Statement
By
Sir Ronald Michael Sanders
Chief Foreign Affairs Representative with Ministerial Rank
for Antigua and Barbuda
at a Roundtable on Monday, 13th October 2003
organised by the Centre for Freedom and Prosperity
at the Chateau Laurier Hotel, in Ottawa, Canada

Let me first thank the representatives of the Centre for Freedom and Prosperity for organising this event. I also want to acknowledge the years of effort they have devoted to resisting the Harmful Tax Competition Initiative of the Organisation for Economic Cooperation and Development (OECD).

It is no secret that the view of the Government of Antigua and Barbuda is that whatever merits there may be in regulating cross-border taxation and in exchange of information on tax matters, the OECD is not an international standard-setting body and it has no legal authority to seek to create standards and impose them on the rest of the world.

We know that the OECD is as aware as we are that it is usurping the role of truly international organisations. This is why it threatens non-OECD jurisdictions with sanctions. Lacking the legal authority to set standards for others, it imposes its will by coercion.

Were it not for the threat of sanctions by the OECD, I doubt that any of the persecuted jurisdictions would have signed commitment letters in any form whatsoever.

In a sense, by making commitments to the OECD, we have been complicit in a violation of international rules and practices, we have contributed to the weakening of the principle of multilateralism, and we have opened the door for larger and more powerful organisations to push us even further to the margins of international decision-making.

When we signed the commitment letters, there was no level playing field.

The deck was already stacked against us.

But, we made it clear that the commitments were contingent on the creation of such a level playing field.

We favoured the creation of identical rules, negotiated with full participation by OECD and non-OECD jurisdictions, implemented on the same time table, enforced by the same process, and verified by machinery on which all jurisdictions are represented.

However, instead of the playing field being levelled; it is now more uneven than ever.

The process of disadvantaging the already persecuted jurisdictions began in December 2002 when the President of the European Union stated that certain OECD member countries had been granted special concessions on the implementation of exchange of information provisions on tax matters.

On 13th December, within days of this announcement, I wrote to the OECD Secretary-General Mr Donald Johnston, stating that, in light of this statement by the EU Presidency, Antigua and Barbuda considers that "the conditionality of a level playing field amongst participating members of the OECD Global Forum no longer exists".

I had asked then for "a special meeting of the Global Forum early in the new year to inform all participants of the situation in regard to the position of certain EU members states and to examine whether or not a sufficient consensus remains to render the work of the OECD Secretariat in the Global Forum viable in the months ahead".

Then on 21st January this year, the EU Council of Economic and Finance Ministers decided that within the EU, Austria Belgium and Luxembourg will not be required to exchange information, but would apply a withholding tax.

It agreed further that the same agreement would be extended to Switzerland, and that similar arrangements would extend to Liechtenstein, Monaco, Andorra and San Marino.

This caused me to write to the OECD Secretary-General, six days later on 27th January. On this occasion, I said "It is now patently and blatantly clear that no level playing field exists and jurisdictions, such as Antigua and Barbuda that have committed to participate in the OECD Global Forum are being placed at a severe disadvantage".

I pointed out to Mr Johnston that the OECD was continuing to issue documents adumbrating new standards as if nothing has changed, and I said, "However, everything has changed". And, everything had changed.

Therefore, my country's purpose in attending the OECD Global Forum over the next two days is to determine whether there is any basis for continued participation in the OECD Global Forum.

As far as Antigua and Barbuda is concerned, we considered the premise of any commitment to the OECD's Harmful Tax Competition Initiative to have been destroyed on 21st January 2003 when the EU Council announced its decision with respect to three of its member Sates and the special arrangements for five other jurisdictions.

It is not we who created this rupture; it is they.

Antigua and Barbuda's conclusion on this matter was further strengthened on 18th September when the Council of the OECD held a meeting at which it announced that "there was no consensus on a draft recommendation on improving access to bank information for tax purposes".

This served only to convince us that within the OECD there is no agreement on exchange of information in civil tax matters. Yet, they wish to impose upon us measures that they cannot agree to implement within their own States.

At the meeting of the OECD Global Forum tomorrow and Wednesday, I hope that the OECD will not argue that the parameters on which we made the commitments have not changed. For this would be a disingenuous position to which persecuted jurisdictions should give absolutely no credence.
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Mr Johnston himself in a letter to the EU Commission in January fully acknowledged that the EU decision had made the already uneven playing field even rougher for non-OECD jurisdictions.

The September meeting of the OECD Council which failed to reach consensus further illustrates the point that the parameters of the commitment from non-OECD jurisdictions have changed, and changed significantly.

I have no doubt that, even in these drastically altered circumstances, there will be member countries of the OECD that will argue that the OECD should still blacklist those persecuted jurisdictions which, like mine, feel that the commitment we gave last year is no longer sustainable.

But, if in 2000 the OECD had no legal or moral authority to blacklist our countries, the Organisation has even less legal or moral authority to do so now.

Any blacklisting of our countries for not agreeing to exchange of information on civil tax matters in circumstances where OECD countries have been exempted from requirements for such exchange of information would be a grave abuse of power. It is an abuse which persecuted jurisdictions should challenge in appropriate international fora such as the World Trade Organisation where Antigua and Barbuda and other countries tabled this matter last week.

I make the further point that any decision by the OECD to continue the illegality of blacklisting countries should be taken in accordance with normal OECD procedures which demands consensus. Therefore, its member states Austria, Belgium, Luxembourg and Switzerland should be present and voting when that decision is taken. It would be instructive to see the result of such a vote since, to date, none of them have been included in the OECD list of uncooperative jurisdictions.

I want to make it clear that Antigua and Barbuda has no fear of exchange of information. On criminal matters, we have a number of Mutual Legal Assistance Treaties under which we exchange information with several countries. On matters of tax evasion, we also have Tax Information Agreements with a number of countries including the United States, and we have indicated our readiness to negotiate such Treaties with Canada and Australia who have approached us.

These are negotiated treaties in whose terms we play a full part. They are not imposed. What is more in Antigua and Barbuda, we have passed legislation in our legislature permitting us to exchange information with states with which we have concluded tax information agreements. But this legislation balances the obligation to exchange information with the privacy rights of the individual in non criminal activity.

How do we go forward from here?

Much will depend on how the OECD now wishes to deal with this matter. If threats and coercion remain their preferred method of doing business, their project will get no willing support from countries such as mine.

If, however, the OECD admits that the playing field is not level and there is no prospect of it being so, and, in this context, they offer to work with us in a genuine international forum in which they are not both player and referee, then there would be a basis for going forward.

For my country, there are two elements that could keep cooperation between OECD and non-OECD jurisdictions alive.

The first is the acceptance by the OECD that all jurisdictions have the right to adopt the decision of the European Union Council of Ministers and could, instead of exchanging information, apply the principle of a withholding tax or "equivalent measures" as was conceded to the United States.

The second is to agree to the establishment of a genuinely global forum under the United Nations umbrella in which each country, including those who are not now involved as either OECD or non-OECD countries, are fully represented to debate and set standards for tax competition and regulation.

We have seen the present OECD project fail for lack of support among its own.

Any new process must be transparent, inclusive and democratic.

The idea that the present hierarchical and exclusionary system should continue in which some of the member states of the OECD set standards for the rest of the world is as unacceptable to Antigua and Barbuda, as it is to the OECD member states who refuse to accept them.