20 March 2003

Small states tackle discrimination

ITIO expands membership amid growing concern over protectionism by developed countries

In a clear sign of growing concern over discrimination by large, developed countries, two more small states have joined the International Trade and Investment Organisation to work for a level playing field in the trade in services.

New members The Isle of Man and St Vincent and the Grenadines bring ITIO membership to 16 countries across Europe, the Caribbean, Pacific, Latin America and Asia.

At the ITIO’s meeting in Panama City last week, high on the agenda was the preferential treatment given to developed countries by the European Union (EU), Organisation for Cooperation and Development (OECD) and International Monetary Fund (IMF).

Last year, by promising a level playing field between members and non-members, the (OECD) encouraged numerous small countries – including most of the ITIO – to agree to exchange tax information on request from 2006.

However, an expected EU directive on the taxation of savings gives four OECD member states – Austria, Belgium and Luxembourg and Switzerland – special treatment by allowing them to defer exchanging information until 2011 or later.

“The EU’s protectionist initiative drives a coach and horses through the OECD’s level playing field,” said ITIO Chairman Glenroy Forbes, “The OECD may need to rethink its plans.”

The IMF’s approach to tackling money laundering aroused further concerns. “We expect all countries to be held to the same standards in combating the scourge of money laundering, not one law for the big and another for the small,” said Mr Forbes, “The IMF must measure everyone with the same yardstick.”

The ITIO meeting also deplored the decision taken by countries both within and outside the OECD to blacklist some ITIO members in apparent violation of international law and trade rules, using OECD criteria. Members noted with interest the countermeasures being developed by Panama, such as not allowing firms from countries operating blacklists to bid for government contracts.

NOTES TO EDITORS

ITIO

1. The International Trade and Investment Organisation (ITIO) met in Panama City on 15 March 2003.

2. The ITIO was founded in March 2001 and groups 16 small and developing states across Europe, the Caribbean, Pacific, Latin America and Asia. It works for a level playing field in the trade in services, particularly in the development and implementation of new regulatory standards.

3. Members are Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Isle of Man, Labuan (Malaysia), Panama, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Turks & Caicos and Vanuatu.

4. The Commonwealth Secretariat, Pacific Islands Forum Secretariat, CARICOM Secretariat, Caribbean Development Bank and Eastern Caribbean Central Bank have Observer status.

Defining a Level Playing Field

5. The ITIO believes that all new international standards should be developed using the following non-discriminatory process:

• Get a full and fair picture – When considering a new/revised standard, first undertake benchmarking studies of existing ones in all affected countries, developed as much as developing ones.

• Have a big tent – Develop the new standards in a universal forum in which all affected countries can participate equally.

• Open the doors – Give the proposed and final standards wide publicity and hold transparent consultations with all stakeholders, including the private sector.

• Take a ‘big bang’ approach – Don’t force one country to introduce new international standards before another: everyone should jump together.

Getting Results

6. Following pressure from ITIO members, the OECD accepted references to a level playing field in all commitments to their “harmful tax competition” project.

7. ITIO members then ensured that the OECD Global Tax Forum’s Joint Ad Hoc Group on Accounts was opened up to all jurisdictions that had made a commitment.

8. The ITIO has since worked to see that the Joint Ad Hoc Group on Accounts operates a level playing field. Last November saw a joint communiqué with OECD members such as the United States, the UK, France, Germany, Canada, Mexico and Japan which welcomed “an enhanced sense of inclusive partnership amongst OECD and non-OECD countries and territories, working together to achieve common standards for transparency and effective exchange of information for tax purposes”, and agreed that “it is valuable to examine current and developing standards and practices in all countries and territories in taking this work forward to achieve a level playing field.”

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