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The 2001 edition of Transfer Pricing Guidelines was substantially revised in July 2010. See the current edition .
This compact version of Transfer Pricing Guidelines provides the complete and current text of the OECD pricing guidelines accepted by member countries and to be used by multinational enterprises when transferring goods and services across boundaries and within the same group of companies. They maintain the arm's length principle of treating related entreprises within a multinational group and affirm traditional transaction methods as the prefered way of implementing the principle. These controversial issues are not just of interest to tax experts. National tax administrations, taxpayers, and businessmen alike all have a share in avoiding conflicting tax rules which might seriously hamper the development of world trade.
These guidelines have also been published in a loose leaf version.
The trade analysis and firm surveys conducted in several African countries in this study highlight an apparent mismatch between government policies and exporters’ needs in the provision and use of trade support services. While acknowledging the weaknesses of firms in these countries, the study does present evidence confirming the existence of a wide array of policy options for increasing business competitiveness and reducing dependence on primary commodities. Successful upgrading and diversification, however, require not only a right set of macroeconomic and structural policies, but also a substantial change in the policy-making process. A major governance problem undermines the implementation of a successful "business plan" for export diversification in these countries: the lack of involvement of private sector and civil society in policy formulation.
Developing and transition economies are seeking to accelerate their development by liberalising trade and investment, and taking advantage of the opportunities of the global market place. However, in the wake of recent financial crises, concerns have been expressed that some countries might turn away from open trade and investment. In fact, most crisis-affected countries are continuing to liberalise trade and investment, which they see as part of the solution to the crisis, not the cause.
This report reviews evidence of the benefits and challenges of trade and investment for development, drawing on experiences from economies in various parts of the world. Experience shows that open trade and investment have been beneficial for development, when accompanied by a coherent set of growth-oriented macroeconomic and structural policies, capacity-building, social policy and good governance. Further, countries like Korea and Mexico that have responded to economic crisis with liberalisation and structural reform have experienced positive results. All countries -- developed, developing and transition -- have a vital stake in a new Round of multilateral trade negotiations to prepare for the global economy of 21st century.
The development process can advance more rapidly than ever before in the new global economy. While opening their economies to trade and investment is a necessary condition for developing countries to achieve sustained high growth and reduce poverty, it is by no means a sufficient condition. Initiating a sustainable dynamic growth requires sound, market-oriented economic policies; appropriate social policy frameworks, including strong investment in human capital and adequate social safety-nets; and good governance. But, as shown by the Asian financial crisis, weaknesses in any of these basic foundations make even successful developing economies vulnerable to crisis.
OECD countries have a pivotal role to play in facilitating developing countries' efforts to fully exploit the benefits of open trade and investment. The key objective of this report is to identify how OECD countries can promote policy coherence by improving the framework for international investment and capital flows; addressing environmental concerns; facilitating participation of developing countries in the global information society; and enhancing the coherence of development co-operation policies. To be successful, policy coherence implies the broader agenda of consciously taking account of the needs and interests of developing countries in order for them to be effective rather than vulnerable and marginal players in the global economy.
Recent years have witnessed growing concern over the controversial issue of trade and labour standards. In a context of intensified international competition, alleged cases of child labour exploitation or of denial of rights to freedom of association and collective bargaining in some developing countries have been perceived by some in developed countries not only as a violation of human rights but also as unfair trade practices. On the other hand, developing countries generally respond that these concerns are unfounded and reflect disguised protectionist preoccupations. What are the relevant core labour standards in this discussion? Do countries with low levels of core labour standards gain an unfair trade advantage over countries with high standards? What are the advantages and disadvantages of possible mechanisms to promote core labour standards? This study provides the first comprehensive analysis of these questions and reviews evidence for a large number of countries throughout the world.
