WTO trade round only halfway to its January 2005 deadline. Meanwhile, the percentage of world trade accounted for by preferential regional trade agreements (RTAs) is expected to grow from 43% at present to 55% by 2005 if all expected RTAs are realised. The EU, NAFTA, APEC and MERCOSUR are all examples of regional initiatives. Is smaller better?

Small may well be beautiful in the business world, but being small can also be tough going, in good as well as turbulent times. Red tape, taxes and other charges, capital costs, employment regulations, legal costs: issues such as these absorb a lot of small-company time and money, and can, in the end, become a barrier to either going into business, or surviving in it. Still, small and medium-sized enterprises (SMEs) account for over 95% of all firms and for 60%-70% of employment in the OECD area.

In some circles, these days, it is fashionable to blame globalisation for all manner of ills. Critics hold it responsible for everything from poverty and inequality to environmental pollution.

Remember Seattle? Or was it Geneva? WTO ministerial meetings are now a regular feature of the global political calendar – they are in some ways the policy equivalent of the soccer World Cup in terms of intensity, media attention, sometimes disappointing finals, even crowd trouble. The next stop is the WTO Ministerial Conference in Cancún, Mexico, in September, again with a heavy agenda amid great expectations. In the run-up to these talks we thought it might be worth retracing the road to Cancún.

Trade capacity-building – enabling developing countries to participate fully in the multilateral trading system – is a key element of the Doha Development Agenda. Information on progress in this area is now available from an OECD/WTO joint trade capacity-building database (TCBDB).

A cry for transparency always accompanies any WTO trade round, and Doha is no exception. Yet trade talks remain clogged with terms of reference, jargon and ambiguities. Trade and Competition: From Doha to Cancún tries to respond to this problem, coming as it does out of a meeting of trade and competition experts from developed and developing countries who met to explore and clarify some key themes in the Doha Declaration.

China became the world’s largest recipient of foreign direct investment (FDI) for the first time in 2002. Yet while this is impressive for a country that began reaccepting foreign investment only recently, this jump is amid declining FDI inflows to other countries. In terms of FDI per capita, China still ranks relatively low, according to a forthcoming OECD report.

The Chinese economy has come a long way in the past 25 years. Yet more needs to be done to ensure the continuation of rapid growth, including further measures to provide a suitable climate for foreign investment.

It has now been more than twenty years since the GATT, and in turn the WTO, altered the nature of the multilateral trade system, shifting the focus from strict negotiation of customs tariffs to the formulation of rules to promote and oversee the liberalisation of trade.

Experts from most of the world’s steel-producing countries, including government and industry representatives, held talks in Paris aimed at cutting trade-distorting government subsidies. The 24 and 25 February meetings made progress, and participants hope to complete much of the work by September. While some serious issues need to be resolved to secure an agreement, “there is good will to remove differences,” said US Assistant Secretary of Commerce, Faryar Shirzad.

Reports of the death of Doha have been greatly exaggerated, even if the process is looking slightly off colour. For the sake of development, deadlines must be respected and the process allowed to work. Jean-Marie Metzger, head of the OECD trade directorate, explains.

High-level international talks on steel get under way at the OECD, 18-19 December 2002. We asked Herwig Schlögl, OECD Deputy Secretary-General, to explain.

Investing in transition economies of eastern Europe was a heady trend of the early 1990s that promised so much but ended in disappointment and loss for many western companies. But there are signs of a healthy recovery in the region, including among home-spun enterprises. It may be time to take transition countries more seriously again.

Eight Southeast European states have pledged to abide by a list of common principles and practices aimed at encouraging private investment, from transparent policies and removal of trade barriers to good corporate government and integrity in public administration. This represents an “important step on the path … towards closer political and economic co-operation, as well as greater integration with the European Union and with the broader global economy,” said OECD deputy secretary-general Richard Hecklinger at the signing of a declaration to this effect in Vienna on 18 July.

Israel has signed up to the OECD Declaration on International Investment and Multinational Enterprises, which calls for foreign investors to be treated no less favourably than domestic enterprises. The declaration also promotes voluntary standards of business conduct through the OECD Guidelines for Multinational Enterprises. Adherence to the declaration will enable Israel to share experiences with the 30 OECD members and other non-OECD signatories, including Argentina, Brazil, Chile, Estonia, Lithuania and Slovenia.

