International Organisations, Blacklisting and Tax Haven Regulatory Reform

Sharman, Jason. "International Organisations, Blacklisting and Tax Haven Regulatory Reform" Paper presented at the annual meeting of the International Studies Association, Le Centre Sheraton Hotel, Montreal, Quebec, Canada, Mar 17, 2004
Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: This paper seeks to evaluate the relative success of exclusionary or coercive strategies versus inclusionary or consensual strategies employed by international organisations in securing tax haven states' compliance with new global financial regulations. In 1998 the G7 launched several related regulatory initiatives designed to tame tax competition, counter money laundering and shore up international financial stability.

These initiatives were premised on a 'top-down' or exclusionary approach, whereby standards were set in closed fora and diffused to small tax haven states by blacklisting and sanctions. This approach was intended to yield quick results and avoid 'lowest common denominator' standards. Almost six years later, this paper argues that international organisations such as the OECD significantly over-estimated their ability to secure the unwilling compliance of even the smallest tax haven states. As a result, more traditional inclusionary strategies based on sovereign equality and consensus now seem just as likely to be effective in setting global standards. Evidence is predominantly taken from the OECD's 'harmful tax competition' initiative, but also includes that body's campaign against the illicit use of corporate vehicles, the Financial Action Task Force, the Financial Stability Forum, the IMF Offshore Audit and the International Taxation Dialogue.