A UN Tax
Convention?
EXPLORING THE MERITS AND FEASIBILITY
OF A NEW INTERNATIONAL CONVENTIONON TAX AND FINANCIAL TRANSPARENCYNAIL
NORWEGIAN ACADEMY OF INTERNATIONAL LAWSEPTEMBER 2022

AUTHORS
Torbjørn Graff Hugo (tgh@intlaw.no) is a researcher and policy adviser on
multilateral processes and global advocacy at NAIL. Hugo has broad practical andtheoretical experience from multilateral policy work, treaty development, andglobal advocacy.
Magnus Løvold (ml@intlaw.no) is a researcher and policy adviser on multilateralprocesses and global advocacy at NAIL. Løvold has extensive expertise inmultilateral processes, international diplomacy, and global advocacy and has
experience from a variety of international institutions, as we as the foreign service.

ABOUT
The Norwegian Academy of International Law (NAIL) is a politically independent
research association founded with a mission to promote the development of andrespect for international law. NAIL is made up of a network of researchers andanalysts with backgrounds from political science, international law, andinternational relations. NAIL has a particular expertise in treaty law, international
political processes, peace agreements, law relating to situations of armed conflict,arms and disarmament, and protection of human rights.
COVER
Vianden Castle in Luxembourg (Photo: Frans Berkelaar/Wikimedia Commons).
Luxembourg is ranked among the top global tax havens by the Tax Justice
Network (see https://taxjustice.net/country-profiles/luxembourg/).
ACKNOWLEDGEMENTS
This paper was made possible thanks to support from the Norwegian Church Aid(NCA). The views expressed in this publication are the sole responsibility of theauthors, and do not necessarily reflect the views or opinions of the NCA, its staff
members, or sponsors.

2
www.intlaw.noA UN Tax
Convention?
EXPLORING THE MERITS AND FEASIBILITY
OF A NEW INTERNATIONAL CONVENTIONON TAX AND FINANCIAL TRANSPARENCY

SUMMARY
Every year, billions of US dollars in government revenue are lost
through corporate tax avoidance, profit shifting, and other taxrelated illicit financial flows. This is an issue of transboundary
concern, undermining States’ fiscal independence andhampering the prospects for achieving the Sustainable
Development Goals. At the heart of the matter is the deliberateuse, by certain jurisdictions, of low or zero tax-rates and financial
secrecy to attract capital and profits.

Torbjørn Graff Hugo
Magnus Løvold

Considerable progress has been achieved over the past decade,including under the OECD/G20 Inclusive Framework on BEPS.
However, ongoing efforts have raised a number of questions
regarding the effectiveness and fairness of the rules that havebeen introduced, as well as the legitimacy and accountability of
the way in which these rules have been developed. In response, agrowing number of States, civil society actors, and decisionmakers have concluded that it is time for a new approach, andthat this should take the form of a new international convention
on tax and financial transparency. Such a convention would
address—in an open, inclusive, and comprehensive manner—taxrelated aspects of illicit financial flows.
This report considers the merits and feasibility of such a
convention, outlining the conditions for, and key steps in, adiplomatic process towards its adoption. It concludes that a newinternational convention, if well-conceived and developed, could
constitute an achievable and meaningful tool in the international
community’s efforts to tackle tax-related illicit financial flows. To
get a negotiation process started, however, the proponents ofthis proposal may need to develop a clearer common
understanding of the rationale for a new convention, its role andpurpose, and the added value of its substantive content.

NORWEGIAN ACADEMY OF INTERNATIONAL LAW
3

SEPTEMBER 2022

Contents
1

2

Growing calls for a new approach ................................................................................ 5
1.1

For haven’s sake .................................................................................................................... 5

1.2

Not all bleak ........................................................................................................................... 6

1.3

Governance gaps ................................................................................................................... 9

1.4

In search of a new approach ................................................................................................ 10

Nuts and bolts of international conventions .............................................................. 12
2.1

Purpose and key elements................................................................................................... 12

2.2

Binding force ........................................................................................................................ 13

2.3

Participation ........................................................................................................................ 14

2.4

Regime structure ................................................................................................................. 16

2.5

Phases of treaty-making ...................................................................................................... 17

3

The road to a possible new convention on tax and financial transparency ................ 20
3.1

Framing the issue and creating a sense of urgency ............................................................. 20

3.2

Articulating a convincing policy objective ........................................................................... 22

3.3

Changing the dynamics ........................................................................................................ 25

4

Conclusion ................................................................................................................ 26

Acronyms
BEPS
FCTC
G20
G7
GDP
LMIC
MAC
MLI
MNE
OECD
UN
UNCLOSUNFCCC
VCLT
WHA
WTO

Base erosion and profit shifting
Framework Convention on Tobacco Control
Group of Twenty (19 countries and the EU)
Group of Seven
Gross Domestic ProductLow- and Middle-Income Countries
1988 Convention on Mutual Administrative Assistance in Tax Matters
2016 Multilateral Convention to Implement Tax Treaty Related Measures toPrevent Base Erosion and Profit Shifting
Multinational enterprise
Organisation for Economic Co-operation and Development
United Nations
1982 UN Convention on the Law of the Sea
1992 UN Framework Convention on Climate Change
1969 Vienna Convention on the Law of Treaties
World Health AssemblyWorld Trade Organization

4

1
Growing calls
for a new approach
Worldwide, nearly half a trillion US dollarsof government revenue is lost every year
through corporate tax avoidance, profit
shifting, and other tax-related illicit
financial flows (IFF).1 Corporate tax abuse
constitutes the largest share of the losses(60–70 per cent), while the rest is lost
through “tax evasion by wealthy
individuals”.2 The problem is of such a scalethat it threatens to undermine the fiscal
independence and control of States. It is a
global, transboundary issue, whereby “therevenue base of one nation erodes at theexpense of the revenue base or economic
activity of a competing nation”3. An effective
response therefore requires international
cooperation.

secrecy to obscure transactions andownership. The two problem drivers areboth results of deliberate government
policies. In the absence of an effective global
governance framework, certain
jurisdictions—colloquially referred to as taxhavens—have been able to make theirfortunes by luring in and/or hiding value
created in other countries.
As a result, “governments lose substantial
corporate tax revenue because […]aggressive international tax planning […]artificially shift[s] profits to locations where
they are subject to non-taxation or reduced
taxation”.5 Combined with extensive use offinancial secrecy regulations, including“exemption from the obligations to registerand published beneficial ownership, topreserve accounting documentation and toaudit”,6 this produces an unhealthy
misalignment between economic activity
and taxing rights. It also serves as a catalyst

1.1
FOR HAVEN’S SAKEAt the heart of the matter are two problem
drivers: (i) the shifting of capital and profits
to jurisdictions4 with low or zero tax-rates,and (ii) the widespread use of financial

1 GATJ/PSI/TJN (2021), "The State of Tax Justice 2021",

legislation (e.g., the state of Delaware, which is part of
the United States, or Cayman Islands, which is anoverseas territory of United Kingdom).
5 The Multilateral Convention to Implement Tax Treaty
Related Measures to Prevent Base Erosion and Profit
Shifting (shortened MLI), preambular paragraph 1. See
https://www.oecd.org/tax/treaties/multilateralconvention-to-implement-tax-treaty-related-measuresto-prevent-beps.htm.
6 Tollan, H. (2016), "An International Convention on
Financial Transparency", chapter 10 in Pogge and Mehta(eds.), Global Tax Fairness, Oxford University Press, p.
239.

Global Alliance for Tax Justice/Tax Justice
Network/Public Services International, November 2021.
Available from https://taxjustice.net/reports/the-stateof-tax-justice-2021/.
2 GATJ/PSI/TJN (2021), "The State of Tax Justice 2021".
3 Gregory, N. (2012), "Lax Tax: The Threat of Secrecy
Jurisdictions and What the International Community
Should Do about It", Transnational Law & Contemporary
Problems 20, no. 3 (Winter 2012): 859-894, p. 886.
4 The term ‘jurisdiction’ is broader than ‘States’ or‘countries’ and is used to refer to any geographical areawith a political structure authorized to introduce

5for the concealment of criminal profits andill-gotten gains.

Harmful tax competition is a text-bookexample of an international cooperation
problem, where individual rationality is at
odds with collective rationality. The specificacts and practices that cause the loss ingovernment revenue (aggressive tax
planning, shifting of profits, concealment ofownership structures) are predominantly
undertaken by companies and wealthy
individuals. It is governments, however, thatmake such act and practices possible. And,ultimately, only governments can develop
and implement effective solutions to tackle
this problem.

In an effort to halt further erosion of theirtax bases and prevent profits from shifting to
tax havens, other countries have, over theyears, responded by lowering their own tax
rates, and/or introducing financial secrecy
regulation. This has triggered a negative
spiral of harmful tax competition—a race tothe bottom. As "[c]ountries compete to
attract economic activity",7 the total global
tax base is gradually reduced, which is partof the reason why the average global
statutory corporate tax rate fell by half
between 1985 and 2018, from 49 per cent to24 per cent.8“

1.2
NOT ALL BLEAK
The good news is that the international
community is acutely aware of thechallenges posed by harmful tax
competition. The need for international
cooperation and legally binding agreements
to address the issue is widely accepted.9 In
fact, the history of international treatymaking on tax and financial transparency ismore than a century old.10 “Due to thediversity of the tax systems” back then,11
however, it was concluded that bilateraltreaties, rather than multilateral ones,
should form the backbone of theinternational legal setup. As a result, there
are more than 3,500 bilateral tax
agreements in existence today.12 And notunlike the system of bilateral trade
agreements—famously described by Jagdish

Harmful tax
competition is a textbook example of aninternational
cooperation problem,
where individual
rationality is at odds
with collective
rationality

7 Devereux, M. P., & Vella, J. (2014), “Are We Heading

Prussia and the Austro-Hungarian Empire. United
Nations, International Tax Agreements, vol. III: World
Guide to International Tax Agreements 18431951 (1951),
p. 343. See also Jogarajan, S. (2018), “Double Taxationand the League of Nations”, Cambridge Tax Law Series,
Cambridge University Press,
doi:10.1017/9781108368865.002.
11 Jogarajan, S. (2018), p. 191–192.
12 See, for instance,
https://www.oecd.org/gov/regulatory-policy/taxtreatiesmodeltaxconvention.htm.

towards a Corporate Tax System Fit for the 21stCentury?”, Fiscal Studies, 35(4), 449–475, p. 452.
Available at http://www.jstor.org/stable/24440324.
8 Tørsløv, T., Wier, L., and Zucman, G. (2022), “TheMissing Profits of Nations”, Working Paper. Available fromhttps://gabriel-zucman.eu/missingprofits/.
9 The OECD published a seminal report on the issue of
harmful tax competition in 1998. Available athttps://www.oecd.org/ctp/harmful/1904176.pdf.
10 The first bilateral tax treaty was concluded at the endof the 19th century, in 1899, between the Kingdom of6

Bhagwati as resembling a spaghetti bowl13—
this has created a rather messy situation.

are taxed where substantive economic
activities generating the profits are carriedout and where value is created”.17 The
convention builds on the OECD/G20 Base
Erosion and Profit Shifting (BEPS) project,
and aims, in short, to transpose the resultsfrom that process into bilateral tax treaties.18
The MLI currently has close to 100 States
parties.19

Alongside the web of bilateral treaties, there
are some multilateral instruments on taxrelated issues in place. The two mostimportant of these treaties were both
negotiated under the auspices of theOrganisation for Economic Co-operation andDevelopment (OECD).14 The 1988
Convention on Mutual Administrative
Assistance in Tax Matters (MAC) aims totackle tax evasion and avoidance, withexchange of information between tax
authorities as a key pillar. Since theconvention was amended (by protocol) in2010, “any State which is not a member of
the Council of Europe or of the OECD may
request to be invited to sign and ratify".15
Currently, the agreement covers nearly 150
participating jurisdictions.16

In addition, certain aspects of financial
secrecy are dealt with in other multilateraltreaties, notably the United Nations
Convention against Corruption (UNCAC)20
and the United Nations Convention against
Transnational Organized Crime (UNTOC).21
However, these conventions do not aim toregulate tax-related illicit financial flows
specifically.22
Finally, a third multilateral convention on
tax-related issues is currently considered. In
2021, members of the OECD/G20 Inclusive
Framework on BEPS23 agreed—in the formof a statement—to a so-called two-pillar
solution to tackle “tax challenges arisingfrom the digitalisation of the economy”.24 To

The 2016 Multilateral Convention to
Implement Tax Treaty Related Measures toPrevent Base Erosion and Profit Shifting(MLI), is focused on tackling harmful tax
competition and on ensuring that “profits

13 Bhagwati, J. (1991), The World Trading System at Risk,
Princeton University Press, Princeton, NJ.
14 For an overview, see
https://guides.ll.georgetown.edu/c.php?g=363487&p=4817002#Selected%20Multilateral%20Treaties.
15 The Convention on Mutual Administrative Assistance in
Tax Matters (1988, amended by protocol in 2010,shortened MAC), Article VIII(5). The 2010 Protocol isavailable at https://www.oecd.org/ctp/exchange-of-taxinformation/2010_Protocol_Amending_the_Convention.
pdf.
16 See https://www.oecd.org/tax/exchange-of-taxinformation/convention-on-mutual-administrativeassistance-in-tax-matters.htm.
17 MLI, preambular paragraph 4.
18 For more information on the OECD/G20 BEPS Project,
see https://www.oecd.org/tax/beps/.
19 See https://www.oecd.org/tax/treaties/beps-mlisignatories-and-parties.pdf.
20 See https://www.unodc.org/unodc/en/treaties/CAC/.
21 See https://www.unodc.org/unodc/en/organizedcrime/intro/UNTOC.html.
22 Ryding, T. M. (2022), "Proposal for a United Nations
Convention on Tax", Eurodad/Global Alliance for Tax

Justice, p. 5. Available fromhttps://www.eurodad.org/un_tax_convention.
23 The OECD/G20 Inclusive Framework on BEPS is aforum that brings together over 135 countries andjurisdictions to collaborate on the “implementation of 15
measures to tackle tax avoidance, improve thecoherence of international tax rules and ensure a moretransparent tax environment.” (seehttps://www.oecd.org/tax/beps/about/). It was set up in2016 to ensure that “interested countries andjurisdictions, including developing economies, canparticipate on an equal footing in the development ofstandards on BEPS related issues” (seehttps://www.oecd.org/tax/beps/flyer-inclusiveframework-on-beps.pdf).
24 OECD (2021), "Statement on a Two-Pillar Solution to
Address the Tax Challenges Arising from theDigitalisation of the Economy", 8 October 2021. Available
from https://www.oecd.org/tax/beps/statement-on-atwo-pillar-solution-to-address-the-tax-challengesarising-from-the-digitalisation-of-the-economyoctober-2021.htm. Note that in the “Detailed
Implementation Plan” annexed to the statement, it isindicated that yet another convention may beconsidered, under Pillar 2: “As part of the work on theimplementation framework, IF members will consider the
merits and possible content of a multilateral convention

7

implement the first pillar, which deals withthe allocation of taxing rights,25 thestatement indicates that a multilateralconvention would be developed. The text of
new convention was to be negotiated by a
subsidiary body of the OECD26 called theTask Force on the Digital Economy, andcompleted by early 2022, “with the objectiveof enabling it to enter into force and effect in2023 once a critical mass of jurisdictions as
defined by the MLC have ratified it.27 This
timeline seems to have a been overly
optimistic, however. In May 2022, the OECDacknowledged that the new convention
would not come into force before 2024, atthe earliest. Some have also begun to doubt
whether the “OECD-brokered agreement […]will ever be implemented”.28

decades later, the 20 largest economies in
the world support all three measures.
Since the G20 declared, in 2009, that “[t]heera of banking secrecy is over”,30 theinternational community has taken
significant steps to tackle tax evasion andavoidance, and to curb harmful tax
competition. Catalysed by the work of aninternational body called the Global Forumon Transparency and Exchange ofInformation for Tax Purposes (Global
Forum),31 harmonized standards on
exchange of information have been
implemented in jurisdictions across theworld. This has led to a “sharp rise thevolume of information exchanged” between
tax authorities (initially on request, but since2017 also automatically).32 As part of theharmonized standards on exchange of
information, considerable progress has also
been made to ensure “availability andaccessibility of beneficial ownership
information”.33 Similarly, important steps
have been taken on country-by-country
reporting. Pursuant to the minimum
standard introduced under Action 13 of the
OECD/G20 BEPS Project, over 100
jurisdictions now require large
multinational enterprises (MNEs) to reportrevenues for “each tax jurisdiction in which

