1 TRATADOS MULTILATERAIS THE EFFECTS OF GLOBAL AND REGIONAL TRADE AGREEMENTS ON DOMESTIC TAX LAW AND BILATERAL TAX CONVENTIONS: GENERAL ASPECTS Howard M. Liebman

2 A – TYPE OF AGREEMENTS 1 – MULTILATERAL TRADE AGREEMENT: WORLD TRADE ORGANIZATION (WTO). Successor to GATT WTO Laws: 16 sections of the Marrackesh Agreement and its annexes (GATT, GATS, TRIPS, SPS, SCM, DSU)..149 members; represents more than 95% of worldwide trade..Implements trade agreements, settles trade disputes, forum for trade negotiations, all with a potential/actual tax impact.

3 2 – REGIONAL TRADE AGREEMENTS a. NAFTA (U.S., Canada, Mexico)..Entered into force on January 1, Free movement of goods and services, fair competition, investment protection, IPR protection. b.MERCOSUR (Primarily Argentina, Brazil, Paraguay, Uruguay, Venezuela)..Entered into force on January 1, 995..Free movement of goods and services, common external tariff and common trade policy.

4 2 – REGIONAL TRADE AGREEMENTS c.APEC (21 members – Asia Pacific)..Economic and trade forum..Promotes the reduction of barriers to trade and investment. d.ASEAN (10 members). e.CARICOM (15 members and 5 associate members)..Entered into force on August 1, Common market.

5 2 – REGIONAL TRADE AGREEMENTS f.EU (25 members) – EC (45 members)..Treaty of rome (1957), Single European Act (1986), Treaty of Maastricht (1992)..Internal Policies: single market, common system of indirect taxation of goods and services and excises..External Policies: Common external custom tariff, common trade policy, etc.

6 2 – REGIONAL TRADE AGREEMENTS g.EFTA (Current members: Iceland, Liechenstein, Norway, Switzerland)..Entered into force on May 3, Free movement of persons, services and investment, fair conditions of competition, IPR protection. h.Other Free Trade Agreements (FTAs): Regional (see list from the WTO) and Bilateral (see list from the USTR).

7 3 – BILATERAL INVESTMENT TREATIES (BITs).Over 2,400 BITs..Fosters the liberalization, protection and/or promotion of foreign direct investment..How?  Non-discrimination principles: “National Treatment” and “Most Favored Nation Treatment”.  Offers protection against expropriation, free transfer of capital and transparency in legal and administrative procedures.

8 B – SCOPE OF AGREEMENTS: TAX COVERED BY THE WTO, NAFTA, BITs 1 -The WTO Agreements. a.GATT Article I:1 – MFN treatment applies to custom duties and charges of any kind. May include internal taxes..Article III:2 – National Treatment applies to internal taxes and any other charges. b.The SCM (Subsidies and Countermeasures) Agreement Article 1..Covers both actual or potential direct transfers of funding as well as any governmental revenues due but foregone or not collected..Granted/ordered by any public body.

9 B – SCOPE OF AGREEMENTS: TAX COVERED BY THE WTO, NAFTA, BITS. 2.NAFTA Section Deals with taxation in a very etensive fashion. 3.BITs..Reminder: BITs are concluded to favor foreign direct investments..Deal with taxation to a very limited extent (if any)..Possible Rationale: Taxation should be dealt with in a bilateral taxation treaty..Case study: US-Uruguay BIT of November 11,  Taking from the left hand what one gives with the right.

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