A blog on a delicate issue: should the U.S. enter into new free trade agreements with centers of corporate tax avoidance ... https://www.cfr.org/blog/could-trade-agreements-help-limit-tax-competition

I don't think there is any real doubt that tax avoidance drives a significant part of the trade data -- the rise in the U.S. pharmaceutical deficit after the Tax Cuts and Jobs Act for example.

Obviously the U.S. needs to change its international tax policy to get rid of the current incentive it provides to offshore profits and (pharmaceutical) jobs.

But should the U.S. also use trade negotiations to push countries to change their corporate tax practices?

One approach would be not to do new trade deals with entities that are facilitating tax avoidance by US multinationals, and thus reducing US tax revenues.

But that might be a hard standard to live by ...

(Ireland and Singapore are on any credible list of corporate tax centers)

Another approach would be to condition trade agreements on a high level of disclosure -- so centers of corporate tax avoidance would have to make their favorable tax treatment of US firms offshore subs visible ...

and to make the continuation of any agreement conditional on meeting agreed international standards on tax (the OECD's BEPS principles, and any future agreement on the Inclusive Tax Framework.

No doubt there are other ideas too -- please share.

I am confident this is an issue (among other things, Elizabeth Warren raised it during the primaries) but not confident (yet) that I know the right answer.

Hard tho at this stage to argue tax isn't a big distortion to trade