Article: Agenda Setting and Decision Making under the OECD/G20 IF and the WTO – Developing Countries and Reform

This article is the outcome of the call for papers on the topic ‘Democratic Legitimacy Of Decision Making Process in Tax’ The OECD/G20 IF and the WTO have increasingly been subject to calls for reform in recent years. Imbalanced power asymmetries in agenda setting and deficiencies in decision making mechanisms have contributed to the existential crisis under the WTO and to legitimacy challenges under the international tax rulemaking body by developing countries. This article examines similarities and differences in structural and procedural legal frameworks and political considerations that facilitate the rulemaking processes and compares the lessons that have been learned. The article finds that both institutions have [historically] fallen short of incorporate agenda items of interest aligned to national needs in developing countries, resulting in gradually declining perceptions of legitimacy and exclusionary processes dominated by closed groups of developed countries. As a result, developing countries under the WTO have used decision-making processes to ‘opt-out’ as an exercise of country preferences thereby resulting in gridlocks caused by the exclusionary nature of the agenda. The informal fluid structure of the OECD/G20 IF has facilitated critical global breakthroughs in Base Erosion and Profit Shifting (BEPS) related issues, its exigent nature, however, has conversely resulted in challenges. These have been charachterized by opaque arbitrary procedures on the acceptance and rejection of proposals creates input-legitimacy concerns; timelines that impinge on democratic consultative processes; and the absence of alternative approaches to ‘opt-out’, limiting policy options for developing countries. The article further finds that special and differential treatment (S&DT) provides developing countries with much needed policy discretion to address international trade and tax related issues of interest. This may potentially counteract agenda-setting and decision-making deficiencies in both institutions and offset pre-existing onerous commitments imposed by the single-undertaking principle and BEPS minimum standards. S&DT is not without its challenges and controversies, though deficiencies in the relevancy of measures, lack of enforceability, and disagreements over eligibility highlight current weaknesses. The article explores a number of reforms and proposals. Inclusive-Framework, WTO, agenda-setting, decision-making, rulemaking, S&DT, preferential-treatment, developing, UN, consensus.