Despite the recent hiccups in theimplementation of the two-pillar solution,
the overall progress made over the past two
decades when it comes to international tax
cooperation is encouraging. When the Tax
Justice Network (TJN) was set up in 2003,
calls for automatic exchange of financial
information, beneficial ownershiptransparency, and country-by-country
reporting (labelled the ‘ABC of tax
transparency’) were “originally written off as
entirely unrealistic and utopian”.29 Two

in order to further ensure co-ordination and consistent
implementation of the GloBE rules.”25 Pillar One has been viewed as an important step
towards a system of unitary taxation for multinational
corporations. See, for instance,
https://taxjustice.net/2019/11/21/a-historic-day-forunitary-taxation/.
26 In 2017, the Task Force on the Digital Economy wascreated a subsidiary body of the Inclusive Framework on
BEPS.
27 OECD (2021), "Statement on a Two-Pillar Solution to
Address the Tax Challenges Arising from theDigitalisation of the Economy", p. 6.
28 Seehttps://www.theguardian.com/business/2022/may/24/hi
storic-global-tax-deal-on-multinationals-delayed-until2024.
29 Cobham, A. (2022), "Taxing for a New Social Contract",
Finance & Development, IMF, March 2022. Available athttps://www.imf.org/en/Publications/fandd/issues/2022/
03/Taxing-for-a-new-social-contract-Cobham.
30 G20 Communique: London Summit — Leaders’statement from 2 April 2009. Available athttps://www.imf.org/external/np/sec/pr/2009/pdf/g20_
040209.pdf.
31 The Global Forum consists of 165 members and is,according to the OECD, “the leading international bodyworking on the implementation of global transparency
and exchange of information standards around theworld.” The Global Forum was originally set up in 2000
and restructured in 2009. See
https://www.oecd.org/tax/transparency/.
32 OECD (2019), "Transparency and Exchange ofInformation for Tax Purposes—Multilateral Co-operation
Changing the World", 10th Anniversary Report, p. 3.
Available athttps://www.oecd.org/tax/transparency/global-forum10-years-report.pdf.
33 Ibid.

8

they do business”.34 In practice, this meansthat “almost all MNEs with consolidated
group revenue at or above the EUR 750
million threshold” are covered.35

negative”.37 During the negotiations on the
two-pillar solution, the OECD Secretariat
reportedly “ignored the negotiation
positions of both the African Tax
Administration Forum (ATAF) and theGroup of 24 representing a range ofcountries in the global South.”38
Unsurprisingly, therefore, developing
countries such as Kenya, Nigeria, Pakistan
and Sri Lanka subsequently refused to sign
on.39 Instead of addressing the “structural
economic challenge of [multinational
enterprise] tax avoidance” for low- andmiddle-income countries (LMICs), the twopillar solution “ended up becoming anarrowly constructed vehicle to enhancedomestic resource mobilization in G7
countries, and if implemented, may actuallyfurther erode LMICs’ revenue base.”40

1.3
GOVERNANCE GAPS
While much has been achieved over the past
decade, the progress made under the
auspices of the OECD has also raised a seriesof questions regarding the effectiveness andfairness of the rules that have been put inplace, and regarding the legitimacy andaccountability in the process that broughtthem into being. It has been pointed out thatinternational tax rules, including the latest
proposals from the OECD, do not adequately
require the taxation of multinational
companies where their economic activity
takes place. Moreover, “the rules still do notprevent the anonymous ownership of assets
and income streams, which is central to
every case of individual tax abuse and, more
widely, to almost every corruption case andevery illicit financial flow.”36

Perhaps the most damning critique of theOECD-led efforts has focused on their lack oflegitimacy and accountability. Even if themultilateral conventions (MAC and MLI)
have been opened up to participation by
non-OECD countries, and although theforums where the issues are being
negotiated (Global Forum, Inclusive
Framework) have become more inclusive,the control of the process—and of theSecretariat—remains in the firm grip of theOECD members. This is in stark contrast to
virtually any other global issue—fromclimate change to international security,
global health, or international trade. The

Furthermore, the rules developed under theOECD-led process have been criticized forfavouring the world’s largest economies.
According to one estimate, Pillar Two of the
Inclusive Framework proposal “grants
almost all revenue to a handful of richcountries”, while the “net impact [of PillarOne] on developing countries could be

34 See https://www.oecd.org/tax/beps/bepsactions/action13/.
35 OECD (2021), "OECD/G20 Inclusive Framework on
BEPS: Progress Report July 2020-September 2021".
Available from https://www.oecd.org/tax/beps/oecdg20-inclusive-framework-on-beps-progress-reportjuly-2020-september-2021.htm.
36 Cobham, A. (2022), "Taxing for a New Social Contract".
37 Oxfam (2021), "The effect of the OECD’s Pillar 1
proposal on developing countries – An impact
assessment", October 2021. Available athttps://www.oxfamireland.org/sites/default/files/pillar_1_impact_assessment_-_04.10.21_final.pdf.

38 See https://financialtransparency.org/global-south-

countries-will-main-losers-oecd-minimum-globalminimum-tax-deal-risking-undermining-covid-19vaccination-recovery-efforts/.
39 See, for instance, https://qz.com/africa/2082754/whykenya-and-nigeria-havent-agreed-to-global-corporatetax-deal/.
40 McCarthy, J. (2022), "A bad deal for development— Assessing the impacts of the new inclusive frameworktax deal on low- and middle-income countries",
Brookings Global Working Paper #174, May 2022.
Available at https://www.brookings.edu/wpcontent/uploads/2022/05/Tax-and-Bad-Deal-forDevelopment_Final.pdf.

9

lack of legitimacy and accountability isfurther exacerbated by the fact that theOECD operates largely behind closed doors,
without public scrutiny, and on the basis ofconsensus (which gives the least cooperative
States a veto over the final outcome).41

decision-making, it is perhaps not surprisingthat the OECD-led process is struggling todevelop an effective and equitable global
response. The question is whether there isreason to believe this will change.

1.4
IN SEARCH OF
A NEW APPROACH

Since the late 1990s, there has beensomething of a battle for supremacy between
the OECD and the United Nations over therole as the principal forum for developing
global tax rules. So far, the OECD has largely
held the upper hand in this battle. In part,the OECD has done so by liaising closely with
the G7 and G20, but in part also because it
has accommodated, however imperfectly,
calls for inclusiveness and participation.
With the restructuring of the Global Forumin 2009, and the creation of the Inclusive
Framework on Base Erosion and Profit
Shifting in 2016, which is open to all
jurisdictions,42 the OECD took some of thesting out of the criticism levelled against it.

Recently, a growing number of countries,
civil society actors, and decision-makers
seem to have concluded that it is time for a
new approach. 44 In May 2019, Senegal, on
behalf of the Africa Group, called for thedevelopment of a separate international
convention on tax, which would assist in
tackling all aspects of IFF, including “illicit
flows emanating from tax avoidance, trade
misinvoicing, profit shifting, and otherillegal commercial activities, especiallythose of multinational enterprises “.45
In The State of Tax Justice 2020 report, thecall for a separate convention was framed,
perhaps for the first time, as a “UN Tax
Convention”:

The remaining problem, however, is that“the OECD as an institution was notdesigned to” act as the global arbiter ofinternational tax cooperation.43
Participation in the Inclusive Framework
remains far from universal, even if morethan 90 per cent of world GDP is nominally
represented. Moreover, the accountability
and the legitimacy of the OECD as a forum
for multilateral decision-making continues
to be highly disputed. Given its opaque
working methods and consensus-based

Ultimately, these challenges make clear
the need for global governance – a UN tax
convention to ensure a global andgenuinely representative forum to set
consistent, multilateral standards forcorporate taxation, for the necessary tax
cooperation between governments, and to

41 For a discussion on the legitimacy of the OECD/G20
BEPS Project, see Fung, S. (2017), "The Questionable
Legitimacy of the OECD/G20 BEPS Project", Erasmus
Law Review, Issue 2 2017. Available athttps://www.elevenjournals.com/tijdschrift/ELR/2017/2/
ELR_2017_010_002/fullscreen.
42 With certain caveats, such as the acceptance of theearlier BEPS package. This is not uncommon ininternational law, however. When States join a previously
negotiated treaty, they have to accept the package, andif the treaty is a framework convention, they would
normally have to join the framework convention first inorder to join any protocols.

43 Gregory, N. (2012), "Lax Tax: The Threat of Secrecy

Jurisdictions and What the International Community
Should Do about It", p. 881.
44 For a discussion on the limitations of the OECD’s BEPS
process, and the need for a more systemic approach,see, for instance, Devereux, M. P., & Vella, J. (2014), “AreWe Heading towards a Corporate Tax System Fit for the
21st Century?”, Fiscal Studies, 35(4), 449–475.
http://www.jstor.org/stable/24440324.
45 See UN Web TV:
https://media.un.org/en/asset/k10/k10cs0zsar (from02:49:30).

