USCIB Interview:
OECD Deputy Secretary General Richard Boucher
Ambassador Richard Boucher, a career U.S. diplomat, was named deputy secretary general of the 30-nation Organization for Economic Cooperation and Development in November. (Chile will become the OECD’s 31st member once its legislature ratifies accession.) From 2006 to 2009, Ambassador Boucher served as assistant secretary of state for South and Central Asia, following upon a seven-year stint as assistant secretary for public affairs during which time he crafted the U.S. public approach on key world issues for three secretaries of state.
Ambassador Boucher, who has been tasked with spearheading the OECD’s enhanced engagement and accession processes, sat down for an interview with USCIB in Washington, D.C., earlier this month. Participants included Charles P. Heeter, Jr. (Deloitte), chairman of the Business and Industry Advisory Committee (BIAC) to the OECD, Timothy E. Deal, USCIB’s senior vice president for Washington, Jonathan Huneke, USCIB’s vice president for communications and public affairs, and Jill Schuker, director of the OECD’s Washington office.
Q: What brought you to the OECD?
I’ve always had a tangential relationship with the OECD, from my early days in the State Department’s Economic Bureau. I worked on Chinese economic reform throughout my career. And the last couple years I spent working with India, including economic subjects such as an investment treaty. I’ve had a career in international economics, even though I’ve often deviated from that to do public affairs or other things. So one of the things that appealed to me at the OECD was this is the organization that knows the most about how economies work, and that at a moment when we’re all scratching our heads again, and talking about how economies should work better, this was the place to be.
Q: What from your background have you brought with you to the OECD?
A sort of world-wide view. Whether it was public affairs or some of the other jobs that I’ve done, I’ve worked in all major areas of the world. I’ve tried to maintain a global outlook. So what I’d like to get from the OECD is the perspective on how economies work around the world. And what I’d like to bring to the OECD is to keep the global picture in mind, and to make sure that we stay relevant on a global scale.
Q: How do you explain the OECD’s relevance to Americans, especially business people?
It’s relevant on a bunch of different levels. Whether it’s chemical standards or tax treaties, or international bribery standards, it has a direct effect on how business operates, and how economies operate around the world. It’s the place where policy experts come together. And it’s where people who are doing regulation – in taxes, financial services, corporate governance –come together and compare experiences. They try to come up with best practices, standards and policies. It’s founded on experience, on what works. And if we want a world that’s based on real experience and not theory, I think the OECD is the best place to share that experience and come up with answers to the problems we all face in managing economies, managing companies.
Q: With the G8 giving way to the G20 as the primary high-level forum for global economic discussion, what is the role of the OECD?
We don’t know for sure. As the G8 evolves, as the G20 evolves, the OECD is going to evolve as well. What we’ve found so far is because we have the expertise, the shared policy experience of now 31 OECD members, and a substantial outreach effort to the bigger economies around the world, those organizations turn to the OECD and say, for example, “We need to look at fossil fuel subsidies, can you help us?” And, the answer is yes, we can help do that. Interested in innovation strategies? Well, that’s something the OECD is working on already and bringing countries together. Interested in labor? We’re working with the International Labor Organization on putting together a G20 ministerial on labor. We’ve got expertise in all these different areas, and we can develop new expertise as needed. And I think we’ll see people turn to us. That doesn’t mean we’re the only ones. Obviously, the IMF has a role, the World Bank has a role, the Financial Stability Board has a role, because there are financial issues and regulatory issues or development issues. But I think the core of economic management is at the OECD, as are the social impacts. How do you deal with some of the jobs and the employment problems caused by the crisis? How do you reestablish the structural potential of economies that might have been lost during the crisis? Those are issues we can help people with, bring people together. So what we’ll find is that these organizations turn to us in areas that we have the particular expertise or can develop it quickly, and they’ll turn to others where others have the expertise, and hopefully all this will work pretty well together.
Q: What can you tell us about the OECD’s accession and enhanced engagement efforts?
Chile is the first of probably four economies in the next six months that will come in. And Chile has done a bang-up job getting ready for membership, not only adjusting its own economy to meet the highest possible standards of economic management, but also bringing something to the table. We will learn a lot from Chile. We’ll look at Chile’s pension plans to enrich our understanding of aging societies. Slovenia, Estonia and Israel also seem to be on track. A couple more meetings and committees have to discuss the issues, but it looks like we’ll have them in by next June. Russia’s on a slower timetable. We all know there’s a lot for Russia to do. The fact that they’re interested in accession is good. I think it’s good for everybody in the business world. The more Russia does to bring itself in line with global standards, the better off we all are. They sent a very substantial delegation to the bribery meeting that was held in December, which is great. Everybody knows they’ve got a long way to go. But the fact that they’re serious and showing serious interest, that’s good for all of us. And the more they do, the better we all are.
