US Withdraws from UN Global Tax Treaty Negotiations, Citing Conflicting Priorities

The United States has officially withdrawn from negotiations concerning a new global tax treaty at the United Nations, as reported by Bloomberg on February 3. Jonathan Shrier, the US acting representative to the UN Economic and Social Council, informed the UN’s negotiating committee that the US opposes the nature of the ongoing discussions.

Shrier's comments came on the first day of a week-long committee meeting held in New York. He stated that the objectives of the proposed UN tax treaty are inconsistent with US priorities and represent an unwelcome overreach. The proposed convention aims to assist nations in stimulating economic growth and achieving the UN’s 2030 Agenda for Sustainable Development, which encompasses 17 goals. According to the UN, the treaty is expected to generate significant additional tax revenues for many countries, particularly those in the Global South.

This withdrawal aligns with the early stance of the Donald Trump administration, which had previously rejected pillar two of the OECD’s global tax initiative. A memorandum from President Trump’s administration last month declared that the OECD’s global minimum tax deal “has no force or effect” in the US. Rasmus Corlin Christensen, a political economist at Copenhagen Business School, noted that established power hierarchies hinder the ambitions for an expansive new UN convention, a reality that has been made even more apparent since Trump’s election as President.

“Still, there were – and are – opportunities within these power hierarchies to advance new, even radical, global tax policy ideas,” Christensen added. He also expressed that, despite the US’s exit, negotiations are likely to continue. “It’s possible the UN tax convention becomes more of an extension of the existing UN tax committee’s work – doing policy work predominantly by and for developing countries,” he stated.

The US’s decision to withdraw from the UN negotiations followed a vote in 2023, where countries expressed support for a more prominent role for the UN in international tax matters. This vote was a response to tensions between developing and developed nations and led to a resolution aimed at enhancing the UN's role through the establishment of an international tax cooperation convention.

It was reported that many developed countries favor the OECD taking the lead on international tax reform, while numerous developing nations contend that the OECD’s reform efforts have not been inclusive enough. Furthermore, Alex Cobham of the UK advocacy group Tax Justice Network previously stated that the UN serves as a more suitable forum for addressing global tax abuse than the OECD, as the US cannot obstruct progress in the former.

By fLEXI tEAM