The thesis is that to give insufficient recognition to international trade agreements in developing tax policies can result in distortions in international trade. It is not suggested that the objective of facilitating free trade should be paramount to sovereign interests which underlie tax policy decisions. However, the proposition is that in selecting from among alternative tax policies, the policy which should be chosen is that which achieves national objectives while minimizing distortive effects on international trade. The goals of this study are: 1) to determine whether particular tax provisions impede, distort, or otherwise have a negative and unjustifiable effect on free trade; and 2) to reflect on the intersecting role of taxation and international trade. Although many tax policies may be viewed as prima facie "discriminatory", such discrimination may be acceptable pursuant to international agreements, or overriding national interests may prevail. An attempt is made to develop a framework for examining the effects of taxation on international trade which can be used as a guide for tax policy makers in selecting policies which meet domestic criteria as well as facilitate free trade. The thesis consists of five chapters. The first f chapter sets out the methodology, conceptual framework and theoretical basis for the study. The next three chapters examine specific tax regimes in the context of the General Agreement on Tariffs and Trade (the "GATT") and underlying principles of free trade. The tax regimes are: 1) withholding taxes for payments under software licensing arrangements; 2) research and development tax incentives; and 3) cross-border transfer pricing provisions. Chapter five summarizes the case studies and outlines approaches to fiscal harmonization under a free trade regime. The conclusion is that a GATT tax code may be an appropriate mechanism for achieving harmonization for certain tax measures. However, it is infeasible, at least in the short term, to expect a GATT tax code will be placed on the World Trade Organization's agenda. Even if such a code is attainable in the future, unilateral, bilateral and other multi-lateral approaches to eliminating distortive tax policies may be more appropriate in some cases.

The thesis is that to give insufficient recognition to international trade agreements in developing tax policies can result in distortions in international trade. It is not suggested that the objective of facilitating free trade should be paramount to sovereign interests which underlie tax policy decisions. However, the proposition is that in selecting from among alternative tax policies, the policy which should be chosen is that which achieves national objectives while minimizing distortive effects on international trade. The goals of this study are: 1) to determine whether particular tax provisions impede, distort, or otherwise have a negative and unjustifiable effect on free trade; and 2) to reflect on the intersecting role of taxation and international trade. Although many tax policies may be viewed as prima facie "discriminatory", such discrimination may be acceptable pursuant to international agreements, or overriding national interests may prevail. An attempt is made to develop a framework for examining the effects of taxation on international trade which can be used as a guide for tax policy makers in selecting policies which meet domestic criteria as well as facilitate free trade. The thesis consists of five chapters. The first f chapter sets out the methodology, conceptual framework and theoretical basis for the study. The next three chapters examine specific tax regimes in the context of the General Agreement on Tariffs and Trade (the "GATT") and underlying principles of free trade. The tax regimes are: 1) withholding taxes for payments under software licensing arrangements; 2) research and development tax incentives; and 3) cross-border transfer pricing provisions. Chapter five summarizes the case studies and outlines approaches to fiscal harmonization under a free trade regime. The conclusion is that a GATT tax code may be an appropriate mechanism for achieving harmonization for certain tax measures. However, it is infeasible, at least in the short term, to expect a GATT tax code will be placed on the World Trade Organization's agenda. Even if such a code is attainable in the future, unilateral, bilateral and other multi-lateral approaches to eliminating distortive tax policies may be more appropriate in some cases. / Law, Peter A. Allard School of / Graduate