Thursday, April 12, 2012

Controlling policy debate on trade & development

UNCTAD has issued a letter decrying attempts by the OECD to silence it as a voice in the international economic development debate:

"Since its establishment almost 50 years ago at the instigation of developing countries, UNCTAD has always been a thorn in the flesh of economic orthodoxy.  Its analyses of global macro-economic issues from a development perspective have regularly provided an alternative view to that offered by the World Bank and the IMF controlled by the west.
Now efforts are afoot to silence that voice.  It might be understandable if this analysis was being eliminated because it duplicated the work and views of other international organizations, but the opposite is the case - a few countries want to suppress any dissent with the prevailing orthodoxy. 
...At time when pluralism is finally being meaningfully discussed in the election of the  President of the World Bank, it is ironic that OECD countries are endeavouring to stifle  freedom of speech within another multilateral organization."

The letter is signed by a long list of people, including Dani Rodrik.  The Tax Justice Network posted the letter along with this disturbing addendum:
John Burley, who worked for UNCTAD for many years in senior positions, and who coordinated the letter, gave a presentation in Geneva in which he provided some background information (supplemented with a couple of comments in an email):

"An attempt is going to be made there, on the basis of what we hear ... at the moment, to change UNCTAD's mandate by denying the organisation the right to continue – and I emphasise: to continue – to analyse and report on global macroeconomic issues, including the role of global finance in development.
. . . This is not a matter of money: it is an attempt to dilute the mandate of UNCTAD to work on macro-economic and global finance issues."
... Why is the UNCTAD message so unwelcome? The fact that UNCTAD has no formal responsibility for the global management of the international economy and none of its own funds to dispense means that its analysis is free of vested interests. ... 
... And it is precisely in its analysis of interdependence that UNCTAD brings added value to an understanding of how the functioning of the global economy impacts on the majority of the world's population who live in developing countries. Given the current pressure on the organisation and its secretariat, that contribution could now be gone for good (our emphasis).
. .
The developed countries in Geneva have seized the occasion to stifle UNCTAD's capacity to think outside the box. This is neither a cost-saving measure nor an attempt to "eliminate duplication" as some would claim."
This is not about tax policy per se though quite clearly tax policy is a major part of trade-based development initiatives.  So it is worth connecting this to the OECD's control of rhetoric over international tax.  The OECD likes to call itself a "market leader in tax policy," a self-assessment I often refer to as an understatement because there is not much competition in this market, if any, and the OECD seems to work rather diligently to ensure that remains the case.  India's response to the OECD's position on transfer pricing is a current example, as TJN notes in their post; they also point us to this guest post by David Spencer that outlines the ongoing tension between the OECD and UN tax committees.

There are high barriers to entry in the international tax policymaking market--you've got to have the right infrastructure and resources so you can hold conferences in attractive locations and get important people to show up and network together, and you need to be able to display some indication of your ability to influence national legislatures to adopt norms you develop.  The institutions that can do that, like the OECD, can only keep doing that so long as people don't start to think they fail to represent consensus, sufficiently to erode the influence of their ideas in political discourse.  As we know, high barriers to entry are good for the established monopoly, and the case seems no less true for the production of ideas, judging by the many efforts to eliminate competition.

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