On 26 February this year, CARICOM’s Secretary-General, Ambassador Irwin LaRocque, voiced considerable concern that “the constantly shifting parameters for good tax governance set out by the European Union (EU) are encroaching on the Region’s sovereignty”. Objections against the encroachment of sovereignty through tax regulation by the Organisation of Economic Development (OECD) and the European Union (EU) have been voiced repeatedly for almost 20 years now, with the organisations’ policies having been likened to ‘‘fiscal colonialism’’ , or similar, by a number of commentators. In fact, the (potential) impact of such regulation has been the subject of considerable scholarship.
The challenge that small jurisdictions, including those that are part of CARICOM, allegedly pose to larger countries in terms of tax competition has led to them facing scrutiny from not only the OECD and the EU, but civil society as a whole, with various charities and non-governmental organisations claiming that they reduce tax incomes and contribute to increasing inequality globally. The claim rests upon the idea that small states’ offshore financial centres have been disproportionally involved in “shady international finance dealings”, allowing high net worth individuals and multi-national corporations to avoid paying tax in their own countries; supporting corrupt regimes siphoning funds out of developing countries on a grand scale; and providing shelter for criminals and money-launderers.
Hence, the CARICOM states’ claim to sovereignty regarding tax regimes which supposedly perpetuate such wrongdoing is in competition and dissonance with the OECD and EU’s claim to more transparency and fair competition globally, and the international human rights regime’s desire for equality among citizens of all states. This dichotomy illustrates one of the fundamental issues in public international law today; the material meaning of the concept of sovereignty.
Traditionally, the concept of sovereignty contained a “presumption of full governmental authority over a polity and territory” ; historically however, Sovereignty has evolved to generally be applied only to states. Now, in the 21st century, national authority is forced to share control with regimes that are created as a response to an increased trans-boundary movement of people, capital, information and goods. Such regimes be they intragovernmental (such as the OECD and the EU), non-governmental civil society organisations, or international treaty-based human rights or anti-corruption regimes, aim to address (in part) the challenges of globalisation. In doing so, however, they challenge the traditional conception of sovereignty, delegating power from individual states to collective agreements. The power struggle between the claims of state sovereignty and international organisations is particular problematic, if, as in the case of the CARICOM states in question, the state whose sovereignty is being infringed upon, is not part of the ‘infringing’ regime (in this case, the EU and OECD).
In this case, analysis of whether or not state sovereignty is being compromised by external powers must be more nuanced. Twelve of the 15 CARICOM states are member states of the International Covenant of Civil and Political Rights and 11 are members of the International Covenant on Economic, Social and Cultural Rights. Moreover, CARICOM states are also bound by customary international human rights norms. Therefore, insofar as the OECD and EU tax regimes foster international human rights, such as equality and development, the sovereignty of the states in question is limited by their own membership of the international human rights regime, and their commitment to support it. However, to the extent that the international tax regimes of the EU and OECD aim to bestow a competitive advantage upon their own members, the sovereignty of the CARICOM states in question is certainly infringed. Thus, CARICOM should uphold its obligations as a member of the international human rights regime; however, it must also work to safeguard the sovereignty of its member-states against the unfair encroachment of regimes, of which it is not a member.
 Press release CARICOM, 27 Feb 2019, available at https://caricom.org/media-center/communications/press-releases/eus-shifting-tax-compliance-requirements-encroaching-on-caricoms-sovereignty-sg.
 Ronald Sanders, “The fight against fiscal colonialism: the OECD and small jurisdictions” 91 (2002) The Round Table 325.
 E.g., Anthony Travers, “Comment: The EU and the 'new 21st century colonialism’” International Investment, 5 April 2018.
 E.g.: William Vlcek,” Why Worry? The Impact of the OECD Harmful Tax Competition Initiative on Caribbean Offshore Financial Centres” 96 (2007) The Round Table 331; Ruben Seijbel, The problematisation of small tax havens (Leiden, 2018).
 Susie Alegre, “Small State International Financial Centres: A Chance to Reclaim the High Ground on Human Rights?”in Petra Butler, Eva Lein, Rhonson Salim (eds) Integration and International Dispute Resolution in Small States (Springer, Heidelberg, 2018) 203, 204.
 See findings by the independent expert, Juan Pablo Bohoslavsky, regarding the relationship between tax regimes, human rights and development in Final Study on Illicit Financial Flows, Human Rights and the 2030 Agenda for Sustainable Development United Nations Office of the High Commissioner for Human Rights (2007). http://ap.ohchr.org/ documents/dpage_e.aspx?si¼A/HRC/31/61 paras 21, 61- noting that this not only a small states issue.
 James Crawford, “Sovereignty as a Legal Value” in James Crawford & Martti Koskenniemi (eds) Cambridge Compendium of International Law (CUP, Cambridge, 2012) 117, 132
 Margaret Young,” Fragmentation, regime interaction and sovereignty” in Christin Chinkin & Freya Baetens, Sovereignty, Statehood and State Responsibility (CUP, Cambridge, 2015) 71, 78.
Petra Butler Petra Butler is the Director of the Institute of Small and Micro States and a Professor at Victoria University of Wellington. She specialises in domestic and international Human Rights, public and private comparative law, and international commercial contracts.