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eLaw Journal: Murdoch University Electronic Journal of Law |
'Once we saw issues and problems through the prism of a village or nation-state ... Now we see the challenges of our time through the world's eye.'
Justice Kirby's words are a powerful expression of what is often referred to in the literature as 'globalisation'. Every era is characterised by 'vogue' words that suddenly become ubiquitous. For the 1990s and into this century, this word is undoubtedly 'globalisation'. Like other vogue words, globalisation has wandered in and out of journalism and has almost become an instant cliché. Perhaps the result of it being used by many writers on every possible occasion, globalisation has come to mean different things to different people. At the same time, it has caused apprehension, excitement, expectation and widespread confusion among citizens and governments alike.
For some three hundred years, from its emergence in the mid-seventeenth century, the nation state was regarded, rightly, as the dominant actor in international economic relationships. Historically, the state was the primary regulator of its national economic system. The world economy, quite legitimately, could be conceptualised as a set of interlocking national economies. Trade and investment in the world economy were literally 'inter-national'.[13]
Moreover, it has been asserted that the idea of 'borders' or 'boundaries' corresponds with a State's jurisdiction, that is, its right of regulation, which does not necessarily correlate with its actual physical boundaries, although it is often the case because, inter alia, of the territorial basis on which jurisdiction can be asserted.[14]
To be a multinational company in the past, you had to be huge, with offices around the world capable not only of handling your corporate atoms but dealing with local laws, customs (in both senses of the word) and the physical distribution of products. Today, three people in three different cities can form a company and access a global marketplace.[17]
The transition from an industrial age to a post-industrial or information age has been discussed so much and for so long that we may not have noticed that we are passing into a post-information age.[20]
(1) As every nation possesses an exclusive sovereignty and jurisdiction within its own territory, the laws of every State affect and bind directly all property, whether real or personal, within its territory; and all persons who are resident within it, whether natural-born subjects or aliens; and also all contracts made and acts done within it.
(2) No State can, by its laws, directly affect or bind property out of its own territory or bind its own subjects by its own laws in every other place.[40]
Used in this context, the concept of territory is defined in the sense of a geographical area - that is, as a physical concept. Brownlie notes that the word territory in 'a legal context denotes a particular sphere of legal competence and not a geographical concept.'[41] Despite this, territory has very much been interpreted in a physical, geographical, bricks and mortar sense.
We are living in a time of unparalleled change. Australia must have a taxation system which equips it for the coming decades, not for those that have passed.[54]
Increasing globalisation will translate into an increasingly competitive environment for Australian business. The impact of the telecommunications revolution and associated technologies, in diminishing the significance of national boundaries, will make more businesses feel the chill wind of much stiffer competition. We may remain an island geographically [isolated] but we will not be able to hide from the forces generated by globalisation.[55]
Apart from an announced proposal to reduce the company tax rate to 30 per cent to bring Australia's rate more into line with the rates of other countries in the Asia-Pacific region, Ralph announced proposed changes to the capital gains tax regime, again with tax competition considerations in mind:
A more competitive capital gains regime to encourage investment, particularly to attract highly mobile international capital for which there is strong and increasing competition, to encourage entrepreneurs to start new businesses in Australia, and to achieve a better functioning capital market.[56]
[t]he bottleneck characteristic of any centralized law-making machinery, and the natural frailties of law-making processes based on writing authoritative texts--make centralized systems unsuitable for tackling a diverse, rapidly changing, large scale set of problems--like those posed by the net.[61]
[t]he same decentralised decisionmaking that created the net at a technical level may be able to create a workable and, indeed, empowering and just form of order even at the highest level of the protocol stack--the realm of rules applicable to the collective social evaluation and governance of human behavior.[62]
[T]hey can try and cling to the mirage of absolute sovereignty ... or alternatively they can regard self-interest as inextricably entwined in the mutual interest in acclimatising to the changes in the global economy which are taking place, through co-ordinated action at the national and international levels.[68]
This far-reaching form of cooperation seems to have been made possible by the resemblances between the participating States in various fields, in particular mutually understood languages, similar legal systems, and the fact that most participants had already been cooperating intensively for some years under bilateral assistance agreements.[76]
[1] This quote, by Marshall McLuhan, is descriptive of the 'global village' coined by him in 1960 in recognition of the fact that new technologies and communications have effectively 'shrunk' world societies to the level of a single village: see generally the definition of 'global' in Robert W Burchfield, The New Fowler's Modern English Usage (3rd ed, 1998) 333.
