The slow re-configuring of the global institutional landscape on development, but in what direction?

A second Guest Post by Siobhán Airey, doctoral researcher in international law and aid at the Faculty of Law, University of Ottawa, Canada, as she gives her thoughts on the unfolding of the 3rd Financing for Development Summit  taking place this week in Addis Ababa, Ethiopia from the13th -16th July. Read the previous one here.

There has always been subtle and explicit resistance from the global North to the UN being the recognised international forum for global direction and decision-making on the nature and delivery of development. The history of post-independence efforts from Southern states to use the UN as the forum to debate and plan for development is a record of their ambition meeting sophisticated and ultimately successful Northern intransigence (Pahuja 2011).

Addis can be seen as another page in a chapter from that wider ‘book’ which follows from the Monterray (2002) and Doha (2008) conferences in which debates on the representativeness and accountability of the major international development organisations were central.

This Addis conference continues this debate in explicit and less tangible ways. Explicit is whether or not there will be international agreement to establish an intergovernmental tax body that is truly representative of all UN member states. Currently, the domestic and international tax regimes allow an enormous financial outflow from the global South to (mainly) the global North. Tax rules that facilitate tax havens, tax loopholes, tax incentive schemes for certain forms of private investment and other tax mechanisms play a huge role in facilitating the international flow of money, leading to tax avoidance and tax evasion. The result is that developing country states lose enormous amounts of money that could, in theory, support the delivery of essential public services in health, education, infrastructure and so on. Some estimates have put this at US$50 billion a year.

CSOs and representatives of many Southern states argue that only an intergovernmental UN Tax Body can effectively have the mandate and the authority to effectively address this complex area. They propose that the current UN Committee of International Experts on International Co-operation on Tax Matters, while useful, does not have the resources or the mandate to effectively lead on this area.

However, the OECD’s Forum on Tax Administration (Forum) has, since 2002, claimed for itself a ‘global’ leadership role in tax administration. This role has come under much critical scrutiny from CSOs with the Forum’s recent work on Base Erosion and Profit Sharing (BEPS) that focuses on international corporate income tax matters. It includes an ‘Action Plan’ and reporting mechanism along with a proposal to develop a multilateral instrument that will set international standards in this area within the next 2 years. The latter element of its work has attracted particular negative attention. Why can’t the UN be used as the forum to develop this international instrument? Though the Forum’s work on engaging and consulting with developing country states is acknowledged, critics point out that the OECD remains an international organisation whose membership consists of strong Northern economies. Thus the Forum’s approach to addressing international corporate tax matters does not fully address developing country states’ interests or development profile, for example their ongoing difficulties in taxing the natural resources sector (one dominated by northern-registered extractive companies); the significance of the informal economy and their different profile in terms of the role of industrialisation in development.

Debates on this – whether a commitment to establish an intergovernmental UN Tax Body is reached - are one of the three issues now at the heart of the Addis conference negotiations.  It is clear that this issue is the latest iteration of the ongoing discussion on the role of the UN in international economic affairs and the continuing efforts by Southern states to seek a more representative forum for debate and direction on the institutional and legal architecture on international economic development.

From a Southern perspective, if ‘partnership’ is to remain a relevant concept in contemporary development relations between northern and southern states; between international donors and aid-recipient states, and between these and the international development organisations, the processes underpinning this partnership must move beyond ensuring the mere presence and consultation of Southern states, to their effective voice in decision-making.

It will be interesting to see what the negotiations in Addis on the proposal to develop an intergovernmental UN Tax Body will reveal on the continuing story on the role of the UN in global economic relations.