Event description
Sovereignty, cooperation and dispute resolution mechanisms sit at the heart of some of the most consequential debates in the UN Framework Convention on International Tax Cooperation. Since the beginning of the negotiations, tax sovereignty has repeatedly been invoked in discussions over the scope of commitments, decision-making rules, reservations and the relationship between the Convention and existing treaty obligations.
For some countries, sovereignty arguments support caution: international tax cooperation should not unduly constrain domestic constitutional arrangements, legislative autonomy or national choices over tax policy. This concern has surfaced particularly in debates over whether decisions under the Convention should be taken by consensus or majority vote, and whether States should be allowed to enter reservations.
For others, however, the central problem is that sovereignty is already constrained by the existing international architecture. Unequal tax standards, treaty networks and investor protections can limit countries’ ability to design progressive tax systems, withdraw tax incentives or ensure that multinational enterprises contribute on comparable terms with domestic firms. From this perspective, stronger international cooperation may be necessary precisely to restore meaningful fiscal sovereignty.
Tax sovereignty is also subject to restrictions imposed by other legal frameworks, like international investment treaties. The interaction between tax rules and investor–state dispute settlement (ISDS) in investment treaties brings this tension surrounding tax sovereignty into especially sharp focus. Because many investment agreements do not comprehensively exclude taxation, tax measures can become subject to investment arbitration. This raises concerns not only about litigation after tax reforms are adopted, but also about potential chilling effects where governments contemplate withdrawing incentives, introducing new taxes or increasing the effective taxation of multinational companies.
This webinar will bring together critical perspectives to explore how sovereignty should be understood in the emerging Convention and what forms of cooperation are needed to protect rather than restrict countries’ fiscal policy space. It will examine decision-making rules, reservations and the relationship between the framework convention and its protocols and other treaties, with particular attention to proposals for an ISDS override or other mechanisms in the protocol on dispute prevention and resolution that would give tax-specific rules and dispute-settlement processes precedence over investment arbitration for covered tax measures.
The discussion will ask a broader question: how can the Convention reconcile national sovereignty with effective international cooperation, while ensuring that older treaty arrangements do not freeze the very policy space the new framework is intended to strengthen?
Speakers:
- Josefina del Rosario Lago, Policy Analyst, International Institute of Sustainable Development (IISD) (Argentina)
- Liselott Kana, Former Chair of Workstream II on the Protocol on Cross-Border Services and former Chilean negotiator (Chile)
- Miriam Ronzoni, Professor of Political Theory, University of Manchester (United Kingdom)
Moderator: Sergio Chaparro-Hernández, Tax Justice Network