Beyond that, we’ve got five enhanced engagement countries that we’re actively working with: China, India, Indonesia, Brazil and South Africa. And those are countries that have substantial weight in the world economy, that need to have substantial input into future world standards and best practices. We need their understanding to enrich our discussion. And we bring a lot to them as they face policy choices. How do different countries do these things? That’s what we can share with them. So my job is to “enhance” the enhanced engagement as much as we can, make it meaningful to those countries and to us. Beyond that, there is a broader outreach, to the Middle East, North Africa, Latin America, Southeast Asia, other places where OECD experience can contribute to countries that want to develop market economies, but where we can also learn from them as they face different development challenges. How they’re going about it, what they’re trying to do, and how some of them are succeeding.
Q: In Latin America, Chile is in line to join the OECD, and of course OECD Secretary General Angel Gurría is from Mexico. Has that increased the organization’s influence in the region?
The fact that we have Latin American members means we now have a different kind of experience coming in. As I said, Chile brings some really unique experience to the table. So does Mexico. It means that there are things for others to aspire to in the region. Others can look at those countries and say, “Hey, they got their act together and did it right, maybe we should too.” We’ve got programs with Argentina, Brazil and others. We need to show people in the region that the market route works.
Q: BIAC has observer members in nearly all of the enhanced engagement countries as well as in the accession countries. Can this network be helpful to you?
What we look to BIAC for generally is even more important in the enhanced engagement countries: What are the challenges people are facing? What are the problems, and how are they trying to solve them? It’s business people from those countries who, on a very practical level, must contend with unemployment insurance, or pension schemes or economic regulations. Also BIAC members who operate in these countries know the problems we need to solve in different places. Countries say “We want to be more competitive, we want to have a better investment environment.” Well, if we’re going to help countries achieve a better investment environment, you know the investors, as well as the host countries, the recipients. So that’s where the rubber meets the road.
Q: What specifically is involved in OECD accession? What do countries have to do to make the grade?
Each of the OECD’s 20-odd major committees goes through the practices of the country in its particular area of expertise. The tax people go through tax practices, bribery people go through what steps they take on bribery. And in areas where they think the country ought to do more to come up to standards – for example, passing intellectual property legislation, as has happened in one or two of the present accession candidates – they say, “Look, we’ll give you a positive recommendation if you do this.” The speed of accession is governed by the speed with which they are able to come through on those things. So just the process of accession has led to upgrading the quality of law and implementation. OECD doesn’t just say “You’ve got to pass these laws,” but “You’ve got to show us you can implement them, too.” A lot of really important social issues come through it as well. Enhanced engagement is more with a view to possible membership. We would love those countries to come in, but they’re going to come in when they’re ready. And what we need to do in the meantime is, as I said, make it meaningful for us and make it meaningful for them, meaning that when we have policy discussions we benefit from their experience, and when they face policy choices they get the benefit of our experience and our expertise. If you go back 30, 40 years, the OECD was at least 80 percent, if not more, of the word’s GDP. If we’re going to be the world’s premiere economic management organization, we’ve got to have that relationship with the countries that now constitute a significant portion of the world’s GDP.
Q: One USCIB member referred to China’s enhanced engagement as a “regulatory shopping cart,” meaning the OECD provides a supermarket of sorts where countries can choose the polices that best fit their needs. Is this how it works?
Well, if you’ll forgive the analogy, we don’t do enhanced engagement like a Chinese menu, where you’ve got to chose one from column A and one from column B. It is indeed more like a supermarket, where you go in and say “What do I need today?” It has a lot to do with the state of your economy. But it also has a lot to do with what you’re trying to accomplish. If you’re trying to attract investment, build long-term stability, go through structural reforms and changes, address currency issues, then you tend to go in the aisles where those products are.
Q: You have a unique perspective, having been in the government at high levels for a number of years, and then going into the OECD. What’s your perspective on how the OECD figures in U.S. policy making? Is it an important organization?
I think it’s always been important. It’s always been a part of our international economic picture. Where I think it’s becoming more important is on the domestic economy. We’re facing some fairly big economic challenges, and the people who are making domestic economic policy want to know what are other countries doing right now. I was really struck when we had a full-day review of Chinese economic policy. They face a lot of problems that are unique to their situation. But they also face the question of pulling back on the stimulus and going to more demand-led growth. At what point do we all have to slow down the expansion of monetary policy and credit in order to avoid inflation? How do they start unwinding state ownership? They face a lot of the same questions as we do. And I think we have policy makers here who understand we face a lot of the questions that others do. That doesn’t mean we’re going to grab somebody else’s method and use it. But you can learn from people’s experience without trying to mimic their ways. And I think this administration has a commitment to looking at the global picture. That means that the OECD is a very important organization to face those challenges.
