After three weeks of intense negotiations, the UNTC ToR negotiations have ended. As the dust settles on this groundbreaking process, where did we end up?
By Charlotte Inge and Matt Forgette, CESR Fellows
Last Friday, member state delegations sat in anticipation in the UN Headquarters in New York. Three weeks of intense negotiations had nearly come to a close. Just before the vote on the adoption of the final draft of the Terms of Reference, three sets of amendments were put forth—two by the United Kingdom, two by Canada, and a trio from the European Union. These amendments represented a last-ditch effort to dilute the Terms of Reference, offering familiar refrains around “taxpayer rights” and “avoiding redundancies,” ultimately aimed at watering down the Framework Convention.
Fittingly, the Africa Group, instrumental in moving international tax negotiations to the United Nations, delivered a poignant response to the amendments: “The current text as drafted, while not perfect, reflects a delicate balance of views of all delegations. The proposed amendments, if accepted, would therefore undermine this balance and create a second-tier Framework Convention that would not address the concerns of developing countries.”
The subsequent amendment vote confirmed the Africa Group’s conviction on the inclusivity of these UN negotiations. Each of the amendments was defeated by roughly a two-thirds majority, meaning the Terms of Reference retained its ambition. However, before the vote to confirm the final draft, the United States took the floor. Their delegate announced the United States’ intention to vote against the groundbreaking Terms of Reference, bemoaning a lack of “inclusivity” and “consensus” throughout the three weeks of discussion.
Once again, the Africa Group offered a compelling retort: “For too long, the voices of developing countries, especially from Africa, have been sidelined in global tax deliberations…we have yearned for a more just and inclusive international tax system…the future belongs to those who choose cooperation over division and dialogue over discord. This is a massive step forward, but we must not lose sight of the work that lies ahead. We therefore call on countries to vote in favor.”
The vast majority of Member States heeded the Africa Group’s call, and the Terms of Reference passed with 110 votes in favor and only 8 votes against. It seemed as though what the United States delegation termed a “lack of inclusivity” was actually reflective of something new–a democratic process in which the United States and other powerful Global North states were unable to dominate and dictate policy. Unlike countless other global fora, the United Nations has provided a space where Global South voices have been amplified–not excluded or merely tolerated and then brushed to the side. The result is a powerful first step, a Global South-led effort towards transforming our international tax system–from a flawed patchwork of rules that prioritize a prosperous few into a comprehensive framework that serves the marginalized majority. CESR provides a deep dive into this historic milestone below:
The final vote on the draft Terms of Reference stood: 110 in favor, 44 abstentions, and just 8 votes against. CESR celebrates the overwhelming votes in favor, but perhaps most encouraging was the near-total absence of opposition votes. The 8 votes against (Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK, and the USA) represent a dramatic reduction from a year ago, when 48 countries voted against a UN Resolution on the “promotion of inclusive and effective international tax cooperation at the United Nations.” The latest vote reflects a growing desire among delegations to commit to the UN Tax Convention process. The United States and the other few wealthy OECD countries that voted against the resolution are increasingly isolated.
Week 3 highlights: New human rights language launches debate
On Monday, India proposed replacing the current language on human rights with a fresh formulation: “recognizing that taxation promotes the enjoyment of human rights, and accordingly respect member state obligations under applicable human rights conventions.” A key to this proposed change lay in the narrowing to “conventions” rather than the broader “human rights law” as was previously and ultimately drafted.
This intervention launched a weeklong debate around human rights within the Terms of Reference, during which CESR and our allies fought to sustain a comprehensive human rights approach to the UNTC process. Fortunately, the language was preserved in paragraph 9.c. of the Terms of Reference, even though under a “compromise,” much broader text. Moving forward, it will be vital to function as a gateway for critical issues excluded from the terms of references, such as gender equality, extraterritorial obligations, tax progressivity, and language on common but differentiated responsibilities.
Watering-down tactics persist
The use of dilution strategies to weaken the ToR’s impact was, unfortunately, once again, a persistent theme. On Monday, Global North countries argued for removing commitments to combat illicit financial flows, given a “lack of universal definition.” Ghana effectively countered this by pointing out that numerous studies and general assembly resolutions illuminate the meaning of illicit financial flows, not to mention that it remains a critical problem for African countries. Contentious issues also arose over the potential merging of sustainable development principles (9(d)) and action commitments (10(c)), with Belize highlighting that both elements are essential to upholding the Convention’s purpose.
Additionally, Canada and the UK once again cited their concern regarding a “short” and “prescriptive” timeframe, pleading for greater “flexibility.” However, Brazil, Pakistan, and the African Group supported the current timeframes (completing the Framework Convention in 2027) , stating these already reflect compromised positions. They stressed that continual compromise to suit Global North desires only slows progress.
Civil society earns recognition, still struggles for access
From a CSO participation perspective, a highlight was Mexico’s intervention (building on Costa Rica’s previous emphasis on CSO participation), calling for a round of applause for CSO’s tireless efforts throughout the negotiation process. This recognition of civil society’s role was a testament to the impact of our collective voices in shaping the future of global tax policies.
However, the week was not without its challenges. Once again, CSOs found themselves excluded from certain negotiation sessions, reminding us of the ongoing struggle for transparency and inclusivity. Many critical changes were made to the Terms of Reference during this so-called “informal informals” period, including the weakening of language on states’ extraterritorial obligations and the deletion of explicit reference to “climate” within the text.
Finally, CESR would be remiss if we did not take a moment to celebrate the momentous progress that the passing of these ToRs represents. In the words of our Executive Director, Dr. Maria Ron Balsera:
"After three intense weeks of negotiations, this ToR reflects an ambitious compromise that all countries must support to cooperate in generating financing for development to fulfill their human rights obligations, combating illicit financial flows following the principles of universality, transparency, accountability, and fairness. Low- and middle-income countries have historically been the most affected by the corrosive effect of tax abuse, depriving their governments of raising sufficient resources to provide good quality public services, fulfill their human rights obligations, and finance climate resilience and adaptation."
CESR will continue its coverage of the UN Tax Convention in future publications, but for now, please delve into our daily Twitter threads for more in-depth coverage of day-to-day negotiations: