The US walkout won’t devalue the groundbreaking UN Tax Convention

The United Nations (UN) Convention on International Tax Cooperation is up and running despite the United States (U.S.) delegation marking its first day by walking out of the entire process on 3 February. The walkout at the UN headquarters in New York City came as diplomats gathered for four days of negotiations to decide the organization and decision-making procedures of the Convention. “The goals of a future UN framework convention on international tax cooperation are inconsistent with U.S. priorities and represent unwelcome overreach,” said the US delegation in a statement when it first took the floor, adding that “we reject the very nature of these discussions.”

The walkout was not a surprise.

While losing the U.S.’s support for the Convention will prevent any resulting tax rules from being truly global, Washington’s boycott is better than a wrecking ball to the entire process. There was little chance that the Trump Administration, which has already rejected the Organization for Economic Cooperation and Development’s (OECD) corporate tax rate policy and is considering leaving the OECD itself, was ever going to engage on a progressive tax reform agenda covering issues of illicit financial flows, beneficial ownership, and international tax disputes, among others. Nonetheless, it is positive that not one delegation heeded to the U.S.’s request to join them in the walkout – even though eight other wealthy states also opposed the Convention’s mandate when it was voted last November, while over 40 abstained.

The UN Convention has a strong mandate and a decision-making process that is designed to avoid a race to the bottom, leaving room for more substantive work. Agreements are expected before the end of 2025 on policies concerning cross-border services in the digitized economy and the prevention and resolution of tax disputes. Delegates will also work on rules governing illicit financial flows and harmful tax practices—a central demand of the Africa group in the UN who has led the early campaigning for the UN Convention, and has since been joined by Latin America and Southeast Asia. All have long railed against the loss of billions of dollars in tax revenues from companies failing to pay tax in their jurisdictions despite doing lucrative business there. Wealth taxation – based on the blueprint drawn up by the Brazilian G20 presidency in 2024 – and environmental taxes, such as carbon pricing and shipping, are more long-term agenda items but are also part of the Convention’s mandate.

Notably, the Convention will reach agreement on policies, an additional positive outcome from the negotiations. On the last day, the Czech Republic, France, Italy, Malta, and the United Kingdom attempted an amendment that would have introduced consensus decision-making, effectively making it impossible to agree on ambitious policies. The amendment was voted down by an overwhelming majority and ended in a compromise. Now decisions regarding protocols require a two-third majority, and the Convention itself can be decided with simple majority.  

Consensus among the international community on global tax rule making at the UN level is the result of more than a decade of campaigning. Until the last couple of years, Western governments had dismissed this as a pipe dream of the Global South. Though today it seems that the US walkout is just another of the Trump Administration’s turns to US isolationism.