Who’s to blame if Pillar 1 negotiations fail?

Originally published June 2024

Until recently, it was commonly expected that the Multilateral Convention (MLC) for Pillar 1 (P1) might be agreed, but without any path to US ratification, it would be of limited practical relevance (https://lnkd.in/evWvp3ut https://lnkd.in/eCb3QER8).

It might not even get to that. Negotiations are still ongoing, but Italy has said the negotiations are “set to fail”. India has been at the verge of dropping out for a while (https://lnkd.in/eMpcPxdk). But they are not alone. US Secretary Janet Yellen took the extraordinary step of saying on record India and China are hindering a deal (https://lnkd.in/eVXveXt4).

There was some speculation why Yellen did that. Was she just stating facts? Or was she – as Bloomberg claimed – trying to achieve a breakthrough (https://lnkd.in/eik9ZkUB)? Was she trying to create a narrative that P1’s failure was not the US’s fault? Or, more cynically, did she mean to sink the talks to avoid herself the embarrassment of agreeing a deal that she can’t deliver on? Or a bit of all four? The OECD was quick to put out an unusual statement saying that all is still on track, which of couse only added to the impression that something’s going wrong (https://lnkd.in/ebEnYSue).

A few years ago, Yellen had hoped US MNEs would support a P1 deal, but on the whole they are now hostile to it. Once P1 falls apart, we may see a return of DSTs. US may challenge them again, which is easier to do if they’re not seen as responsible for P1 talks failure. So, the blame question does matter.

Here’s a playlist to help you navigate the P1 blame game (Kanye West) (https://lnkd.in/e_jDqKF7). Who shot P1 talks down (Notorious B.I.G.)? Who do we blame (SAINt JHN)? Was the problem America (Beyoncé, Kanye West, David Bowie)? Or China (Bowie) and/or India (Jatin-Lait), as Yellen claimed? Or was it DST imposing Canada (South Park)? Or should we blame companies using nifty tax systems (FASCINATING AIDA)? Or unemployment and poverty related misery (Rodriguez)?

Other things you could blame or not blame include sunshine, moonlight, good times, the boogie (Jacksons), the boogieman (KC & The Sunshine Band), the rain (Milli Vanilli), the alcohol (Jamie Foxx), the night (Calvin Harris), the girls (MIKA), the boys (Yelle), Rastafari (The Congos), Blind Willie Johnson, George Ezra, Kelly Clarkson’s parents’ divorce, Taylor Swift, Akon, Ne-Yo’s girlfriend and literally everyone except Lily Allen. The Kooks are not saying it’s your fault, although you could have done more. It’s too late to apologize (OneRepublic) because we’ve heard it all before (Madonna).

But perhaps it’s the dragged out process, the apathy and the lack of conviction that sunk P1. In the words of Fern Jones: if you have never seen nothing, never heard nothing, never felt nothing and never did nothing, you ain’t got nothing at all.

Obvious disclaimers: this is not advice. These views are my own and do not necessarily represent my employer.

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