G20 Urge Action On Doha And Tax Transparency

by Mike Godfrey, Tax-News.com, Washington

20 November 2008

The G20 Summit in Washington which resulted in numerous pledges and a broad consensus on the need for international co-operation to minimise the impact the financial crisis, and lessen the repercussions of a looming global recession, has placed renewed pressure on World Trade Organization (WTO) agricultural negotiators to square their differences with alacrity, and hence save the Doha round of free trade talks.

The communique released after the conclusion of the Washington Summit, though primarily focussed on increased financial collaboration and the need for greater international regulation, pledged specifically to seek a succesful conclusion to the Doha round:

“We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing WTO inconsistent measures to stimulate exports. Further, we shall strive to reach agreement this year on modalities that lead to a successful conclusion to the WTO's Doha Development Agenda with an ambitious and balanced outcome. We instruct our Trade Ministers to achieve this objective and stand ready to assist directly, as necessary. We also agree that our countries have the largest stake in the global trading system and therefore each must make the positive contributions necessary to achieve such an outcome.”

In response to this clear commitment from the G20 nations, the chairperson of the agricultural negotiations, Crawford Falconer, has pressed for negotiators to move urgently. The ambassador told delegates on November 17 that “agriculture negotiators will have to show changed positions within days — and by the end of next week (November 24-28) at the latest — if they are to fulfil the recent Washington summit’s pledge on the Doha Round”.

He called for movement particularly from officials of the 20 countries participating in the November 14-15 Washington Summit.

Ambassador Falconer noted that if the leaders believed that agreement was possible by the end of December, then their officials must have indicated to them that it would be possible to change positions sufficiently to reach consensus. Therefore, he urged that the time had come to reveal the shifts in position that countries were willing to make.

Pascal Lamy, Director-General of the WTO, having recently announced his intention to seek a second term, will no doubt be pleased that the fight to save the Doha round has been included in such an integral way in the G20 discussions. In recent speeches he has argued that trade should be central to the current push for greater financial regulation in the wake of the global financial crisis.

Whilst Mr Lamy welcomed the current enthusiasm for the building of a new Bretton Woods Consensus, he was clear that discussions on such global subjects needed to be as inclusive as possible.

In a recent speech to the Third Global Policy Network Conference in Beijing, he pointed out that “trade is not the cause of financial turmoil but good trade policies may be part of the solution. It allows unused resources linked to the fall in domestic markets to be exported. Trade opening can also be useful, by increasing the efficiency of affected economies, bringing fresh capital inflows — in financial services for example — and by providing new export opportunities. The resort to protectionism is made much more difficult for countries that wish, in a non-cooperative mode, to shield themselves from the exports of crisis-stricken countries.”

Mr Lamy argued that trade should once again be pushed up the agenda, specifically the saving of the Doha round, and not be forgotten in the scramble to create global financial regulation.

“So, trade is the low-hanging fruit in a complex set of issues requiring collective action now, including finance, the environment and energy. The question arises whether these issues should be tackled one by one or as some sort of “grand bargain”. My sense is that, even if these issues have to be solved one by one, there is a need for world leaders today to look at all these issues as parts of one reality: the need to achieve a better redistribution of powers between developed and developing nations and the assumption by all nations of their corresponding responsibilities to tackle these global challenges. All nations need to make their contribution to a global solution. The Doha Round can be fixed now. Let’s fix it while devising solutions to the rest of the challenges.”

He will no doubt be gratified to learn that world leaders were apparently listening.

Tax Transparency

The Washington Summit communique also urged that “tax authorities, drawing upon the work of relevant bodies such as the Organization for Economic Cooperation and Development (OECD), should continue efforts to promote tax information exchange. Lack of transparency and a failure to exchange tax information should be vigorously addressed.”

The process of increasing tax transparency is however already well advanced, with a spate of recent Tax Information Exchange Agreement (TIEA) signings, against the backdrop of a threatened OECD blacklist second coming. The OECD declared itself satisfied with progress following a recent week that saw the signing of 16 new bilateral TIEAs:

"The latest agreements represent a significant extension of information exchange networks in place in these jurisdictions, showing their commitment to implementing OECD’s standards of transparency and exchange of information in tax matters," the organisation noted.

There have been 44 TIEA arrangements put in place since 2000 when the OECD began its first offshore crackdown. The Isle of Man is leading, with 11 such pacts; Jersey has signed 10, Guernsey nine, the Netherlands Antilles four and the British Virgin Islands three. Bermuda also has three of these agreements, having signed its first bilateral pact with the United States in 1986.

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