10

deliver comprehensive, multilateral tax
transparency - the 'ABC', in full.46

the rationale and possible shape of this new
instrument is also beginning to emerge.50

The option of a UN Tax Convention was alsomentioned in a UN report in 2020,47 andthen included as one of therecommendations in the report of the HighLevel Panel on International Financial
Accountability, Transparency and Integrity
for Achieving the 2030 Agenda (FACTI)
panel in 2021.48 More recently, in May 2022,
the Conference of African Ministers ofFinance, Planning and Economic
Development called upon “the United
Nations to begin negotiations under its
auspices on an international convention on
tax matters, with the participation of all
States members and relevant stakeholders,
aimed at eliminating base erosion, profit
shifting, tax evasion, including of capitalgains tax, and other tax abuses.”49

Direct opposition to the proposal has so far
been limited. However, it may be expectedthat several countries, in particular some of
the OECD members, will be sceptical of the
proposal, given that such a convention
would challenge the supremacy of the OECDin the development of international tax
rules. This reluctance may, of course, fade if
it becomes clear that the OECD-led process
will not lead to meaningful change.
Depending on how the proposal for aseparate convention on tax and financialtransparency is framed, however, it is also
possible that some OECD-members will
come to view it as a positive reinforcementof efforts undertaken in the OECD andelsewhere. After all, global supremacy of aparticular forum on a particular issue should
not be a goal in itself. What matters is theability of the international community totackle an issue of shared concern.

Most of these calls and recommendations
have been limited to general points on why
the new treaty is needed and what it might
regulate. Though more detailed analysis of

46 Tax Justice Network (2020), “The State of Tax Justice

Policy Pathways for an Economic Transformation",
Community Paper, June 2021, p. 11. Available fromhttps://www.weforum.org/whitepapers/building-backbroader-policy-pathways-for-an-economictransformation).
49 United Nations (2022), "Report of the Conference ofAfrican Ministers of Finance, Planning and Economic
Development on its work during the fifty-fourth sessionof the Economic Commission for Africa", United Nations
Official Document E/ECA/CM/54/6, Res. 990, Para. 6 (pp.
25–26). Available athttps://www.uneca.org/sites/default/files/com/2022/E_E
CA_CM_54_6_E.pdf.
50 See, for instance, Chowdhary, A. M. and Picciotto, S.
(2021), "Streamlining the Architecture of International Tax
through a UN Framework Convention on Tax
Cooperation", Tax Cooperation Policy Brief, No. 21,
November 2021. Available fromhttps://www.southcentre.int/tax-cooperation-policybrief-21-november-2021/. See also Ryding, T. M. (2022),"Proposal for a United Nations Convention on Tax".

2020”, p. 11. Available fromhttps://taxjustice.net/reports/the-state-of-tax-justice2020/. See also https://taxjustice.net/2021/08/02/thepast-present-and-future-of-tax-justice-network/.
Original emphasis.
47 United Nations (2020), "Financing for Development in
the Era of COVID-19 and Beyond: Menu of Options for
the Consideration of Heads of State and Government Part II", September 2020, p. 124. Available fromhttps://www.un.org/en/coronavirus/financingdevelopment.
48 United Nations (2021), "Financial Integrity for
Sustainable Development: Final Report of the High Level
Panel on International Financial Accountability,
Transparency and Integrity for Achieving the 2030
Agenda", New York: United Nations, February 2021.
Available from https://www.factipanel.org/reports. The
FACTI Panel’s recommendation was also noted in areport by the World Economic Forum in June 2021
(World Economic Forum (2021), "Building Back Broader:11

2
Nuts and bolts ofinternational conventions
The term ‘convention’ does not have a
specific definition under international law,
but it is generally understood as an“international agreement concluded
between States in written form andgoverned by international law, whether
embodied in a single instrument or in two or
more related instruments and whatever its
particular designation”.51 As such, aconvention is legally equivalent to a‘treaty’.52

coordinated manner to resolve an issue ofconcern. In other words, the convention
should establish a common standard ofaction.
The rules that make up the standard ofaction constitute the core provisions of aconvention. As an example, the coreprovisions of the Treaty on the Prohibition of
Nuclear Weapons (TPNW) are contained in
Article 1 of that treaty, which spells out all
the acts that States parties are prohibitedfrom undertaking under any circumstances(including development, testing, andproduction of nuclear weapons).54 For otherconventions, the core provisions can be
more elaborate and stretch over multiple
articles. The UN Convention on the Law of
the Sea (UNCLOS),55 with a total of 320
articles, plus nine annexes, is a case in point.
Still, the purpose of the core provisions
remains the same: to spell out a set of rulesthat States parties are required to abide by.

2.1
PURPOSE AND KEY ELEMENTS
Politically, multilateral conventions can beunderstood as diplomatic tools developed
for the purpose of tackling issues oftransboundary concern. Often, newconventions are developed to deal with acollective action problem, whereby “theuncoordinated actions of each player may
not result in the best outcome”.53 In thesecases, the key function of multilateralconventions is to ensure that States act in a

51 1969 Vienna Convention on the Law of Treaties (VCLT),

Relations (4 ed.), Oxford University Press Print
Publication.
54 2017 Treaty on the Prohibition of Nuclear Weapons.
Available fromhttps://treaties.un.org/Pages/ViewDetails.aspx?src=IND&
mtdsg_no=XXVI-9&chapter=26&clang=_en.
55 1982 United Nations Convention on the Law of theSea, United Nations, Treaty Series, vol. 1833, p. 3.
Available fromhttps://treaties.un.org/Pages/ViewDetailsIII.aspx?src=IND&mtdsg_no=XXI6&chapter=21&Temp=mtdsg3&clang=_en.

Article 2(1)(a). United Nations, Treaty Series, vol. 1155, p.
331. Available fromhttps://legal.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf.
52 Note that, as the quote indicates, the term used todescribe a legal instrument does not have any particularlegal bearing. It could be called a compact, a covenant, acharter, a protocol, an agreement, or a pact. Whatmatters is the content of the agreement, and the mannerin which it has been adopted
53 Brown G. W., McLean, I., and McMillan A. (2018), A
Concise Oxford Dictionary of Politics and International12In addition to establishing a common
standard of action, most conventions
include a set of supporting provisions. The
purpose of these provisions is to promoteand facilitate the implementation of the coreprovisions. This could include requirements
to submit annual reports or to identify
national focal points, as well as the creationof institutional structures and othercollective arrangements aimed at supporting
the implementation and gradualstrengthening of the regime. Together, thecore provisions and the supporting
provisions can be said to constitute theconvention’s operative elements.

needed to facilitate the achievement of
the convention’s objective.
Most conventions serve a combination ofthese three functions, but the emphasis
varies. The UN Charter, for instance,
contains a long list of rules, but also set up
the United Nations as an intergovernmentalorganization. Conventions such as theTreaty on the Non-Proliferation of Nuclear
Weapons (NPT) or the 2008 Convention on
Cluster Munitions (CCM) mainly serve thefirst two functions, with little attention to
institutional structures.56 By contrast, the1995 Agreement Establishing the World
Trade Organization (WTO) and 1946
Constitution of the World HealthOrganization (WHO) are examples of
conventions whose main purpose is to set up
a multilateral institution.

Finally, most conventions contain a set of
guiding elements (in the beginning), and aset of functional elements (towards the end).
The role of the guiding elements—including
the preamble, and possibly separate
articulations of the convention’s scope andobjective—is to formulate a sharedunderstanding of the issue of concern,
including its causes and effects, and the roleof the convention in addressing it. The roleof the functional elements is to clarify any
legal or technical aspects, for instanceregarding entry-into-force, depositary, or
languages.

2.2
BINDING FORCEIn principle, whether an agreement between
States is considered legally binding or not isa question of intent; it is legally binding if
the parties meant for it to be legally binding.
Such intent is not always simple to deduce,
however, and in practice, the legal characterof an international agreement is determinedby the process through which it isnegotiated, adopted, and brought into force.
Legally binding agreements would normallyspecify how and when the agreement enters
into force, which would typically require acertain number of States to express theirconsent to be bound by it. In accordancewith the procedures outlined in the Vienna
Convention on the Law of Treaties (VCLT),
such consent is generally expressed throughsignature and (subsequent) ratification, orTaken together, this points to three key
functions of multilateral conventions:
1) To articulate of a shared understandingof an issue of transboundary concern;
2) To formulate a common standard ofaction that, if faithfully implemented,
would provide a meaningful
contribution towards tackling the issueof concern; and3) To establish the institutional structuresand other collective arrangements

56 For an overview of disarmament treaties, including the

NPT and the CCM, see https://treaties.unoda.org.

