The Organization for Economic Cooperation and Development (OECD) is holding out the prospect of membership to Argentina, Brazil and Peru. For the countries, this is a rare chance to get their necessary reforms underway. The lure is investment and production profits.
by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung
This is good news for South America: the OECD has accepted the applications of Argentina, Brazil and Peru and invited these countries to begin negotiations to join the international organization.
This came as a surprise. Until now, the U.S. in particular had resisted speeding up the admission process – while Europe was more in favor of a faster expansion of the club of the wealthier 38 member states worldwide.
Along with the three South American countries, invitations have also gone out to the heads of government of Bulgaria, Croatia and Romania. In Latin America, Mexico (since 1994), Chile (2010), Colombia (2020) and Costa Rica (2021) are members so far. On average, countries and the OECD take between three and four years to complete negotiations. However, negotiations for Colombia’s admission most recently took almost seven years.
In South America, Brazil in particular believes it has a good chance of joining the OECD club by 2026 under the next government. Since 2017, Brazil has already been working on gradually adapting its laws to the OECD requirements. Around 40 percent of all rules are already compliant.
Under liberal President Mauricio Macri, Argentina has pushed hard for OECD membership. Whether his successors will still be interested in the next few years remains to be seen. The same applies to Peru.
The South American countries have difficulties above all with their tax systems and the equal treatment of foreign investors and capital. In addition, the economies of Argentina and Brazil are strongly closed to imports. Argentina also currently has an exchange rate regime. Brazil also taxes capital inflows from abroad differently. None of this is allowed under Paris Club rules.
For the countries, possible OECD membership is above all an opportunity to tackle the repeatedly postponed reforms in the financial sector and economy, but also in the fight against corruption or in environmental protection. Admission to the OECD, which stands for market economy and democracy, is like a seal of approval for the location and means a significant production gain for the economy in the medium term.
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