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Political Will and the Global Implementation of Unitaid and the Airline Ticket Tax

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Political Will and the Global Implementation of Unitaid and the Airline Ticket Tax POLITICAL WILL AND THE GLOBAL IMPLEMENTATION OF UNITAID AND THE AIRLINE TICKET TAX A Thesis submitted to the Faculty of the Graduate School of Arts and Science of Georgetown University in partial fulfillment of the requirements for the degree of Masters of Arts in Development Management and Public Policy By Catherine A. Withrow, B.A. Washington, DC June 2007. The research and writing of this thesis is dedicated to my mother, in whose footsteps I proudly follow, And my father, who has encouraged me with every step. Special thanks to: Jason Lawrence at USUN for inspiring the idea behind the thesis The interviewees at USUN and UKUN My thesis committee, especially my advisor, Maria Matilde Ollier for her continued support and guidance, and Arturo Fernandez and Guillermo Alonso and My friends who have supported me through this process. ii TABLE OF CONTENTS Introduction………………………………………………………………………………...……...1 Chapter I: A Theoretical Perspective on Negotiation………………………...……………...……7 • International Cooperation, Two-Level Games, and Epistemic Communities………..…...7 • UNITAID and International Negotiations……………………………………………….11 • Case Study and Model……………………………………………………………..…….13 • A Summary of the Theoretical Perspective……………………………………..……….15 Chapter II: UNITAID and Global Taxation……………………………………………..…….....17 • The Birth of UNITAID………………………………………………………….……….17 • UNITAID’s Mission and Objective…………………………………….…....………….20 • UNITAID Financing………………………………………………………….………….21 • UNITAID’s Governance Structure………………………………………………………25 • Initial Reaction…………………………………………………………….....………….27 • The Heart of UNITAID Disagreement………………………………………..…………29 • Global Public Goods, the Millennium Development Goals and Innovative Financing....31 • Types of International Taxation: Options on the Table…………...…………………….34 • Challenges to International Taxation …………………………...………………..……..39 • UNITAID and the Global Taxation Debate…………………...………………...………42 Chapter III: The French Exception ……………………………………………………...………44 Chapter IV: US Political Will and UNITAID……………………………………..……...……..49 • United States Media Coverage ……………………………………………….…………50 • United States Public Opinion………………………………………………...….………54 • United States Congress…………………………………………………………………..59 • United States International Negotiations……………………………………….……….65 Chapter V: UK Political Will and UNITAID ……………………………………………………73 iii • The UK Media…………………………………………………………………….……..73 • UK Public Opinion………………………………………………………………………76 • UK Parliament…………………………………………………..……………………….81 • UK International Negotiations………………………………...……...…………………89 Chapter VI: A Summary of Differences – the US and UK Compared…………….……………..96 • Media……………………………………………………………………….……………96 • Public Opinion……………………………………………………………………...……97 • Lawmaking Bodies: Congress and Parliament………………………….……………….99 • International Negotiation……………………………………………….………………100 • Summary…………………………………………………………………….………….101 Chapter VII: Multilateral Winsets and Political Will ………………………….………………102 • The US Multilateral Winset……………………………………………………...…….102 • The UK Multilateral Winset……………………………………………………………106 • The Feasibility of a Universal UNITAID and Similar Mechanisms………..………….109 Conclusion………………………………………………………………………………………116 Appendix A: List of Abbreviations ………………………………...…………………..………119 Appendix B: Example of US Congressional Debate Regarding International Taxation…...…..122 Appendix C: Example of UK Parliamentary Debate Regarding International Taxation…...…..126 Bibliography…………………………………….………………………………………………128 iv INTRODUCTION The central challenge we face today is to ensure that globalization becomes a positive force for all the world’s people, instead of leaving billions of them behind in squalor. Inclusive globalization must be built on the great enabling force of the market, but market forces alone will not achieve it. It requires a broader effort to create a shared future, based upon our common humanity in all its diversity 1 Kofi Annan Former United Nations Secretary General A classic American axiom states, “The only sure things in life are death and taxes.” This adage, perhaps true in a time when national borders provided reasonable boundary lines for both certainties, is becoming increasingly less relevant as globalization erases these limits, thus changing the concept of both. It is becoming progressively clearer that death and taxes are now transnational issues, and as their concepts change, so do the norms surrounding them. Death, or more appropriately, the cause of death, is no longer a local affair. Deadly diseases are now internationally communicable, with global migration and movement spreading diseases from avian flue to tuberculosis to new populations at a rapid pace. Even non-local or non-locally threatening diseases have given rise to concern. Diseases such as AIDS, tuberculosis and malaria constitute a humanitarian crisis and a major threat to development, thus earning developed-world concern and generosity. Philanthropic giving is on the rise, and a major beneficiary of this increased funding is global health.2 There is especially a growing concern for avertable deaths in the developing world – those deaths that can be prevented with a vaccine, a mosquito net, or widely available medicines. The goal of many of the global health movements is to provide these life-giving tools and to make an early and painful death less of a surety. 