policies "designed to achieve the highest sustainable economic growth and employment and a rising standard of living of the population''.

Under the terms of Article 2 of the Convention, OECD countries undertake "to ensure economic growth and external and internal stability, to reduce obstacles to trade in goods and services, to liberalise movements of capital, and to contribute to the economic development of all the world's countries.'' In light of the charge by the Business and Industry Advisory Committee of the OECD that the harmful tax initiative is a strategy designed to make "low tax countries abandon the activities upon which their livelihood is based,'' and that "such a strategy could make these countries economically dependent on other countries,'' The Royal Gazette asked the OECD directly whether its harmful tax initiative was in conflict with the basic tenets of the organisation.

Frances Horner of the OECD tax policy division responded, stressing that since the question was subjective, her answer did not necessarily represent the opinion of the OECD's member countries.

Ms Horner said: "The OECD wishes to promote true and sustainable economic growth for all countries. If unfair tax competition were to go unchecked, economic benefit would inure to some countries to the detriment of others.

This would be inconsistent with OECD's purpose.'' She continued: "Moreover, the economic benefit (from attracting geographically mobile investment) does not represent true or sustainable growth. And the detriment to countries victimised by harmful tax practices is much greater than the benefit obtained by the countries attracting the investment.''