UN conference wording gets mugged

The United Nations is convening a three-day summit of world leaders from June 24-26 in New York to assess the global economic crisis, to identify responses to mitigate its impact, and to start a dialogue transforming the international financial architecture.

An outcome document will emerge from this conference, and we've been privy to a couple of snapshots of the suggested wordings as the negotiations have progressed. An earlier version, which we very much liked, appears to have been mugged along the way. The key paragraph in the earlier version was this:

"Illicit financial flows and tax avoidance and evasion are estimated to amount to several times global ODA (TJN: some of these estimates have been challenged recently and we'll respond to those challenges very soon - Richard Murphy has made a start here and here) and have a harmful effect on development. Measures to enhance regulation and supervision of and transparency in the formal and informal financial system must include steps to curb illicit financial flows in all countries. Improving the transparency of the global financial system, also deters illicit financial flows to international financial centers and enhances the ability to detect illicit activities, e.g. through curtailment of trade mispricing, country-by country reporting by multinational corporations, automatic cross-border exchange of tax information, applying the know your customer-principle in international bank transactions, and measures to improve compliance with and implementation of anti-money laundering standards."

The latest version we've seen, which we believe will turn out to be the final version, reads:

"38 We emphasise the need to ensure that all tax jurisdictions and financial centers comply with standards of transparency and regulation. We reiterate the need to further promote international cooperation in tax matters, including within the United Nations, inter alia by promoting double taxation agreements. Inclusive and cooperative frameworks should ensure the involvement and equal treatment of all jurisdictions. We call for consistent and non-discriminatory implementation of transparency requirements and international standards for exchange of information.

39 Illicit financial flows are estimated to amount to several times global ODA and have a harmful effect on development financing. Measures to enhance regulation and supervision of and transparency in the formal and informal financial system should include steps to curb illicit financial flows in all countries. Improving the transparency of the global financial system also deters illicit financial flows, including to international financial centers and enhances the ability to detect illicit activities."

Now these latest versions aren't utterly awful (though what a "tax jurisdiction" is could be open for debate), but they are rather woollier than the original and we can definitely detect the hand of the secrecy jurisdictions in terms of the wording: one of their favourites is "equal treatment of all jurisdictions" which in practice is often taken to mean "we aren't going to change unless everyone else does."

Perhaps the most important thing that has been removed is the specifics:

"Improving the transparency of the global financial system, also deters illicit financial flows to international financial centers and enhances the ability to detect illicit activities, e.g. through curtailment of trade mispricing, country-by country reporting by multinational corporations, automatic cross-border exchange of tax information, applying the know your customer-principle in international bank transactions, and measures to improve compliance with and implementation of anti-money laundering standards."

Perhaps somebody would care to explain what happened. We will bring you more on this if and when we hear more.