The services sector plays a vital infrastructure role in national economies, employs more people than other sectors, and is the most dynamic sector of world trade. New negotiations under the WTO General Agreement on Trade in Services, which began in January 2000, offer an important opportunity to reap the benefits of greater openness in services markets worldwide. The papers in this volume, produced as part of the OECD Trade Directorate's services project, explore fundamental issues for the services negotiations: what are the barriers to trade in services? How can those barriers be addressed in negotiations to ensure meaningful results? How can services liberalisation be bolstered and underpinned by improved regulatory transparency? Ranging from the incidence and impact of economic needs tests, through quantitative and qualitative formulas for reducing the barriers to trade in services, to possible disciplines affording interested parties the opportunity to comment before regulations are enacted, this volume identifies and analyses innovative solutions to the challenges facing services negotiators.
As trade barriers at the border have fallen through successive trade negotiations, domestic regulation has emerged as a source of residual but potentially significant trade barriers. Recognising the importance of participating in intensified global competition, countries increasingly see regulatory reform as an inescapable policy to ensure that the expected benefits of globalisation are realised and that differences in national regulatory systems do not become barriers to international trade and investment. In this light, OECD has undertaken a broad-ranging project on regulatory reform, for which market openness is seen as a key objective.
The papers collected in this volume were presented at a workshop at OECD that aimed to share national experiences of regulatory reform and trade and to foster consensus-building on best practices. Such practices include enhanced transparency, non-discriminatory due process, independence of regulators and active implementation of competition policy. Other issues raised at the workshop included the challenges for developing countries in pursuing regulatory reform and enhancing market openness, and insights for multilateral trading rule-making emerging from country experiences.
The discussions reveal the pervasiveness of the issues raised at the workshop. In examining the recent development of regulatory issues in trade policy making, this volume brings new light to experiences in some parts of Asia and the Western hemisphere as well as to the growing links among trade, regulation and governance.
The links between trade policy and competition policy have become more important in recent years. With tariff reductions, trade negotiators are looking increasingly at non-border policies that distort trade and at non-governmental barriers to trade. And, as official barriers to trade and investment fall, firms may have a greater incentive to engage in anti-competitive conduct to protect markets. Hence the need for coherent trade and competition policies. Trade and competition policies each seek to improve the allocation of resources; they complement and reinforce each other. These papers from the OECD Joint Group on Trade and competition examine aspects of those complementarities and relationships and in so doing draw on the OECD’s capacity to analyse questions in a multidisciplinary way. This book -- which includes a whole chapter on the telecommunications sector -- throws new light on all these issues in the lead up to the WTO's new round of negotiations. But whatever the outcome of Seattle, the questions raised in this volume will remain relevant.
The OECD Joint Group on Trade and Competition was established in 1996 to help deepen understanding of the complex issues arising at the interface of these two policy domains against a globalising backdrop and explore how best to ensure that both sets of policies are mutually supportive in promoting greater economic efficiency. This publication, the third to arise from Joint Group activities, brings together a series of working papers that Member countries’ trade and competition authorities have considered during the past two years. The objective of the publication is to share with a broader audience the tangible progress made recently by the two communities in the analysis of important issues at the interface between trade and competition policies.
International conventions designed to combat global environmental problems -- known as Multilateral Environmental Agreements or MEAs -- often use trade measures, among other instruments. But in fact the term trade measures covers a variety of provisions, ranging from simple reporting requirements of transboundary movements to the use of trade sanctions imposed to change a country’s environmental behaviour. MEA use of trade measures has not been without controversy in both trade policy and environment policy circles. In order to try and disentangle the various strands of this important set of trade and environment issues, the OECD Joint Session of Trade and Environment Experts focused on the actual experience with the use of trade measures in three universally subscribed MEAs -- CITES (on endangered species), the Montreal Protocol (on ozone layer depleting substances) and the Basel Convention (on hazardous wastes). Whilst the case studies unsurprisingly reveal varying experiences, common issues and main themes, as well as a series of lessons learned, could nonetheless be drawn together from the case study analyses and have been assembled in the concluding chapter of this volume.
