Joint statement: It’s time for the OECD to walk the talk on human rights

The UN General Assembly is expected to approve the terms of reference for negotiation of a Framework Convention on International Tax Cooperation (UNFCITC) in November. This will be the latest milestone in an historic initiative to shift global standard setting on tax cooperation from the Organisation for Economic Cooperation and Development (OECD), which only represents the interests of the 38 most industrialized nations, to the UN, where all countries have a voice.

As a civil society collective working towards social, economic, racial and climate justice, we call on the OECD to support the UN process and to provide a meaningful response to the concerns raised by both UN experts and civil society that its proposed ‘two-pillar solution’ to cross border tax abuse would prejudice human rights in developing countries.

In December last year, a group of eight UN human rights experts, including the Independent Expert on Foreign Debt and Human Rights, the Special Rapporteur on Racism and the Special Rapporteur on the Right to Food, made a historic communication to the OECD warning of the negative human rights impacts of its ‘two-pillar proposal’. The experts warned that the OECD’s reforms would widen racial and gender inequality both between and among countries whilst robbing the already impoverished countries of the Global South of much needed revenue to resource economic, social and cultural rights. The communication further laid bare how the OECD’s reforms would prejudice the predominantly non-white nations of the Global South, thus impeding their right to development and exacerbating poverty and inequality.

In August, an Ad Hoc Committee established in accordance with a resolution brought forward by the Africa Group adopted the terms of reference for negotiations by landslide majority, with 110 nations in favour, 44 abstentions and 8 countries voting against. The terms of reference are notable for including adherence to human rights principles as an objective of the Convention. Most OECD states abstained from the vote whilst several opposed the motion. The OECD had previously sought to undermine rights-aligned reforms through the UN process. Throughout the sitting of the Ad Hoc Committee, OECD countries have argued that the UN process should remain complementary to parallel OECD reforms; that the UN process amounts to duplication; and that agreement should be achieved by consensus – a criteria that would allow veto power for OECD countries through the back door.

As a collective of organizations working on social, economic, racial and climate justice, we wrote to the OECD in May, demanding that it meaningfully respond to the arguments and evidence presented by the UN human rights experts and that it commits to carrying out human rights impact assessments – including the potential of racial and gender impacts – of the ‘two pillar proposals’.

We received an unsatisfactory response from the OECD in which they insisted that they are “fully committed to UN human rights mechanisms”; “supporting gender equality” and “fighting all forms of discrimination”. Without substantiating its claim, the OECD alleged that its global corporate minimum tax would be beneficial to countries in the Global South. The OECD also alleged that because every country has the “sovereign choice” to decide whether to participate in its tax reforms it is unfair to accuse it of any kind of wrongdoing.

In August, we responded to the OECD reiterating the deleterious effects of its ‘two pillar proposals’ for countries in the Global South. Chief amongst these concerns are how its global minimum corporate tax would result in a race to the bottom, how any revenues raised would be miniscule and that the OECD has failed to counter evidence of the negative racial and gender impact of its proposals.

We also strongly raised our concerns about how undemocratic the OECD’s tax reform processes have been, repeatedly sidelining the distinct interests of countries in the Global South on numerous occasions. For instance, Global South countries have pushed for different approaches to international taxation such as unitary taxation and a higher threshold for a minimum corporate tax which would ensure a more equitable allocation of taxing rights and address inequities baked into the international financial architecture. We also highlighted examples of how the OECD has overridden the sovereignty of states especially in the Global South and used coercive tactics to ensure that compliance with its standards are inescapable.

To date, the OECD has failed to respond to our second letter, thus prompting us to make this correspondence public in accordance with universal principles of transparency and accountability.

The OECD has held stewardship of global tax reform processes for over six decades, having been handed this responsibility by a small number of powerful nations during the era of decolonisation. We have elsewhere laid bare how the establishment of tax havens, which are part and parcel of a system of international tax abuse that siphons $492 billion from tax authorities each year, were also prompted by decolonisation.

The time for this neocolonial approach to global tax governance is over. UN human rights experts were correct when they said that the UN-led process represents a “once-in-a-lifetime opportunity” to reform the international financial architecture so that it is fit for purpose and can address the polycrisis of our times – including the debt, climate, poverty and inequality crises – all of which disproportionately impact the countries of the Global South.

It is no longer sufficient for the OECD to make a rhetorical commitment to human rights; it must demonstrate its commitment to global economic governance that is centered on achieving dignity for all within planetary boundaries.

Signatories:

Center for Economic and Social Rights
ESCR-Net
The Government Revenue and Development Estimations (GRADE)
University of St Andrews
Minority Rights Group
Movement Law Lab
Steven Dean, Professor of Law at Boston University (signed in his personal
capacity)
Tax Justice Network

Correspondences

• UN independent experts communication to OECD (22 Dec 2023)
• Joint civil society letter to OECD (19 May 2024)
• Response to civil society from OECD (2 July 2024)
• Follow-up letter to OECD from civil society (19 August 2024)