March 2019

By Daniel P. Erikson and Willa Lerner

Mexico is celebrating its silver anniversary. Chile is getting close to double digits. Colombia has made its debut. Costa Rica is practicing its steps. Argentina, Brazil and Peru are still waiting to be asked to dance. 

Which Latin American country will be the next one invited to join the Organisation for Economic Cooperation and Development (OECD)? After a year of changing fortunes, the contest still remains very much up in the air. Founded in 1960 by 20 original members, the OECD has only accepted 17 new members in the past six decades, with only three of those hailing from Latin America. Still, many countries across the world strive for accession each year, hailing from Europe, Latin America, Asia and elsewhere.

Mexico became the first Latin American country to earn membership into the OECD in 1994. It took an additional 16 years for another Latin American nation, Chile, to accomplish the same feat in 2010. But the trend is accelerating. In May 2018, Colombia became the third Latin American country to earn OECD membership. With Costa Rica in the accession pipeline, and with Argentina, Brazil, and Peru all signaling their desire for an invitation, the opportunity for a broader Latin American presence in the OECD appears increasingly realistic. The pace and sequencing of that expansion, though, is more difficult to predict. Since our 2018 update, Latin America’s reach for the OECD continues to be characterized by the steady, persistent, efforts of the countries striving for accession amidst a season of political volatility.

For many in the international community, membership in the OECD is viewed as a critical step to gaining a stronger foothold in the global economy and winning respect as a desirable destination for foreign investors. In order to join, countries must meet significant requirements and closely follow the guidelines of “accession roadmaps,” including earning a spot in 23 different OECD committees. The OECD governing body, made up of all OECD members, grants the roadmaps—but any member of the organization may refuse a nation’s petition for accession. For the countries of Latin America, these guidelines and roadmaps focus on increasing productivity, enhancing social inclusion, and strengthening institutions and governance across the region.

Colombia steps forward

Colombia became the 37th member of the OECD on May 30, 2018, five years after opening accession talks and receiving an accession roadmap. Prior to accession, Colombia conducted a thorough review and reform of its justice, trade, labor, and corporate governance systems and developed new environmental and sustainability oriented policies. Colombia’s membership in the OECD was made a priority by former President Juan Manuel Santos, and he praised the country’s formal entry into the organization, stating “Colombia already has clear evidence of the impact that the OECD can have in a Latin American country. The accession process has initiated several institutional reform processes and triggered very important internal reflections... It is a region that can benefit greatly from the concepts promoted by the OECD in the areas of governance, transparency and inclusiveness.” As a candidate, President Duque questioned the wisdom of joining the OECD, but as president he has participating in OECD Council meetings and restated the country’s commitment to membership.

Costa Rica on the verge

Almost four years into work on its accession roadmap, Costa Rica continues to make progress on the path to membership. As of November 2018, the nation had completed 12 of the necessary committee reviews—marking the halfway point on its journey to becoming the first Central American member of the OECD. President Carlos Alvarado, elected in May 2018, is aiming to accelerate the process by creating a Special Commission for OECD Affairs within the Costa Rican Legislative Assembly. The commission will lead efforts to adopt certain OECD-related bills in the areas still requiring alignment, including in the fields of competition law, fisheries management, and financial markets. Costa Rica’s roadmap also contains a concentrated focus on reducing expenditures, increasing tax revenues, and improving education and employment opportunities.

Argentina on the move

Argentina has been active in the OECD since the early 1990s, but only initiated a request for accession in June 2016. Under the leadership of President Mauricio Macri, Argentina has closely implemented an OECD-approved Action Plan and participated in a number of OECD committees. In the latter half of 2018, rumors began to arise regarding the possible granting of an accession roadmap. Throughout the year, President Macri capitalized on Argentina’s G20 leadership, using the Summit to highlight the country’s economic development and commitment to OECD values and to garner favor with the U.S. and other G20/OECD members. Although the Macri administration claims to have support for Argentina’s accession request from all member nations, no official accession roadmap has been presented. Comments from OECD leadership recognize important improvements to Argentina’s tax and infrastructure systems, but also indicate that significant progress is needed on poverty, inequality, and educational challenges before a roadmap can be effectively implemented.

Brazil eyes and opening

When newly elected Brazilian President Jair Bolsonaro makes his first official visit to Washington, DC next week, Brazil’s bid for OECD membership will be among the priorities he will seek to advance. Following a timeframe similar to that of Argentina, Brazil has been an active participant of OECD committees since the late 1990s and a “Key Partner” since 2007. Brazil is the most engaged of all the Partner countries, serving as an Associate in 9 OECD committees and a Participant in 15 others. In May 2017, Brazil became the first Key Partner to request membership to the OECD. While the country waits for an accession roadmap, the newly-inaugurated Bolsonaro administration has continued efforts to reform tax and transfer pricing regulations to meet OECD standards and has been public mulling an official request to the Trump administration to support its bid. If the Trump Administration does endorse Brazil for OECD membership, this will be a striking reversal of the positon of previous U.S. governments, which have traditionally been cool to the idea of bring Brazil’s still largely closed economy and often challenging diplomacy into the “rich countries’ club.”

Peru plays the long game

Peru, too, is awaiting an accession roadmap after having first made a request for membership in October 2016. As a member of the OECD Country Programme, Peru has enacted over 29 legislative decrees to implement OECD recommendations. These decrees encompassed reforms in areas including waste management, transparency and exchange of information in tax matters, regulatory policy, cross-border bribery, and rural and urban development. In May 2018, Peru also ratified both the Anti-Bribery Convention and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, two conventions that continue to strengthen the country’s alignment with OECD values. Former U.S. Secretary of State Rex Tillerson indicated support for Peru last year, and country appears committed to doing the work even while the rewards remain at bay.

Next Steps

2018 marked another big step forward for Latin America’s involvement in the OECD, as Colombia became the third Latin American nation to achieve full membership. Meanwhile, the three current Latin American candidates are joined by a set of European countries, including Bulgaria, Croatia, and Romania, who are all awaiting the OECD’s next move. With new leadership across the region and evolving strategies for countries hoping to accelerate the process, 2019 may be the year that the next Latin American candidate for OECD membership finally gets its turn.