13

by depositing and instrument of accession(or acceptance/approval).57

contrary, there are multiple examples oflegally binding agreements that have failed
to deliver meaningful results. In part, thiscan be explained by the simple fact thatsome international issues are more difficult
to deal with than others (be it climatechange, biodiversity loss, or nuclear
disarmament). But to some extent, is also aquestion of treaty design—that is, thecontent of the agreements. If the convention
text does not clearly spell out what States are
required to do (or refrain from doing) totackle the issue of concern, it makes little
difference if the wrapping is legallybinding.60

In general, legally binding agreements
represent a deeper level of commitment thannon-binding (or political) agreements. In
part, this is because the threshold forapproval is higher. For most countries,
ratification of a new convention requires
consent by the legislative branch(parliaments). While this may provechallenging in some jurisdictions (with the
USA as a prime example),58 it also has
several benefits. For one, it makes theprocess more democratic and open to public
scrutiny. Secondly, it makes the decision tojoin and comply with the new convention
more credible and less vulnerable to changes
in the executive branch. As such,
conventions and treaties are often morepredictable, robust, and reliable thanpolitical declarations, agreed outcome
documents, or voluntary frameworks. Third,
involvement of the legislative branch canalso have benefits during theimplementation of the agreement, inparticular if new national legislation isrequired. Legally binding agreements also
become part of public international law,which means that States parties have ageneral obligation to comply with them, ingood faith.59“

In general, legallybinding agreements
represent a deeper
level of commitment
than non-binding (orpolitical) agreements

2.3
PARTICIPATION
Treaties are entered into between sovereign
States, and most multilateral treaties haveopen memberships, which means that, inprinciple, all States are eligible to join.61 This

That said, the fact that an international
agreement is legally binding does notnecessarily make it effective. On the

57 Most treaties, as well as the VCLT, list four options forexpressing consent to be bound by the treaty:“ratification”, “acceptance”, “approval”, and “accession”.
The most common is for States to sign the treaty first,
and then subsequently ratify it. States that join the treaty
at a later date would normally join through accession.
58 In the United States, international treaties require theadvice and consent of two-thirds of the Senate (though
in practice, things are a bit more complicated. See, forinstance,https://constitution.congress.gov/browse/essay/artII-S2C2-1/ALDE_00012952/).

59 The principle of pacta sunt servanda (agreements shallbe kept) is enshrined in Article 26 of the VCLT.
60 For a discussion on the role of mandatory and non-mandatory elements in treaties, see Bodansky, D. (2015),"Legally binding versus non-legally binding instruments",
Chapter 11 in Barrett, Carraro and de Melo (eds.),
Towards a Workable and Effective Climate Regime, CEPR
Press. Available from https://voxeu.org/content/towardsworkable-and-effective-climate-regime.
61 In practice, however, this is not always straightforward. The first problem is that there is no proper
definition of a State under international law. The closest
is a provision in the 1933 Montevideo Convention, which

14means that unless the convention text
explicitly states otherwise, a convention
negotiated under the auspices of the United
Nations would be open to participation by all
193 UN Member States, plus the two
permanent Observer States (Holy See andPalestine), as well as Niue and Cook Islands(a grand total of 197). For the MLI (which
was negotiated under the auspices of theOECD), it is explicitly stated that Guernsey,
Isle of Man, and Jersey are eligible to become
parties, in addition to “all States”.62 Of
course, the actual number of States parties toa given convention can vary considerably,from just a few dozen to nearly all UN
Member States. Very few conventions haveso-called universal participation; there isnearly always one or more States that, forvarious reasons, remain outside.

called a UN Tax Convention, and even if thedecision to start negotiations is made by the
UN General Assembly—would not have theprerogative to establish new UN organs.
Accordingly, when the African Group stated,in 2019, that the new convention would
serve as the backbone for their “envisaged
upgraded international tax committee”, it isimportant to stress that the new convention
would not have that authority. A decision to
upgrade the UN tax committee from anexpert group to an intergovernmental bodyunder the United Nations (subsidiary organ)
would have to be taken by the UN General
Assembly.63
This does not mean, of course, that a newintergovernmental tax body could not beestablished under the new convention. As
noted above, most conventions include
provisions for setting up a governing bodyfor the new regime.64 Such a governing body
could be mandated by the convention to takedecisions on certain issues and have theflexibility to set up subsidiary bodies. As an
example, the Conference of the Parties to the
UNFCCC acts as the highest decision-making
body for that convention (but it is not a UNbody). A more elaborate version is theConstitution of the World HealthOrganization (WHO), which set up theWorld Health Assembly (WHA) as its
governing body and mandated it to developinternational rules within its scope ofNote that a multilateral convention governs
relations only between those States thathave formally agreed to be bound it (referred
to as ‘States Parties’). It does not, therefore,
have any legal force for States that have notexpressed such consent. Moreover, it has, inmost cases, no direct bearing on otherinternational agreements. This means that a
new international convention on tax andfinancial transparency, if negotiated andadopted in accordance with the procedures
stipulated in the VCLT, would not have any
authority over the UN system, which isgoverned by the UN Charter (another legallybinding agreement). Simply put, a newconvention on tax matters—even if it islists four criteria (Article 1, see
https://www.jus.uio.no/english/services/library/treaties/0
1/1-02/rights-duties-states.xml). And quite often, there
will be discussions about the participation of certain
jurisdictions. To a large extent, the answer will depend
on who you ask, and where you sit. Though for treaties
negotiated under the auspices of the United Nations, andfor which the Secretary General of the UN is thedepositary, the convention would normally be open toparticipation by “States that are Members of the United
Nations or members of the specialized agencies, orParties to the Statute of the International Court ofJustice.” (See United Nations, "Summary of Practice of

the Secretary-General as Depositary of Multilateral
Treaties", United Nations Official Document
ST/LEG/7/Rev.l, pp. 22–23.)
62 MLI, Article 27. Other jurisdictions may also become
parties, provided that all other parties agree. Note thatthe depositary for the MLI is the Secretary-General ofOECD, not the UN.
63 See Charter of the United Nations, Article 22. Available
from https://www.un.org/en/about-us/un-charter.
64 Terms vary, but examples include Conference of theParties (COP), Meeting of States Parties (MSP), Meeting ofParties (MOP).

15

application (international health).65 The
WHA is also tasked with overseeing theimplementation of the International HealthRegulations, and to develop new legallybinding agreements. That is, for instance,
how the Framework Convention on Tobacco
Control (FCTC) was established.66

one protocol,68 which suggests that it might
have been better to just negotiate astandalone instrument, thereby avoiding theneed for two ratification processes. To
complicate things even further, protocols
can also be used to amend standalone
agreements, instead of acting as
supplementary agreements—as was donewith the Convention on Mutual
Administrative Assistance in Tax Matters in
2010.69

2.4
REGIME STRUCTURE
There is no fixed formula for how to
structure a treaty or a legal regime. Sometreaties are called ‘framework conventions’and would typically have one or more
‘protocols’ added as supplementaryagreements. Other treaties are designed as
standalone agreements, with all substantive
elements included in one single instrument.
Both types could also have annexes
attached.

Every convention, or regime,70 is designed toachieve a certain objective, which is why thequestion of structuring is often left open
until it has become clear what the regime ismeant to achieve, and how. Form normallyfollows function. In general, however, there
are two main tools that negotiators canmake use of in order to add flexibility to alegal instrument: protocols and annexes.
Each of these come with a set of advantages
and disadvantages.

But even if a treaty is called a framework
convention, there is no guarantee that it will
have any protocols. Conversely, treaties thatare not called framework conventions canalso have protocols. The Convention on
Biodiversity (CBD), for instance, has two
protocols, but does not have the term
‘framework convention’ in its title.67 And the
UNFCCC—which has both ‘United Nations’and ‘Framework Convention’ in its title—has
a supplementary agreement that is not calleda protocol (Paris Agreement). And thenthere are framework conventions with only

Protocols (or other legal instruments serving
the same function) can be useful insituations where the issue at hand has abroad thematic scope, and where there isscientific uncertainty around the scale,causes and effects of the problem, ordisagreement about the most appropriate
regulatory response. If, however, the issue at
hand is relatively narrow in scope,technically complex, and likely to require
regular adjustments, annexes can serve a

65 See70 The term ‘regime’ is used here to describe anhttps://www.who.int/about/governance/constitution.
66 For a procedural history of FCTC, see
https://legal.un.org/avl/ha/whofctc/whofctc.html.
67 For more on the CBD, see https://www.cbd.int.
68 Examples include the Vienna Convention for theProtection of the Ozone Layer (which is designed as aframework convention even if it is not called that), with
its Montreal Protocol, and the Framework Convention on
Tobacco Control.
69 Another example is the international convention on
the prevention of pollution from ships (MARPOL), which
was adopted in 1973, and amended by protocol in 1978.
It has since been referred to as MARPOL73/78.

international governance structure set up to tackle agiven issue, regardless of the legal architecture. In
international relations theory, the term ‘regime’ is usually
defined at "sets of implicit or explicit principles, norms,
rules, and decision-making procedures around which
actors' expectations converge in a given area ofinternational relations" (Krasner, S. (1983), International
Regimes, Ithaca, NY: Cornell University Press, p. 2). The
term ‘lineage’ is sometimes used to describe the same,
but with a more legal focus (see for instance Mitchell etal. (2020), "What We Know (and Could Know) About
International Environmental Agreements", Global
Environmental Politics 20:1, February 2020,
https://doi.org/10.1162/glep_a_00544).