Q: Has the fact that the economic downturn was so heavily centered in the United States and Western Europe led some countries to question the value of open markets or some of the other things the OECD stands for?
Not fundamentally. It’s interesting to look at people’s reaction to the crisis around the world. There are a few places that say, “We were protected because we were protectionists,” but not that many. Everybody’s wary. Everybody remembers the experience of the 1930s, or at least learned about it in school. And so one of the things on the G20 agenda is to watch out for trade and investment protectionism. We’re also learning to look for it in more subtle forms. I think countries by and large are committed to the global market economy, but they’re all watching each other pretty carefully. But the fundamental issue of markets, market incentives, tracking investment, developing jobs, productivity, technology, education, better labor policies, better competition – nobody’s really questioning those. They still believe that getting better at the fundamentals of economic management is the way to satisfy your population.
Q: How is OECD managing the planned revision of its guidelines for multinational enterprises?
We just had a big forum with a lot of corporate, NGO and labor input on where we go on the guidelines. I found it interesting; it was my first real introduction to the area, and there was enormous attendance and enthusiasm. Many pointed out the similarity of interests of local and international businesses in a given economy, the fundamental importance of national treatment, and that you may need guidelines that can apply to everybody. Companies want to be contributors to the long-term health of economies and societies. And so having a standard set of rules, a standard set of guidelines for everyone really does benefit everybody. We’d like to see everyone adopt more or less the same practices. We did that with the anti-bribery convention, and I think that was a very successful all around.
Q: The OECD convention on bribery just marked its tenth anniversary, correct?
Yes, and the history of that is very illustrative. When we passed the Foreign Corrupt Practices Act, U.S. companies had restrictions on them that nobody else did. Now we’ve come out a lot better because everybody is meeting certain standards. As new countries join the convention, that makes it better for business and for the countries themselves. I read that the Chinese government put out a report saying there was $35 billion in illicit payments in China last year. We now are moving to another level not just of recommendations, but of implementation and review. Countries will be reviewed for not just whether they passed a law but whether they’re carrying it out. It makes the business environment, the economic environment, and frankly the political environment so much more healthy in countries to have the process underway. It’s gone global, beyond the OECD, to a huge number of countries.
Q: Should the OECD be doing more treaty-making?
There are definitely a lot of areas where it doesn’t have to be treaty-making, but rather standard-setting. And sometimes maybe it’s just experience-sharing. But sometimes taking these things global really makes sense. Corporate guidelines would be an example, where perhaps we should try to have an international standard there that everyone can adhere to. Or on taxes, an area where the OECD has informed and helped create the international standard, but it’s also gotten bigger than us. I think there are a number of areas where we ought to do that to some extent, looking for advice from BIAC and others – what are the areas that would be most meaningful? And that’s where the work we do with big economies outside the OECD – with China, India, Brazil, South Africa, Indonesia, and Russia – can be really important, because this lets them get involved in the setting of future standards. They complain sometimes, “Why should we be expected to meet standards we didn’t have a hand in making?” It’s in our interest to have them involved in standard setting.
Q: What is the OECD’s involvement in the climate change debate?
I think energy and climate change is one of the most interesting areas we’re involved in. We’ve already done a lot of work on green growth. Everybody wants to know how to manage an economy so that it grows greener over time and is sustainable. How do you measure economic success? It’s more than GDP. It’s the ability to sustain the viability of your economy and population over time. We had a big meeting in Busan, Korea last fall on this. So a lot of these pieces come together – green growth, innovation, structural reform, measuring progress, and a number of other things – into the idea that people want to manage their economies better for the long term. I think the OECD has a lot to contribute, and is a good place for countries to get together to discuss, what kind of taxes work on energy, what kind of cap-and-trade systems work, what ways are there to give the right incentives to grow greener rather than just making rules about it.
Q: What’s the role of the International Energy Agency in all this?
There’s an incredible amount of expertise to draw on in a symbiotic relationship with the IEA. They have the annual World Energy Outlook, they have real experts in the use and development of energy, and we have a lot of the expertise on how that filters into the rest of the economy, and how you build your economy in the future. Having the IEA as part of this is a good way to look at the mandates that we’re getting from governments, which is: tell us how to grow greener without losing our growth potential.
Q: Last question: What can business do to make your life easier?
Give me ideas I can steal. Really, I think we’re all looking for good ideas these days. And tell us what we should be doing. We’ve got to be an organization that responds to the needs of our constituents – member countries, non-member countries, business, labor. Everybody who’s working on the world economy these days needs to come forward with ideas and on things we ought to look at together.
More on the Business and Industry Advisory Committee to the OECD