The path towards Arab and Euro-Mediterranean integration is challenging for all countries involved but the potential long term benefits are substantial. Multilateral trade initiatives which run parallel to "open" regional integration with the European Union and among Arab states can generate higher economic growth by promoting free trade in goods, services and assets between developed and developing countries. However these agreements have profound implications for Arab states in the region raising old and new issues in the political economy of regional co-operation and development. The body of evidence presented suggests that if these regional trade arrangements combined, allow for "deeper" forms of integration, competitiveness and cohesion can improve well beyond the Eastern and Southern borders of the EU.
Poverty reduction through economic growth is becoming a more urgent shared objective at this time of crisis and represents another potential long term benefit from deeper Euro-Med and Arab integration. In negotiating free trade agreements the EU must therefore strive to make such agreements as equitable as possible; in implementing them, partner countries must focus reform efforts to ensure their efficacy. Arab and Euro-Mediterranean integration can ideally maximise benefits for all countries involved, in spite of signficant legal, institutional and administrative hurdles that will have to be overcome to make such relationships workable.
The new issues examined in this book (the dynamics of open regionalism, the expansion of domestic markets from increased FDI and monetary stability, and the optimal mix of regional trade agreements) build on conclusions from previous studies regarding modest gains from shallow integration. Deeper regional agreements can be good for growth and stability in a region which has experienced very little of both in recent years.
The Uruguay Round Agreement on Agriculture (URAA) was a turning point in the reform of the agricultural trade system. It imposed disciplines on trade-distorting domestic policies and established new rules in the areas of market access and export competition. How effective have the three disciplines contained in the URAA been in bringing about a reduction in the level of production-related support and protection? Which elements of the disciplines have proved effective and which ineffective? What policy lessons can be drawn from the experience so far? What might be inferred about opportunities and challenges for further trade liberalisation? This report provides some answers to these questions for all OECD countries.
A key conclusion of the report is that the immediate quantitative effects of the URAA on trade and protection levels have been modest. The reasons for this include the weakness of many specific features of the URAA including implementation and methodological issues.
Countries have already embarked on a new round of multilateral trade negotiations on agriculture. The challenge facing policy makers is to build upon the foundation of the URAA to further reduce trade distortions. This requires strengthening the disciplines already established under the URAA and addressing those weaknesses of the current agreement which have been identified in this study.
The Arrangement on Guidelines for Officially Supported Export Credits celebrates its twentieth birthday this year. The 'Arrangement', as the Guidelines are usually known, is a unique form of international co-operation: as a 'gentlemen's agreement', it has no formal status in law – and yet it has brought order to the supply of export credits (government subsidies to exporters), thus saving billions of dollars of taxpayers' money. Thanks to the Arrangement, exporters in OECD countries now compete on the basis of quality and price, not according to the degree of support they receive from the state. Progressive improvements in the Arrangement, moreover, have extended its coverage, preventing trade distortion and subsidy in the form of tied aid and unrealistic premium fees.
In this collection of essays, past and present negotiators of the Arrangement's guidelines, Presidents and Chief Executives of export credit agencies, international institutions, private-sector players, economists and others involved with the Arrangement from its earliest days chart its evolution – its inception and progressive expansion, the difficulties encountered and problems solved. They examine the sources of the flexibility that has made the Arrangement so successful in adapting to the changing, globalising world economy. Some of the contributions offer candid insights into the closed world of international negotiations. Others document the response of the Arrangement to the growing sophistication of financial and insurance services. All of them shed light on this increasingly important aspect of international trade.
This book will be required reading for anyone interested in the world trading system and the role of export credits in particular, in the relationship between trade and aid, and in international co-operation in general.
This book retraces the Communities' external liberalisation efforts, and discusses, where relevant, the repercussions of internal liberalisation on foreign competitors. The aim of this book is to clarify, and when feasible, to quantify the economic effects of the EU’s trade policies. To this end, it provides an overview of past liberalisation efforts, reviews trade indicators in international comparison and lays out the future trade agenda of the Community. According to the empirical evidence provided in this volume, integration in Europe does not seem to have entailed much trade diversion, while trade is likely to have boosted area-wide income significantly. It is openness in general, rather than regional integration, that has favoured growth in Europe.