16

useful function. But annexes can, of course,
also be used simply to keep things tidy.

discussions will result in the negotiation of a
new legal instrument or whether the
discussions will at some point fizzle out (orperhaps stabilize in the form of a regularized
discussion forum). During this phase, States
tend to be focused on improving theirunderstanding of the problem and of how it
could be solved.

2.5
PHASES OF TREATY-MAKING
The process of setting up a new international
legally binding instrument normally moves
through several phases. The first of these
could be labelled an ‘idea phase’, which iswhere efforts to develop a new international
convention on tax and financialtransparency appear to find themselves.

“

Step one: The idea phase
All multilateral treaty-making processes
start with an idea, which may or may nottake the form of a specific proposal. And thisidea is usually developed on the basis of asimple recognition: that a given issue is oftransboundary concern and requires
international coordination and/or
cooperation. Sometimes an idea can catchon quickly, and, with sufficient support, it
can be carried into the next phase within amatter of months. Quite often, however, theidea-shaping phase can last for years, oreven decades. The idea of banning nuclear
weapons, for instance, is nearly as old as theweapons themselves. Yet it was not until adecade ago that this idea was moulded into
something that gave it sufficient traction. In
this first phase, it is not necessarily clear
what this new instrument should do, what itshould focus on, and how it would work.

Sometimes an idea cancatch on quickly. Quite
often, however, theidea-shaping phase canlast for years, or even
decades.

In practice, the examination phase typicallyinvolves a set of resolutions aimed at giving
the discussions a direction. These
resolutions could, for instance, be adopted at
the UN General Assembly, at the World
Health Assembly or at the UN Environment
Assembly. It is also possible to establish adhoc processes, outside established forums.
Once a forum is chosen, however, the issue
tends to stay in that forum, unless a group ofStates decides that a change of venue orprocedural rules is required in order to movethe agenda forward. In terms of operativedecisions, the resolutions adopted during
the pre-negotiation phase can range from
simply recognizing that there might be a
problem, to setting up a subsidiary body to
discuss how to deal with it. The latter often
takes the form of a so-called open-ended

Step two: The examination phase
When (or if) the idea of a new treaty begins
to catch on and find its way into establishedforums, a more structured consideration ofits merits can begin. This phase is
exploratory in character, rather than
preparatory, and it is often characterized byuncertainty about the direction of travel. It is
not yet clear—either for States or civilsociety—whether the multilateral17

Phases of Treaty-making
Idea

Examina*on

Nego*a*on

Incuba*on

Implementa*on

Preliminary eﬀorts toformulate therequired interna:onal
policy response

Merits of new treaty
considered bygovernments

Nego:a:on of thetreaty text, in
accordance withagreed rules

States express theirconsent to be boundby the treaty text

Treaty has enteredinto force, is regularly
reviewed andgraduallystrengthened

Gradualtransi,on

Adop,on ofnego,a,on
mandateAdop,on oftreaty text

working group (OEWG),71 a group of
governmental experts (GGE), or similar
entities.

Treaty enters
into force

In some instances, States may opt to include
a deadline for the negotiations in the
mandate, a point in time by which theconvention text should be finalized. This
timeline is included in order to avoid
unnecessary delays, but also to add a senseof urgency. For example, when the UN
General Assembly adopted the mandate fornegotiations on the UN Framework
Convention on Climate Change (UNFCCC) in
December 1990, it recommended that thenegotiations be “completed prior to theUnited Nations Conference on Environmentand Development in June 1992 and opened
for signature during the Conference”.73 That
recommendation was followed, and 18
months after the mandate was adopted, theconvention was ready for signature.

Step three: The negotiation phase
The transition to the negotiation phase takes
place when a mandate for negotiations is
adopted, and States get ready to negotiate on
the actual text of the new convention.
Usually, the decision to start negotiations istaken in the multilateral forum where theissue has (mainly) been discussed, be it the
UN General Assembly, the UN Environment
Assembly, the World Health Assembly, or in
the Assembly of the International Maritime
Organization. Decisions to start negotiations
on protocols are normally taken by theparties to an existing convention, at aconference of the parties. However, States
can also choose to adopt negotiation
mandates outside of established arenas. Thishas been done on several occasions in thepast. The decision to start negotiations on
the Convention on Cluster Munitions, forinstance, was taken at an ad-hoc conferencein Oslo, Norway, in 2006.72

Step four: The incubation phase
The negotiation phase ends when the text ofthe new convention is formally adopted. The
rules of procedure for adoption can vary, andthey are decided by each negotiating
conference, but the general rule, as codified
in the VCLT is that multilateral treaties
should be adopted by a two-thirds

71 Note that ‘open-ended’ does not refer to time (as in

72 See https://www.clusterconvention.org/documentsfrom-the-process-on-cluster-munitions/.
73 United Nations General Assembly resolution 45/212,
para. 7.

never-ending), but rather to the membership of thegroup. Open-ended working groups are generally open
to all UN Member States.

18

majority.74 Regardless of how the decisionon the treaty text is made, however, the lifeof the treaty now enters a new phase, which
can be termed an incubation phase. This
phase begins with the adoption of the treaty
text and ends with the entry-into force of the
new legal instrument, which is when the
new treaty becomes legally binding for all
the States that have deposited theirinstruments of ratification (or equivalent).75

instruments is deposited, the incubation
phase can last for quite some time.77 For the
UN Convention on the Law of the Seas
(UNCLOS), for instance, it took 12 years(adopted in 1982, entered into force in1994).78
Step five: The implementation phase
The fifth and final phase in theestablishment of a new legally binding
international agreement is theimplementation phase. This is when thelegal obligations take effect, reporting andcompliance mechanisms are activated, whensecretariats are set up, and when meetings ofStates parties (or conferences of the parties,
COPs) are convened at regular intervals. For
most conventions the implementation phase
continues indefinitely (unless they specify
otherwise), 79 with gradual strengthening
over time.

The requirements for entry-into-force are
specified by each convention. For the
Minamata Convention on Mercury, as an
example, the treaty text stipulates that itshall enter into force on the ninetieth day
after the deposit of the fiftieth instrument of
ratification.76 That happened in August
2017, nearly four years after the treaty was
adopted. Depending on how long it takes
before the required number of ratification

Making a new convention effective
While any convention will have to be tailored to the subject matter it seeks to address, it
is possible, based on past practice, to identify a set of general success criteria for thedevelopment of effective treaties:
1.

Make the agreement legally binding

2. Include provisions containing specific rules, standards, and requirements
3. Include a mechanism for the gradual strengthening of the treaty
4. Include provisions to promote compliance and participation
5. Avoid least-common-denominator outcomes

74 See VCLT, Article 9.

make up a minimum of 40 per cent of the world’s
merchant shipping by tonnage, and that the "combined
maximum annual ship recycling volume ...constitutes notless than 3 per cent of the gross tonnage of the
combined merchant shipping”.
78 Other treaties have waited even longer. The
Comprehensive Test-Ban Treaty (CTBT) was adopted in
1996 but has yet to enter into force.
79 The Treaty on the Non-Proliferation of Nuclear
Weapons (NPT) is an example of a treaty that was set to
expire after 25 years. At the end of that period (1995),
States parties had to actively decide to extend the treaty
indefinitely.

75 As described in Article 11 of the VCLT, "The consent ofa State to be bound by a treaty may be expressed bysignature, exchange of instruments constituting a treaty,
ratification, acceptance, approval or accession, or by anyother means if so agreed."76 2013 Minamata Convention on Mercury, Article 31.
Available from https://www.mercuryconvention.org/en.
77 Some treaties also have entry-into-force requirementsthat go beyond a specific number of ratifications. For
instance, the Hong Kong International Convention for
the Safe and Environmentally Sound Recycling of Ships(adopted in 2009) also requires that the States parties

19

3
The road to a possible
new convention on tax
and financial transparency
The success of any convention is, in brief, afunction of its design, on the one hand, andthe modalities of the process that brings it
into being, on the other. The key challenge
in any treaty-making effort is to mobilize
support amongst a critical mass of States fora specific treaty proposal. Such a proposal
requires a credible narrative, first, of how atreaty can be achieved and, second, of how it
would provide a meaningful contribution
towards resolving the issue of concern.
These questions are co-dependent: To
mobilize a critical mass of States in favour of
the idea of a new convention, a credible
account of how the treaty may lead totangible legal, political, behavioural, and/or
discursive change would normally berequired. At the same time, to effect thatchange, States need to be convinced that thetreaty can in fact be put in place.

to find convincing answers to three key
questions:
1) How can the issue be framed in a waythat both highlights existing gaps andcreates a sense of urgency?
2) How should the policy objective be
articulated in order to provide a credible
political narrative for its achievement?
How can the political dynamic be changed ina way that allows momentum to build?

