(English) A Paper Tiger: The OECD

The latest OECD attack on our country borders on the ridiculous.  Thus, Pascal Saint-Amans, director of the Global Forum – which is the latest project by the OECD Cartel to end financial competition by the so-called offshore centers – has just declared that the 12 treaties to avoid double taxation (DTT) are not sufficient to be kept on the “white list” and that we must prepare for a second review to see if we meet the “standards”, which include improvements in data transparency regarding company ownership, and accounting standards (as quoted by Business News Americas, August 4, 2011). 

This club of wealthy countries, as branded by The Economist, believes that transparency and effective exchange of information is the international standard, as opposed to fiscal competition and respect for privacy.  The latter (fiscal competition and respect for privacy) are preached and practiced by the United States, the main partner and leader of the G7;  the former (transparency and effective exchange of information) is what they want to impose on countries that are not members of the club. 

It seems that the OECD is unaware that the IRS is trying get U.S. banks to provide it with information regarding foreign-owned deposits (untaxed), in order to pass it on to the countries of origin of the owners of said deposits.  That is, they neither have it, nor do they provide it.  Furthermore, unlike Panama, U.S. legislation does not provide “know your client” requirements.  A bill proposed by Senator Carl Levin (D-MI) in this regard has been lingering in the U.S. Congress since 2006 and it has not been approved because of the fierce opposition by, among others, Senators from Delaware and Nevada, because it would affect the interests of company-formation business from both States. 

It is obvious that what the OECD, as all good cartels, pursues is to protect their partners from third-party competition.  It is therefore difficult to understand the desire of some to submit to its plans, with the wrongheaded argument that not being in the “gray list” will somehow help Panama’s efforts to become a regional financial center “since it provides a cleaner image of the country abroad and because some international banks have adopted the policy of not operating in countries that are on the gray list, something that had become an obstacle to attract such entities to Panama.”

If Panama signs tax agreements with its main partners, the threats of the OECD become irrelevant and it would be foolish to keep playing this game.  Exiting the list makes no practical difference.  The countries that placed us on their black lists have not removed us just because we were removed from the OECD list, nor will they do so in the future.  We have only been removed from the lists of those countries with which we have signed DTAs.  In fact, since the United States has never blacklisted us, the TIEA with the United States not only gave us nothing in return, but also did not solve anything at all, as evidenced by this new communication from the OECD.

To those who doubt our country, we recommend reading the July 14, 2011, issue of The Economist, where it refers to Panama as the Latin American country with the highest growth and a promising future: “Panama’s smart banks, open economy and long queues of boats at its ports have caused many to compare it to Singapore…But Singapore would envy its growth: from 2005 to 2010 its economy expanded by more than 8% a year, the fastest rate in the Americas. The IMF expects it to grow by over 6% a year during the next five years…Accounting for purchasing power, it is one of the five richest countries in mainland Latin America.”  The article scrutinizes the causes behind this wealth, which are none other than its geographical position, deprived to the Panamanians until the Torrijos-Carter Treaties were signed and by which Panama recovered the full use of the Canal and adjacent areas.  The article also mentions the weaknesses of our country, among which are poor education, poverty, mostly in indigenous areas, and weak democratic institutions. But nowhere are the OECD or its list mentioned.

The OECD is a paper tiger and all their arguments are absurd.  What Panama should do, as was approved by the Cabinet at the time (and I do not understand why it has not been enforced) is to implement our Retaliation Act, and to initiate actions before the World Trade Organization (WTO) against those who discriminate against Panama. By doing so, we would put an end to the grotesque juggling by the OECD cartel and its relevance on an issue, which shamelessly, only intends to safeguard its own interests.