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Financial Times

April 3, 2001

Caribbean to lobby for US support

By Canute James in Kingston

     Caribbean countries, whose tax havens and offshore business practices are under attack, will this week try to get the support of the US and Latin American governments in deflecting criticism from industrialised states. 

     Finance ministers from the Caribbean will use a meeting starting in Toronto on Tuesday of the hemisphere's finance ministers, to explain their reasons for objecting to demands for changes in their tax policies, and in the management of offshore financial centres.

     Offshore jurisdictions, many of which are in the Caribbean, have been told by the Organisation for Economic Cooperation and Development, which is made up of the world's industrialised countries, that they are offering "harmful tax competition" in seeking international finance business with no-tax and low-tax incentives.

     The OECD has backed the charge with a threat to impose sanctions in July unless the offshore centres agree to its standards of non-discrimination, transparency and effective exchange of information.

     The Caribbean finance ministers are particularly keen on speaking this week with Paul O'Neill, the US treasury secretary, according to one official. 

     "We think it will be extremely important that Mr O'Neill gets a full flavour of the Caribbean's view of this matter," said Sir Ronald Sanders, Antigua's chief negotiator with the OECD.

     Caribbean officials have suggested that the US appears to be breaking ranks with the other members of the OECD in the attack on the offshore centres.

     This is based on statements six weeks ago by Mr O'Neill, and which regional officials say has raised doubts over the Bush administration's continuing support for the OECD's contention that offshore jurisdictions provide "harmful" tax competition.

     However, OECD spokesmen have said that there is no change in US policy, and that the US position represented a "natural" examination of existing policies by a new administration. 

     The Caribbean finance ministers are also hoping to get Latin American support for their proposal, which is being discussed with the OECD, that the issue of harmful tax be discussed in a "global" forum, and not one comprising only the OECD members and the offshore jurisdictions. 

     "We will ensure that the finance ministers of the Western Hemisphere have a full appreciation of the difficulty that this has caused the Caribbean," said Sir Ronald.

     "The OECD has started out with small jurisdictions because we are seemingly powerless, but there is a number of Latin American countries that would qualify as having harmful tax competition regimes. 

     "The OECD will move in their direction after they are finished with us. The OECD has made out that the issue is about offshore banking and tax havens, and they have managed to confuse about the real intent, which is to get at taxation on investment and trade"

 

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