3.1
FRAMING THE ISSUE AND
CREATING A SENSE OF URGENCY
A diplomatic process towards aninternational convention should, as astarting point, focus on the development of ashared understanding of the nature of the
problem at hand (see section 2.1). In several
past treaty-making processes, identifying,
marshalling, and disseminating evidence
that demonstrates the negativetransboundary effects of existing laws,
policies, and practices has been a first,
essential step.80 There is already a significant

If the call for a new international convention
on tax and financial transparency is to movefrom an idea-phase to a more formal
examination phase and eventual
negotiations, proponents would likely need

80 Examples include the processes led by theInternational Campaign to Ban Landmines (ICBL), theCoalition for the International Criminal Court (ICC), Child
Soldiers International (CSI), Framework Convention
Alliance (FCA), the International Campaign to Abolish
Nuclear Weapons (ICAN), International Campaign Against

Enforced Disappearances (ICAEID), Control Arms, theCampaign to Stop Killer Robots, the Global Coalition toProtect Education from Attack (GCPEA), and theInternational Network on Explosive Weapons (INEW).

20

body of evidence of the negative effects ofillicit financial flows, financial secrecy, tax
avoidance, and profit shifting. Yet, thisevidence does not yet appear to havetranslated into a politically relevant
understanding amongst a critical mass ofStates of how the issue should be framed, orof its main causes and effects. Nor does it
appear in any significant way to havechallenged the sector-focused view ofinternational tax governance, as a technicalissue that is best deal with by the good
offices of the OECD or the UN Tax
Committee.

labour unions—each bringing their own
perspectives and arguments for why change
is needed, and urgent. Such evidence-based
feedback loops have significantly expanded
States’ political scope of action by shifting
the focus of an international debate from aquestion of what is politically feasible, given
the power dynamics and rules of proceduresof established arenas, towards a focus onwhat must be done to address anunacceptable situation.
If efforts to establish a new international
convention on tax and financialtransparency are to succeed, it would be
important to take further steps towards thedevelopment of a shared understanding of
the issue of concern (what exactly is the
problem that the new treaty would resolve?).
Moreover, there is a need to demonstrate theurgency of the issue (why should this beprioritized now?). Currently, some civilsociety actors use the term UN Tax
Convention in their calls for a new legal
instrument, but is tax the right framing?
Would the convention deal with all sorts oftax matters, or would it mainly deal withcertain transboundary aspects of it, such as
harmful tax competition? If so, would theterm harmful tax competition capture both
tax and financial secrecy? And is the term
illicit financial flows something that fits inthis framing, or is that too broad?82 Finding
good answers to these kinds of questions
will likely be critical in order to build
momentum and mobilize support aroundthe idea.

In many past treaty-making processes,
government agencies, internationalorganizations, civil society actors,
researchers, and dedicated individuals haveplayed an important role in collecting andframing evidence in ways that havequestioned the terms of an existing
international debate; injected a sense ofurgency into policy debates; and challenged“privileged” views of the appropriateness ofexisting laws, policies, and processes. Thishas been done by using available evidence toshift the burden of proof onto those who
argue that existing laws, policies, andprocesses are sufficient—the defenders ofstatus quo.
In some cases, these reframing activities
have created productive feedback loops
between evidence and research, on the one
hand, and laws, policies, and practices, on
the other. 81 These efforts have also beencatalysed by the inclusion of a broad
spectrum of civil society actors, from humanrights organizations to religious groups and

81 Borrie J., and Caughley, T. (eds) (2013), Viewing
nuclear weapons through a humanitarian lens, Geneva:
UNIDIR, 2013. Available fromhttps://unidir.org/publication/viewing-nuclear-weaponsthrough-humanitarian-lens.
82 As noted by the FACTI panel, “there is still nointergovernmentally agreed universal definition of IFFs”,

in part due to disagreement about the inclusion of nonillegal activities. See United Nations (2021), "Report of theHigh Level Panel on International Financial
Accountability, Transparency and Integrity for Achieving
the 2030 Agenda", p. 7.

212) existing international regulation isinadequate, and ongoing club-driven
efforts are unlikely to produce
meaningful, equitable and sustainable
results (due to antiquated working
methods, a piecemeal approach, and lackof legitimacy and accountability),
3) a new comprehensive international
convention on tax and financialtransparency would be able to bring all
the necessary pieces together: a longterm commitment to tackling the
problem, specific and enforceablecommon rules, and a robust institutionalframework to support implementationand facilitate gradual strengthening of
the regime.

3.2
ARTICULATING ACONVINCING POLICY OBJECTIVE
The mobilization of States, civil society
organizations, international organizations,researchers, and dedicated individuals infavour of the call for a new convention on
tax and financial transparency requires aclear and convincing policy objective (often
referred to as a ‘call’ or ‘ask’ by civil society
organizations) and a credible narrative for
its achievement. Articulating the policy
objective is a delicate task. If the objective isoverly detailed, it may inadvertently makeefforts to mobilize support for the broader
political narrative more difficult (too muchpre-cooked text risks leading the discussions
into quarrels over minute legal detail).
Conversely, if the objective is too vague, it
may lose political relevance by being too
easy for States to agree with. The policy
objective should present States and otherstakeholders with a clear, binary choice; areyou for it or against it? And given that the
primary purpose of international law is toresolve issues of common concern, the caseshould primarily be built around the need totackle the transboundary aspects of the
problem. Finally, it is important that thepolicy objective is closely linked to theframing of the problem.

“

Ultimately, States will not bother tonegotiate a new treaty that is not perceived
as meaningful. It has to be worth the effort,
which means that the case for developing itneeds to be convincing. Currently, the casefor a new international convention on tax
and financial transparency seems to rest on
the following key points:

If the objective is overly
detailed, it may
inadvertently makeefforts to mobilize
support for the broader
political narrative moredifficult

It is worth bearing in mind that there isalready broad agreement about the need forinternational cooperation to address crossborder tax issues. The call for a newconvention is not in itself controversial (asnoted in the first chapter, discussions under
the OECD-led process are also expected tolead to the adoption of a new convention).
This indicates that the main arguments for a
new convention would revolve around thesecond and third functions that conventions
normally serve (as outlined in chapter 2): theformulation of a common standard of action

1) harmful tax competition represents acollective action problem that requires acomprehensive, legitimate, long-term,
and legally binding international
response.
22and the institutional structures and othercollective arrangements needed to facilitate
the achievement of the convention’s
objective.

these conventions include elements that, tosome extent, would be relevant to transposeto the issue of tax and financialtransparency. At the same time, there arealso major differences between the tax issue
and those of climate change and tobacco
control, in particular when it comes to thenature of the problems and the underlying
dynamics. Climate change is a highly
complex issue, both in regulatory terms andin cooperative terms. And it is extremelytransboundary (there is no ‘domestic’ CO2).
Tobacco control is at the opposite end of thespectrum, with few transboundary
externalities, and is an issue that is quite
simple to regulate domestically, with very
little risk of free riding (smoking policies incountry A have very limited impact on theeffectiveness of smoking policies in country
B). Finally, it is also worth noting thatneither the UNFCCC nor the FCTC have
proven particularly effective in solving the
problem they were set out to tackle.84

To what extent would a separate
international convention on tax andfinancial transparency produce more
effective and equitable global rules? The
criticism levelled against the two-pillar
solution on BEPS indicates that there isconsiderable room for improvement, andthat the common global rules should bedesigned in a way that benefits a larger
group of countries, including low- andmiddle-income countries. To make it
convincing, however, it needs to be madevery clear how an alternative or additional
set of rules would produce better results on
aggregate.
It is often noted that the current
international tax rules are fragmented, andthat a key role for the new convention would
be to bring it all together. While this seems
sensible, per se, it is not obvious how such acoming-together of existing rules would bedone in practice. Would the new convention
subsume the MAC and the MLI, and thenincorporate other BEPS-relevant measures
as appropriate? Or would it rather aim to
introduce a more general type of obligations
or principles, for instance concerning
exchange of information?