1 Annan, Kofi. We the Peoples, The Role of the United Nations in the 21st Century. United Nations, March 2000. Quoted in Ernesto Zedillo. Chair. “Recommendations of the High-level Panel on Financing for Development.” Commissioned by the Secretary-General of the United Nations (2001) http://www.un.org/reports/financing/full_report.pdf#search=%22Report%20of%20the%20High- Level%20Panel%20on%20Financing%20for%20Development%20%20Zedillo%223, 3. 2 National Philanthropic Trust. “Charitable Giving.” http://www.nptrust.org/philanthropy/philanthropy_stats.asp. (22 May 2007). Coinciding with the change in how death is viewed is a change in how taxes are considered. The traditional concept of taxation is very much linked to sovereignty and national power. However, as responsibility becomes evermore transnational, so do the means for funding it. Current mechanisms to finance agendas such as global health are largely based on nationally decided official development assistance and philanthropic giving. Such mechanisms, however, simply do not provide the amount of predictable and timely resources needed to tackle global health problems in an effective way. As such, a handful of development academics and practitioners have attempted to offer a solution: global taxation to finance development. Their suggestion is essentially to trans-nationally tax global activities such as carbon emission, currency transactions, or airline flights, and use the resources to fund development projects. The idea, however, was received with a mix of optimism and skepticism. Its supporters lauded the innovative approach to increased financing, while its skeptics defended the deep-rooted taxation norms of sovereignty and representation. However, on September 19, 2006, the official launch of UNITAID (United to Aid) brought the issues of death and taxes into the international agenda in a very concrete way. UNITAID is an international drug purchasing facility aimed at tackling HIV/AIDS, malaria and tuberculosis in the developing world. Its primary financing mechanism is an airline ticket tax implemented on a voluntary, national basis, with all funds going to UNITAID to be used in the negotiation and purchase of life-saving drugs and diagnostics. Currently, forty-five countries have committed support to UNITAID through the airline ticket tax, with thirty-one of these countries having either begun or completed the process of implementing the “solidarity levy,” as the tax is commonly called.3 Current members include the five founding countries - France, the United Kingdom (UK), Norway, Brazil, and Chile – along with several African nations, South Korea, and some member countries of the European Union (EU). However, of these countries that have not agreed to support UNITAID, many are among the world’s more influential, including Japan, Canada, Russia, Australia, and the United States (US). The main objection of these five countries 3 UNITAID website. “Unitaid Who.” http://www.unitaid.eu/en/. (22 May 2007). 2 is not the end goal of the facility, but rather the means: they do not see international taxation in any form as an appropriate or well-advised solution to the current lack of development funding. UNITAID thus has opened widely the door to the debate on international taxation in a manner significantly more tangible than any amount of reports or presentations. As such, UNITAID could be considered an experiment in whether or not a truly international tax might be a possibility for development finance in the foreseeable future. Therefore, understanding country reactions to UNITAID could be very telling in how international tax schemes might be dealt with in the future. Current research regarding international taxation looks largely into the economic feasibility of global taxes, occasionally at its management, but rarely at its political achievability. However, most involved in the debate recognize that a necessary element to its achievement is large-scale political will.4 Most recognize, too, that at present this level of political will does not exist. For instance, in Ernesto Zedillo’s recommendation to the High Level United Nations Panel for Financing for Development,
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