[2] John Quiggin, 'Globalisation: Brave New World or Techno Trap?' The Australian Financial Review (Sydney), 1 October 1999, Review Section, 5.
[3] An excellent guide to the theory of techno-globalism is provided by Alvin Toffler and Heidi Toffler in their book, Creating a New Civilisation: The Politics of the Third Wave (1994).
[4] Quiggin, above n 2, Review Section, 5.
[5] Ibid. Also, see generally Hans-Peter Martin and Harald Schumann, The Global Trap: Globalisation and the Assault on Democracy (1997).
[6] Ibid.
[7] Ibid.
[8] See Nicholas Negroponte, Being Digital (1995) 203, referring to a meeting of The Organization of the Petroleum Exporting Countries ('OPEC') in October 1981, in which Sheik Yamani delivered his famous speech about giving a poor man a fishing rod.
[9] The phrase arising from the book by Frances Cairncross, The Death of Distance (1997).
[10] See generally Thomas Friedman, The Lexus and the Olive Tree (1998).
[11] Quiggin, above n 2, Review Section, 5.
[12] See generally Ramon J Jeffery, The Impact of State Sovereignty on Global Trade and International Taxation (1999) 15.
[13] Peter Dicken, Global Shift: The Internationalisation of Economic Activity (1992) 148.
[14] Jeffery, above n 12, 16 (footnote 60).
[15] Ibid 17.
[16] Negroponte, above n 8, 237.
[17] Ibid.
[18] An 'intranet' may be defined as a private network inside a company or organisation that uses the same kinds of software that you would find on the public Internet, but that is only for internal use.
[19] Robert B Reich, The Work of Nations: A Blueprint for the Future (1991) 110-11.
[20] Negroponte, above n 8, 163.
[21] Ibid 14: 'A bit has no colour, size or weight, and it can travel at the speed of light. It is the smallest atomic element in the DNA of information.'
[22] Ibid 4.
[23] Ibid 163.
[24] Ibid 164.
[25] Ibid 12.
[26] Ibid 164.
[27] Ibid.
[28] Australian Bureau of Statistics, 3 Million Internet Purchases and 1.5 Million Households Online - ABS, Media Release 106/99 (6 September 1999). Available at <http://www.abs.gov.au> (Copy on file with author).
[29] Ibid.
[30] John Breusch, 'The Bare Facts of E-Health', The Australian Financial Review (Sydney), 1 October 1999.
[31] Negroponte, above n 8, 166.
[32] Ibid.
[33] Ibid 228.
[34] Cairncross, above n 9.
[35] Jeffery, above n 12, 26.
[36] Thomas M Franck, Fairness in International Law and Institutions (1995) 446.
[37] Jeffery, above n 12, 26. Also, as noted by Beale, 'The power of a sovereign to affect the rights of persons, whether by legislation, by executive decree, or by the judgment of a court, is called jurisdiction': J H Beale, 'The Jurisdiction of a Sovereign State' (1922-23) 36 Harvard Law Review 241.
[38] Ibid.
[39] There are three other bases of establishing jurisdiction under the traditional approach: (a) the Protective Principle, (b) the Passive Personality Principle; and (c) Universal Jurisdiction. A detailed consideration of these principles is beyond the scope of this article, but a discussion of these principles may be found in R Higgins, 'The Legal Bases of Jurisdiction' in Cecil J Olmstead (ed), The Extraterritorial Application of Laws and Responses Thereto (1984) 3.
[40] Fritz A Mann, Studies in International Law (1973) 20.
[41] Ian Brownlie, Principles of Public International Law (1990) 116.
[42] Jeffery, above n 12, 48.
[43] Negroponte, above n 8, 8.
[44] John Goldring, 'Consumer Protection, the Nation-State, Law, Globalization, and Democracy' (1996) 2(2) Journal of Computer-Mediated Communication <http://www.ascusc.org/jcmc/vol2/issue2/goldring.html> (Copy on file with author) 2.