In the search for relevant examples to draw
inspiration from, it therefore seems sensible
to widen the lens, and to look for cases
where the underlying problem structure ismore comparable to that of the illicit
financial flows and harmful tax competition.
One option could be to consider the
relevance of the international governanceframework for trade in goods and services,which bears closer resemblance to the tax
issue, and which also has a similar
reciprocity-based regulatory dynamic. In thewords of Nick Gregory:

It has been suggested that conventions suchas the UNFCCC or the FCTC may serve as
useful sources of inspiration for thedevelopment of a new legally binding
instrument on tax cooperation.83 Both ofMany of the problems present in tradecompetition are similar to the problems

83 Chowdhary, A. M. and Picciotto, S. (2021),

2013, John Wiley & Sons, Ltd.; Hoffman et al. (2019),“Impact of the WHO Framework Convention on Tobacco
Control on global cigarette consumption: quasiexperimental evaluations using interrupted time series
analysis and in-sample forecast event modelling”, BMJ,
2019, doi:10.1136/bmj.l2287.

"Streamlining the Architecture of International Tax
through a UN Framework Convention on Tax
Cooperation".
84 See e.g., Andresen, S. (2013), "International Regime
Effectiveness", Chapter 18 in Robert Falkner (ed.), The
Handbook of Global Climate and Environment Policy,

23

OECD to be reshaped into a global
multilateral institution?

present in modern tax competition andbanking secrecy, namely that the revenue
base of one nation erodes at the expenseof the revenue base or economic activityof a competing nation.85“

If that analogy is accepted, what is arguably
needed in the area of tax and banking
secrecy is something akin to the General
Agreement on Tariffs and Trade,86
underpinned by an inclusive, open andlegitimate international institution, which
would serve the role that WTO does on
trade.
Could the OECD serve that function? In
principle, but it would require afundamental restructuring of themembership and architecture of theinstitution.87 The OECD would have to betransformed from a “club of mostly richcountries”,88 into a multilateral institution
open to all members of the UN and its
specialized agencies, and withcorresponding decision-making procedures
and working modalities. This would inpractice require a renegotiation of the 1960
Convention which established the OECD.89
For the current OECD members, thisrepresents a rather difficult choice: Would
they prefer to keep the OECD more or less as
it is, and let it develop organically, as it hasdone over the past six decades? Or are they
prepared to let go of the control they
currently have (each member has a veto on
decisions in the Council), and allow the

There is a need for acomprehensive,
multilateral response to
the issue of tax
competition andfinancial secrecy,
something the OECD isjust not set up to
deliverOver the past two decades, the OECD has, on
its own initiative, taken on the role as theleading global institution on the issue ofinternational tax policy and financialtransparency. In the short term, this may
continue to produce some results, nudging
the world in a direction of more openness,exchange of information, and less harmful
tax practices. In the long run, however, thecritique levelled against the OECD when it
comes to legitimacy, transparency, andinclusiveness is unlikely to go away. There isa need for a comprehensive, multilateral
response to the issue of tax competition and

85 Gregory, N. (2012), "Lax Tax: The Threat of Secrecy

https://www.oecd.org/general/conventionontheorganisa
tionforeconomicco-operationanddevelopment.htm.
88 The Economist (2017), "What is the OECD?", Available
at https://www.economist.com/the-economistexplains/2017/07/05/what-is-the-oecd.
89 The 1960 Convention does open for the expansion of
the membership (Colombia joined in 2020, Costa Rica in
2021. For a full list of members, see
https://www.oecd.org/about/document/ratificationoecd-convention.htm), but new members must be
invited by the Council, and a decision requires unanimity(Article 16).

Jurisdictions and What the International Community
Should Do about It", p. 886.
86 Seehttps://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm.
87 The OECD was established through the Convention on
the Organisation for Economic Co-operation andDevelopment, adopted in Paris in 1960. The forerunnerof the OECD, the Organisation for European Economic
Co-operation (OEEC), was set up after World War II. For
more information, see https://www.oecd.org/60-years/.
For the text of the Convention, see

24

financial secrecy, something the OECD is justnot set up to deliver.

OECD. To break out of this standstill,interested States could seek support fromcivil society actors and other stakeholders indeveloping a new cross-regional leadershipgroup—a core group—and organize a seriesof ad hoc conferences outside existing arenas
to explore the rationale for and option of a
new treaty.

3.3
CHANGING THE DYNAMICS
It is not uncommon that international issues
with a long history become stuck, with fixed
positions and a particular political dynamic(or lack of it). When positions become
entrenched, it might be necessary to shift
the dynamic, either by changing the topic,
changing the people, or changing the venue.
One way to achieve this could be to move
discussions from one diplomatic hub (e.g.,the UN in New York) to another diplomatichub (e.g., the UN in Geneva). Often,
however, treaty-making processes overcome
the problem of entrenchment by organizing
ad hoc capital-based conferences hosted andchaired by of one or more States in favour ofa new approach.

Building new solutions to global issues ofconcern requires critical engagement withexisting international arenas, instruments,groups, and proposals. Challenging lowest
common denominator approaches centredon achieving full consensus amongst States
has in the past been a key aspect of theplanning and implementation of successfultreaty-making processes. Instead of aiming
for universal support for a specific treaty
proposal, diplomatic campaigns have often
aimed to garner support amongst a criticalmass of States; that is, a group of States
sufficiently large and diverse to make
opposing States politically unable to simply
ignore the proposal. The diversity of the
supporting States is a crucial factor in
addressing global, transboundary issues ofconcern. Often, therefore, treaty-making
processes are led by a carefully constructedcross-regional group of States,90 in which
States from different regions work to
generate further support within establishedregional groups.

To succeed, a process towards a newconvention appears to require more crossregional cooperation amongst supporting
States and new arenas forintergovernmental discussions. Currently,
the dynamics appear to be marked by astandstill, in which the G77 calls for the UN
to be the main forum for developing global
tax rules, while OECD countries prefer tokeep tax questions under the auspices of the

90 Sometimes referred to as a ‘core group’, or as a‘likeminded group’.

25

4Conclusion
Worldwide, nearly half a trillion US dollarsof government revenue is lost every year.
Not by accident, but as a result of deliberateuse, by certain jurisdictions, of low or zerotax-rates to attract capital and profits.
Combined with extensive use of financial
secrecy regulation, this has produced anegative spiral of harmful tax competition—a race to the bottom. It is a text-bookexample of an international cooperation
problem, where individual rationality is at
odds with collective rationality.

comprehensive, multilateral tax
transparency […] in full.” 91“

Even if significant progress has been madein certain areas, notably under the auspicesof the OECD and with the backing of theG20, the piecemeal approach, the lack oflegitimacy and accountability, and OECD’s
antiquated working methods indicate that asustainable, long-term solution to thisproblem will require something different.

The lack of legitimacy
and accountability, andOECD’s antiquatedworking methods,
indicate that asustainable, long-term
solution to this problem
will require something
different

The key challenge in any treaty-making
effort is to mobilize support amongst a
critical mass of States for a specific treaty
proposal. And that requires a convincing
case. Ultimately, States will not bother tonegotiate a convention that is not perceived
as meaningful. To build that case,proponents may benefit from structuring
their efforts along three main tracks: i) theframing of the issue, ii) the formulation of
the policy objective, and iii) the political
dynamic.

The shortcomings and inherent limitationsof the current club-driven efforts have led a
growing number of States and otherstakeholders to call for the start ofnegotiations on a new international
convention on tax matters—a UN Tax
Convention. Such a convention, it is argued,
would “ensure a global and genuinely
representative forum to set consistent,
multilateral standards for corporate
taxation, for the necessary tax cooperation
between governments, and to deliver

91 GATJ/PSI/TJN (2020), “The State of Tax Justice 2020”,

https://taxjustice.net/2021/08/02/the-past-present-andfuture-of-tax-justice-network/. Original emphasis.

p. 11. Available from https://taxjustice.net/reports/thestate-of-tax-justice-2020/. See also26

As things stand, the most challenging task
for the proponents of a new convention is todevelop a clear and convincing policy
objective. What exactly is this newconvention supposed to do? What role
would it serve? And how likely is it that thisnew convention would yield significantly
better results than what the current
trajectory could be expected to deliver?

“To some extent, the answer to thosequestions may lie in the formulation of more
effective and equitable policy proposals. But
in principle, there is nothing that prevents
governments from channelling suchproposals into existing structures such as
the Global Forum or the Inclusive
Framework, which would do little to change
the underlying procedural dynamic. Thissuggest that the most convincing aspects ofthe proposal for a new convention on tax
and financial transparency are to be foundelsewhere: not in the nitty-gritties of specificpolicy measures, but in the process throughwhich they are developed. Is the OECD themost appropriate forum for dealing with
global tax issues? Or is there merit inconsidering the establishment of something
new?
In the words of Nick Gregory, it seems odd
that, “although bilateral tax treaties between
countries are common and regional
agreements are beginning to form, there iscurrently no universal organization forcooperation on tax issues.”92

92 Gregory, N. (2012), "Lax Tax: The Threat of Secrecy

Jurisdictions and What the International Community
Should Do about It", p. 886.

27

There is currently nouniversal organization
for cooperation on tax
issues28

www.intlaw.no