The international tax and investment regimes display striking similarities. They are both based on thousands of bilateral treaties that follow similar principles but differ in fine print. They each facilitate the free flow of international capital by respectively disciplining fiscal and regulatory host state conduct. Finally, they share common historical foundations and have experienced similar periods of rapid diffusion and deep contestation. Yet, while the international tax regime recently accomplished a sweeping reform to solve a decades-old legitimacy crisis, the investment regime is still grappling with its own legitimacy crisis and reform. In 2018, the multilateral tax instrument (MLI) entered into force updating thousands of bilateral taxation treaties to curb tax avoidance and prevent treaty abuse. The MLI preserves the existing bilateral tax governance structure while adding new multilateral elements, efficiently modernizes outdated bilateral agreements in both substance and procedure, and sets binding minimum standards while giving states the flexibility to contract out of and around its other provisions. This article argues that the multilateral tax instrument, specifically its (1) legal mechanics, (2) scope, and (3) design, provides a creative template of how to square bilateralism with multilateralism and can thus serve as inspiration for current efforts to reform the international investment regime.
The OECD Multilateral Tax Instrument: A Model for Reforming The International Investment Regime?,
45 Brook. J. Int'l L.
Available at: https://brooklynworks.brooklaw.edu/bjil/vol45/iss1/1