The multilateral trading system has delivered successive rounds of trade liberalisation and established mechanisms to protect the interests of trading nations. The result has been growth for those nations that have recognised the importance of openness and established a domestic policy framework that complements the opportunities presented by trade liberalisation. How have some developing countries been able to turn globalisation to their advantage? What trade issues will need to be addressed if development is to be promoted more broadly? How can the multilateral trading system facilitate the development process? This publication provides an in-depth analysis of the development dimensions of trade, with particular emphasis on the integration of non-OECD countries into the global economy.
This is the 1998 Arrangement. The main purpose of the Arrangement is to provide the institutional framework for an orderly export credit market; it aims to prevent an export credit race in which exporting countries compete on the basis of who grants the most favourable financing terms rather than on the basis of the price and quality of the product. The Arrangement sets limits on the terms and conditions for export credits involving credit terms of two years or more - that is, that are insured, guaranteed, extended, refinanced or subsidised by or through export credit agencies. In addition to providing a framework for official export credits, the Arrangement sets out rules for tied aid and for risk-based premium fees. The Arrangement is a gentlemen's agreement; it is not an OECD legal Act. The Participants to the Arrangement are most OECD Member countries
Developing countries want to join in the globalisation process. However, the increasing complexity of global markets, the new challenges of the multilateral trading system and the competing demands of regional, bilateral and multilateral trade agreements confront developing countries with an expanding array of competitiveness and policy challenges. And, in many cases, they lack the institutional and human resource capacity to meet these challenges.
The DAC Guidelines on Strengthening Trade Capacity for Development have been prepared on the basis of an emerging international consensus and understanding of how the international community can work together more effectively. They intend to help developing countries enhance their capacity to trade and participate more effectively in the international rule-making and institutional mechanisms that shape the global trading system. They also provide a common reference point for the trade, aid and finance communities, putting trade capacity building in the context of comprehensive approaches to development and poverty reduction.
Part I of this two-part study sets out a framework for the analysis of State trading enterprises (STEs). It emphasises their diverse nature and the imperfectly competitive markets in which many of them operate. Although State trading enterprises may be granted monopoly powers, their objectives and therefore their behaviour may differ from that of private sector monopolies. All these factors should be considered in trying to assess the potential impact of STEs on market access or on world export markets.
Part II assembles and classifies a large amount of information and data concerning agricultural state trading enterprises in OECD countries. The criteria used relate to the potential of these enterprises to distort markets and trade.
This joint OECD-Eurostat publication provides statistical data on international trade in services for the twenty-nine OECD Member countries as well as definitions and methodological notes. The data are supplied and published according to the IMF Fifth Manual of the Balance of Payments and the OECD-Eurostat Classification of Trade in Services, which is totally consistent with the balance of payments classification but is more detailed. This book includes summary tables by country and by service category and zone totals for the EU15, EU12, EUR11 and the OECD which are comparable. Tables for individual countries showing data for detailed service categories are also provided. Time series cover the period 1987-1996 as far as data are available.
The trade liberalisation agreements signed between the European Union and the southern Mediterranean countries carry risks as well as benefits. They reveal structural weaknesses in the partner countries, including continued rent seeking, market segmentation, a weak modern private sector and inadequate fiscal systems. In the short term, since the agreements only cover industrial goods and not agriculture or services, there is a risk of job losses in the domestic industrial sector due to competition from the EU.
The authors of this study highlight the opportunities the agreements offer for supporting reforms to encourage industrial restructuring through financial transfers, providing incentives for producers to diversify, and securing new markets. Achieving the reforms, however, will require political will in the southern Mediterranean countries and complementary reforms in the European Union to open its markets further to include those sectors currently excluded from the agreements. Moreover, as demonstrated by the authors' detailed analysis of the Egyptian and Tunisian cases, a regional response to the challenges posed by the agreements is likely to bring more benefits than a purely national response.