Mr Harris said that the Organisation for Economic Cooperation and Development was compromising the sovreignty of island countries with its demands, and urged the affected member countries to stand together to defend their rights.

For small islands with little industry and few resources, the offshore industry represents a 'viable, legitimate and competitive economic opportunity,' the Nauru President told the 16 nation forum. 'But the rich states of this world have labelled it harmful tax competition.'

However, New Zealand Prime Minister Helen Clark, who also attended the forum, has urged caution. She disagreed with Mr Harris last week, saying that the issue was not about countries' rights to tax as they like, but about whether scams and fraudulent schemes would be allowed to go unhindered. 'We've been urging countries named by the OECD to comply in a way that satisfies the OECD,' she commented.

The Pacific Island Forum is comprised of: Australia, New Zealand, Fiji, the Cook Islands, the Federated States of Micronesia, Kiribati, Nauru, Niue, Palau, Papua New Guinea, the Marshall Islands, Samoa, the Solomon Islands, Tonga, Tuvalu, and Vanuatu.