Progress has been made at the steel talks that took place at the OECD on 18-19 December, including a decision by participants to undertake work immediately on the elements of an agreement for reducing or eliminating steel trade-distorting subsidies at all levels of government. For background, read the interview below. For more on the agreement, please click LATEST PROGRESS in the references.

Much has been said and written in recent years about China’s economic potential, with some claims that it may one day rival the United States. China’s growth has certainly been impressive since the 1980s and even conservative projections point to a bright future. However, there may be a weakness: that growth has been very unevenly spread, with the bulk of the US$400 billion in new investment during 1983-2001 concentrated in the eastern and southern coastal belt. In fact, the eastern coastal region accounted for 88% of China’s total inflows of foreign direct investment (FDI) during this period, but the central region attracted just 9% and the western region little more than 3%.

President Bush has called on the US senate to vote on renewed presidential Trade Promotion Authority (TPA). What does it mean? TPA (which went under the name of “fast-track authority” in the 1990s) would ensure that any trade agreement negotiated by the president would be considered by Congress as a single package. Naturally, Congress would maintain the final authority on whether to approve or reject the negotiated agreement, but under this expedited process, Congress would agree to consider the legislation as a whole, with mandatory deadlines, no amendment and limited debate.

In a special to the OECD Observer, Mr Müller explains why Germany wants broad-based trade talks to forge ahead. For Doha to succeed, industrialised countries may have to make some substantial concessions.

Increased trade plays an important role in integrating developing countries into the world economy. But many complain that current global rules make it difficult for them to compete for much-needed markets. Developed countries counter that the list of developing countries is too long for them to make an exception for everyone. How best can these differing interests be met?

Farmers’ incomes still rely too heavily on subsidies, which distort markets, put exporters from developing countries at a disadvantage and cost taxpayers hundreds of billions of dollars a year. Agricultural reform and reductions in trade barriers could help farmers both in the industrial and developing worlds get a better deal in a more cost-effective way.

When you buy a business service online, the sales person may be half a block or half a world away. But do the same trade rules apply as when you buy a piece of solid merchandise, and who decides?

As Doha approaches, it is worth reminding ourselves that liberalisation of trade multilaterally, through the WTO, is not the only game in town. Multilateral efforts co-exist with unilateral, bilateral and regional initiatives. Unilateral market opening by developing countries in services has, for example, been widespread as a way to draw in skills and investment and to strengthen the synergies between the service sector and the rest of the economy. But unilateralism can also have a darker side –

Germany is one of the world's great trading nations. Around a third of its GDP depends on exports. In a special to the OECD Observer, Germany's Minister of Economics and Technology, Werner Müller, explains why Germany wants broad-based trade talks to forge ahead. For Doha to succeed, industrialised countries may have to make some substantial concessions.

The collapse of world trade talks in Seattle in 1999 conveyed some crucial messages over and above the protests about globalisation, not least that the approach to trade negotiations inherited from the General Agreement on Tariffs and Trade (GATT), with its concession bargaining and “green rooms”, has had its day. Seattle also showed that trade ministers alone cannot resolve issues that go beyond the sphere of trade, and that the key systemic issues of the day cannot be reduced purely to their trade or financial dimensions. As it was so aptly put by Angel Gurría, Mexico’s former Minister of Finance: “The ultimate systemic threat today is poverty.”

The prospect of a new round of multilateral trade talks being launched in November is brightening, though challenges remain.

Eight rounds of global trade talks have still not reduced trade barriers enough. Developing countries’ concerns about access to industrial markets must be met before a new round can even be launched, let alone succeed.

There used to be only two ways to buy a book: either order it via a catalogue or book club – a sometimes lengthy and unreliable process – or, more commonly, simply go to a shop, pay cash and take it home in a paper bag. Now, a customer can visit an online bookshop, view a book, read its blurb, browse through the shop’s collection, make a selection, and pay for the book online. The book may be delivered physically or, in some cases, downloaded onto the buyer’s computer. These new ways of buying a book apply to other goods and services too. And as many of the orders are international, this raises challenging issues for existing trade rules.

The liberalisation of trade and foreign investment has stimulated innovation, encouraged efficiency and promoted growth. Open trade has been a driving force for stability and prosperity. It has been a precondition for the fourteen-fold expansion in world trade in goods since 1950 and a six-fold increase in world production.