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Cablegate: Chile Passes Hurdles to Become Oecd Member

VZCZCXRO1660
RR RUEHRN
DE RUEHFR #1732/01 3551007
ZNR UUUUU ZZH
R 211007Z DEC 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 7942
RUEHSS/OECD POSTS COLLECTIVE
RUEHSG/AMEMBASSY SANTIAGO 0005
RUCNDT/USMISSION USUN NEW YORK 1771
RUEHRN/USMISSION UN ROME 0018
RUEHGV/USMISSION GENEVA 3066
RUEHUNV/USMISSION UNVIE VIENNA 0727
RUEHTV/AMEMBASSY TEL AVIV 0309
RUEHMO/AMEMBASSY MOSCOW 6548
RUEHRA/AMEMBASSY RIGA 0251
RUEHLJ/AMEMBASSY LJUBLJANA 0560
RUEHTL/AMEMBASSY TALLINN 0012

UNCLAS SECTION 01 OF 02 PARIS 001732

SENT FROM USOECD

SENSITIVE

SIPDIS

E.O. 1295: N/A
TAGS: AORC ECON CI OECD
SUBJECT: CHILE PASSES HURDLES TO BECOME OECD MEMBER

PARIS 00001732 001.2 OF 002


1. (SBU) Summary: On December 15 the Organization for Economic
Cooperation and Development (OECD) invited Chile to become the 31st
member of the organization (and the first South American OECD
member). Chile completed the rigorous accession process in a record
two and a half years, submitting to examination (and changing, as
needed) its public policies in order to meet the standards set by
the OECD "aquis", which includes close to 100 instruments, decisions
and recommendations. Speaking at the event, Chilean Minister of
Finance Velasco stated that for Chile, the OECD was "first and
foremost a group of democratic nations," one that provided a
"one-stop shop" of good policies. Speaking in Spanish to Chilean
media, he stated that Chile would now be "sitting at the same table
as an equal with the most significant nations of the world." Chile
is the first country in the latest group of OECD aspirants to reach
the finish gate in an accession process which has become
significantly more rigorous over the years. The United States and
others welcomed Chile's accession as a sign that the OECD was no
longer "the Rich Man's club", but proof that best practices and
sound economic policies can be shared by diverse countries with
different income levels. End summary.
2. (U) In May 2007 the OECD Council invited Russia, Estonia,
Slovenia and Chile to begin the accession process to become members
of the OECD. Between 2007 and 2009, 20 OECD committees scrutinized
Chile's public policies to determine whether they met the standards
set out by the close to 100 OECD Decisions and Recommendations in
the areas of agriculture, chemicals, consumer policy, the
environment, fiscal affairs, financial markets, fisheries,
information computer and communications policy, insurance and
private pensions investment and multinational enterprises, maritime
transport, scientific and technological policy and tourism.
3. (U) OECD aspirants are asked to commit to core principles such as
full compliance with the Convention on Combating Bribery of Foreign
Public Officials and full compliance with the principles of
non-discrimination, transparency and "standstill" in accordance with
the OECD Codes of Liberalization and Declaration on International
Investment and Multinational Enterprises - to name just a few of the
OECD instruments which constitute the OECD "aquis."
4. (U) OECD candidates are also expected to share "fundamental
values," including a commitment to pluralist democracy based on the
rule of law and respect of human rights. (Although there is no
formal structure for examination of either democratic institutions
or the situation of human rights, members may raise issue of concern
during the accession process.) Reflecting the increase in the
number of OECD instruments, the OECD accession process has become
considerably more rigorous for the current group of aspirant
countries than that which previous entrants - Korea, Mexico, Poland,
the Czech Republic, Slovakia and Hungary - experienced in the
nineties.
5. (U) Meeting OECD standards required the Chilean government to put
in place legislation in fiscal and tax affairs, anti-bribery,
corporate governance and to establish environmental institutions.
For a number of instruments, Chile requested and was given a one to
three year time-frame for full implementation. The OECD will
continue peer review and encouragement for Chile to continue to
raise its standards even after accession. For example, the Trade
Committee has asked Chile to provide a report after two years on
progress it has made to improve its intellectual property rights
protections.
6. (SBU) The accession process was smooth by all accounts, with
Chile hastening to meet a self-imposed deadline of December 2009 in
order to have OECD membership be one of the accomplishments of the
Bachelet administration. The only discordant note came from
Switzerland just prior to OECD Council consideration of the final
recommendations on December 11. Switzerland approached other country
representatives to raise its concern that claiming "developing
country" status at the WTO was inconsistent with OECD membership,
and proposing that Chile make a commitment similar to the one Mexico
made during its accession, namely that it would "participate in
other international organizations or groupings in a manner
consistent with the aims and undertakings of the OECD and with its
position as a member of the organization." Switzerland ultimately
backed off its request for such a statement from Chile, but did
include in its own Council statement the reminder that: "all members
accept that OECD membership includes the readiness to strive towards
continuous convergence and like-mindedness and, while respecting a
country's development status, an increasing readiness to compete on
a level playing field, and to participate in other international
organizations or groupings in manner consistent with the aims and

PARIS 00001732 002.2 OF 002


undertakings of the OECD and with their position as a member of the
Organisation." Note: OECD members Mexico and Korea are no longer
G-77 members, but - like Chile - are members of the General System
of Trade Preferences in the WTO. End Note.
7. (U) The OECD Council met on December 15 to formalize the
invitation. During a round of statements from OECD members, Chile's
commitment to sound economic policies was hailed along with
recognition of the many steps that it had taken to meet OECD
standards. Many OECD members noted that they had significant
relations with Chile, either in free trade agreements or other
bilateral accords. Members also praised Chile's entry as proof that
the OECD was about best practices, rather than GNP, and that the
entry of Chile would enrich the debate, as well as provide a bridge
to other countries in South America. USOECD Ambassador Kornbluh
praised Chile's success in reducing poverty rates, and quoted
President Obama's remarks that Chile provided an "example for all of
us that good fiscal policy and good economic policy ultimately
allows for prosperity - through good times and bad times." The U.S.
statement also pointed out that OECD enlargement expanded the reach
of the OECD and enhanced its future relevance.
8. (U) Accepting the invitation on behalf of President Bachelet,
Finance Minister Velasco stated that the OECD, for Chile, was first
and foremost a group of democratic countries, noting that Chile had
been working over the last twenty years to build and strengthen its
own democratic governance and respect for human rights. He said
that Chile was committed to domestic and international cooperation
as indispensable to achieving economic development and improving
human well-being. He called the OECD a "one-stop" shop for good
public policies. He also noted that Chile would be able to bring to
OECD discussions its experience in fiscal policy, crisis management,
pension reform and promoting social inclusions. In closing, he
expressed the hope that Chile would serve as a bridge between OECD
and non-members, "spreading the good work, but also bringing to the
table the concerns of the emerging economies." Speaking to the
Chilean media he said that Chile would now be able to sit as an
equal at the table with the most significant countries of the world,
but most importantly, countries committed to democracy and fiQ
poverty and inequality. Kornbluh

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