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European Parliament ACP Report Targets Tax Havens

Monday, January 25, 2010

The European Parliament has called on the European Commission and the governments of the African, Caribbean and Pacific (ACP) states to "include the fight against abuse of tax havens, tax evasion and illicit capital flight as a matter of priority" in the revised Cotonou Agreement, which governs relations between the European Union and the ACP states.

The EP wants to see the inclusion in the agreement of an international binding mechanism which would force "all transnational corporations to disclose automatically the profits made and the taxes paid in every ACP country where they operate."

According to members of the European Parliament, effective and viable tax systems in the ACP countries could be a source of development funding, which could in the long term replace foreign aid dependency.

These proposals form part of a report by the European Parliament Development Committee Chair Eva Joly on the progress of negotiations towards a second revision of the Cotonou Agreement, which is expected to be finalized by March 2010.

The Cotonou Agreement is a partnership agreement between the EU and 77 African, Caribbean and Pacific states. It was signed on June 23, 2000, ratified by the EU member states by 2003, and is valid for 20 years. It was first revised in June 2005, a revision that entered into force on July 1, 2008. The agreement is based on three pillars: political dialogue, commercial relations, and development cooperation.

Until end-2007, the trade chapters of the Cotonou Agreement were exempt from World Trade Organization rules, but this was allowed to expire after it was attacked by other countries outside the Cotonou Agreement, alleging ex-colonial preference.

The ACP countries now benefit from separately negotiated Economic Partnership Agreements with the EU which permit them free access to the member states of the EU for their goods exports in return for opening their own markets to the EU after transition periods of up to 25 years.