Pacific Countries Say OECD Changes Not Enough

Cook Islands Government

27 July 2001

This story is reproduced by kind permission of the Cook Islands Government at: http://www.cook-islands.gov.ck

The deadline for committing to the demands of the Organisation for Economic Cooperation and Development (OECD) under its harmful tax practices initiative may have been pushed back by four months but the Cook Islands and other offshore financial jurisdictions still perceive the time factor as a threat.

At a meeting in New Zealand this week, six of the seven Pacific Islands countries listed by the OECD as being required to make certain commitments, said they required a better understanding of the issues involved and wanted more detailed information before considering how to proceed further. The underlying feeling was that moving the deadline back did not remove the perception of being threatened with compliance.

Leading the Cook Islands delegation and the most senior representative among the sub-Regional group, Prime Minister Dr. Terepai Maoate told OECD officials that the jurisdictions wanted to act as a group and would consult each other while considering any undertaking with the organisation. In addition, Dr. Maoate now wants to take his concerns into the political arena of next month's Pacific Islands Forum in Nauru so that the seven jurisdictions can receive guidance from other political leaders.

The three-day gathering in Auckland began with an introductory session between the OECD Secretariat and delegations from the Cook Islands, Nauru, Niue, Samoa, Tonga, and Vanuatu. The Pacific Islands Forum Secretariat was also in Auckland to assist the delegations. The Republic of the Marshall Islands was unable to attend. A meeting of the jurisdictions followed that session, and then a series of bilateral discussions took place between the delegations and officials from the 29-member organisation based in Paris. New Zealand and Australian officials also participated in the meetings.

During the introductions, Niue's Deputy Premier Young Vivian said the OECD had not given the Pacific Islands a fair hearing because questions they submitted three months ago over the OECD's harmful tax practices initiative haven't been addressed. The previous bilateral discussions held in Suva last April produced a number of questions related to the OECD project but they had not been specifically answered, he said.

Instead, the OECD announced that a number of modifications had been undertaken and incorporated into the 2001 Progress Report of the OECD's tax practices project. That report has still not been finalised although officials from the organisation said some of the concerns raised by the Pacific Islands had been catered for under the Report. One of the modifications was the delay in the deadline from 31 July 2001 to 30 November 2001.

Dr. Maoate said it would have been beneficial to the understanding of the jurisdictions if the OECD had provided the Report to the meeting or at least a Summary. An oral rendition of the Summary, he said, was inadequate because he needed time to read an official document and digest the information and the changes made.

Among the changes to the OECD project are an amendment to the OECD's request for commitments, and the conditions under which defensive measures will be applied. However, the Pacific Islands jurisdictions said the changes did not go far enough. Many issues remained unanswered or unclear, particularly in relation to the process being pursued by the OECD, the uncertainty over how the project will be applied, and the implications for the Pacific Islands jurisdictions if the commitments were to be undertaken.

Recommended