[45] In Australia, the Australian Competition and Consumer Commission ('ACCC') has teamed up with the US Federal Trade Commission ('FTC') to crack down on a global Internet scam which takes unsuspecting users to pornographic web sites then takes control of the user's browser, repeatedly bringing up more pornographic pages. Commonly referred to a 'mousetrapping' or 'pagejacking', the ACCC believes the conduct breaches the Trade Practices Act 1974 (Cth) as it is misleading or deceptive conduct: The Online Australia Update, 27 September 1999 <http://www.onlineaustralia.net.au> (Copy on file with author).
[46] These are essentially the traces someone leaves behind when moving (surfing) from one web site to another.
[47] Information stored in the consumer's hard drive which can show which sites have been visited.
[48] Goldring, above n 44, 4.
[49] Negroponte, above n 8, 58.
[50] See <http://www.geocities.com/Pentagon/Barracks/8845/singapore_internet_censorship.html> (Copy on file with author).
[51] In the UK, Australia, Canada and most Commonwealth countries the decisions by the Privy Council in Sirdar Gurdyal Singh v Rajah of Faridkote [1894] AC 679 and Attorney-General (New Zealand) v Ortiz [1984] AC 1 and the House of Lords in Government of India v Taylor [1955] AC 491 still represent the law.
[52] [1955] AC 491, 511.
[53] John Ralph, 'A Tax System by Design Rather Than Accident', Business Review Weekly (Melbourne), 24 September 1999, 34.
[54] John Ralph, Chairman's Introduction to Review of Business Taxation: A Tax System Redesigned (1999) <http://www.rbt.treasury.gov.au> (Copy on file with author) 1.
[55] Ibid.
[56] Ibid 2.
[57] OECD, The Application of the Permanent Establishment Definition in the Context of Electronic Commerce: Proposed Clarification of the Commentary on Article 5 of the OECD Model Tax Convention, Revised Draft for Comments, 3 March 2000.
[58] R Resnick, 'Cybertort: The New Era' (1994) National Law Journal A1.
[59] OECD, Working Party No 1 of the Committee on Fiscal Affairs, Revision of the Commentary on Article 12 Concerning Software Payments, 29 September 1998 <http://www.ecommercetax.com/Official_docs/OECD - commentary - software transactions.pdf> (Copy on file with author).
[60] David R Johnson and David G Post, 'And How Shall the Net be Governed?' (1996) Cyberspace Law Institute <http://www.cli.org/emdraft.html> (Copy on file with author) [1]. The ensuing discussion on this point is adapted from this source.
[61] Ibid [25].
[62] Ibid [18].
[63] Tim Treadgold, 'Industries Threaten to Flee a Costly Carbon-Tax Regime', Business Review Weekly (Melbourne), 24 September 1999, 44.
[64] Ibid 45.
[65] The name 'Tobin tax' derives from James Tobin, a Nobel-laureate economist at Yale University.
[66] The Economist, 'The Taxpayer Vanishes' The Australian (Sydney), 4 June 1997.
[67] Ibid.
[68] Jeffery, above n 12, 23.
[69] Ibid 21.
[70] Ibid.
[71] Thomas Hobbes, Leviathan (1991) 92.
[72] Jeffery, above n 12, 21-2.
[73] D A Ward, 'Abuse of Tax Treaties' (1995) Intertax 177, 181.
[74] Entered into in 1972 between Denmark, Finland, Iceland, Norway and Sweden, and now including the Faroe Islands.
[75] J W B Westerburgen, 'Ways and Means to Improve European and Wider International Co-Operation Against Tax Evasion and Avoidance, Including Those Proposed in Recommendation 833 (1978) of the Parliamentary Assembly' (1980) European Taxation 168, 172.
[76] Ibid.
[77] Council Directive of 19 December 19
[77] Concerning Mutual Assistance by the Competent Authorities of the Member States in the Field of Direct Taxation.
[78] Article 11 provides that the requested state shall take steps to recover foreign claims as if it were its own. Article 17 provides for the sending of tax demands abroad.
[79]
Goldring, above n 44, 12.
[80] Ibid.
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