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Financial Times

February 14, 2001

International Economy:
Acting on OECD list 'against law'

By Andrew Bounds

Any measures taken against countries branded as unco-operative tax havens by the Organisation for Economic Co-operation and Development would violate trade laws, a former OECD lawyer has said.

Mark Warner, an OECD commercial legal adviser until 1998, said its blacklist of tax havens was discriminatory under World Trade Organisation rules.

"This case has many elements of prima facie discrimination," he told a business audience in Panama, one of the 33 targeted countries, earlier this week. "It is very important to make clear in discussions (with the OECD) that you have legal rights."

Caribbean countries have considered taking the case to the WTO but feared aid being cut off if they did, he said. Mr Warner said the list had no objective criteria because if they had been applied, countries such as the US would appear. He also said the OECD had not proven tax competition was harmful.

Its 1998 report on the matter said: "Despite the inability to measure economic damage, the (OECD) countries agree such regimes are harmful." Mr Warner said they had no evidence and that it was "an abuse of power".

Countries could bring a WTO case only after sanctions, such as transaction costs, had been deployed, he said. For more reports see www.ft.com/globaleconomy

Copyright: The Financial Times Limited

 

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