GLOBAL FORUM - SECOND INTERVENTION BY
Sir Ronald Michael Sanders
Chief Foreign Affairs Representative of Antigua and Barbuda
15th October 2003

Yesterday when we began the discussion on the Level Playing Field, I reminded the meeting that Antigua and Barbuda had issued its commitment to the OECD in respect of the harmful tax competition initiative, on the explicit understanding that before we would adopt and implement any aspect of the project there had to be a level playing field.

I explained that while the level playing field was uneven when the qualified commitment was given, it had become manifestly more un-even as a consequence of the decision on 21st June by the EU Council of Economic and Finance Ministers that within the EU, Austria Belgium and Luxembourg will not be required to exchange information, but would apply a withholding tax, and their further decision that the same agreement would be extended to Switzerland, and that similar arrangements would extend to Liechtenstein, Monaco, Andorra and San Marino.

We were not looking for a perfect playing field, we wanted one that was simply level.

Nothing that my delegation heard yesterday has changed the situation created on 21st June. No member state of the OECD has been able to tell us that their own uncooperative members can be made to change their rejection of the principle of tax information exchange.

Instead, we have heard that we should continue to maintain our commitments to the project.

But, this is akin to asking us to commit economic suicide.

No amount of sophistry, such as we heard yesterday, can obscure the fact that a number of OECD members will be levying a withholding tax rather than engaging in exchange of information in respect of savings income.

It is highly unlikely that their OECD partners would apply any sanctions to them for this infraction. The playing field is therefore clearly more, rather than less, uneven now than it was at the time Antigua and Barbuda issued its commitment letter.

Further, in a response to a direct question yesterday our Co-Chair, Mr Gabs Maklouf, gave the official answer of the OECD to the matter of a level playing field as follows:

• Didn't have one;
• Don't have one;
• Do want one.

The official answer then is that there is no level playing field. Its consummation is devoutly to be wished.

Does it matter if the playing field is not level? It does if you are the representative of Antigua and Barbuda. It may not if you are from an OECD country. And here we see the problem.

The non-OECD countries in this Forum are not volunteers in this process. On the contrary we were press-ganged under threat of punitive sanctions..

The only condition we could demand was that our indenture in the service of the OECD project would be contingent on a level playing field.

This demand was not made for reasons of perversity, but to protect our small scale financial services activities that, despite their relatively minor share of world markets, are vitally important to the well being of our people.

We recognised clearly that unless all OECD member states were subject to exactly the same demands as are being imposed upon us, we would face disaster as financial services business left our shores for the likes of Austria and Luxembourg.

Our German colleague yesterday expressed the view that without the ability to be able to collect more of the taxes due, and believed deposited in Luxembourg, he would not be able to pay German contributions to the World Bank.

In a similar way, in the absence of revenue from financial services Antigua and Barbuda would have difficulty in servicing loans from the World Bank.

OECD member states have to recognise the fundamental dichotomy that lies at the heart of this Global Forum. OECD members remain focussed on enhanced tax collection. But those non-OECD members with an offshore financial sector need to defend this national and vital source of revenue. Our needs and requirements are not the same.

Non-OECD members, like Antigua and Barbuda, played no part in the architecture of this project, and are engaged only in the process of minimising its negative impact on our fragile economies.

The criteria of a level playing field, on issues of detail, content and timing, remain critical elements in our ability to minimise this damage.

The reality is that if Antigua and Barbuda agrees to continue its commitment to the Harmful Tax Competition Initiative in circumstances where several OECD countries are not in any way obliged to exchange information, we will be killing our financial services industry. The entire industry will drift to Austria, Belgium, Luxembourg, San Marino, Liechtenstein and Monaco.

My Government has a duty of care to its people.

We could not possibly tell the people of Antigua and Barbuda that we agreed to continue a commitment where our major competitors in the OECD have not. To do so, would be to condemn our people to perpetual underdevelopment and hardship.

In the circumstances, the EU Council of Ministers has caused us to have to suspend our conditional commitment given to the OECD last year. And, I now formally advise this Forum of this decision by my Government to suspend our commitment until the OECD is able to convince its member states to become cooperative jurisdictions.

Nothing said here should be taken to mean that Antigua and Barbuda is anything other than committed to continued bilateral cooperation in this area of tax information exchange. Antigua and Barbuda has established strong laws and enforcement machinery that exceed international standards to address the problems of money laundering and terrorism financing. We are proud of this achievement.

What is more our Legislature has empowered the Antigua and Barbuda Government, by primary legislation, to enter into Information Exchange Agreements. We will continue to honour to the full our existing tax information agreements and mutual legal assistance treaties, and we will also continue to negotiate bilateral agreements with other jurisdictions.