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The purpose of this article is to try to place the debate about Cuno v. DaimlerChrysler in a broader perspective by connecting it with the overall discussion of harmful tax competition. It discusses two hypothetical scenarios under which the city of Toledo, Ohio, is (a) a separate country and (b) a member state of the European Union. If the first hypothetical were true, the tax incentives offered by Toledo would violate the rules of the World Trade Organization; if the second hypothetical were true, the tax incentives would also violate the Treaty of Rome, as interpreted by the European Court of Justice. The reason for those outcomes is that tax incentives like those at issue in Cuno violate well established policies of both the WTO and the ECJ designed to prevent harmful tax competition from skewing trade and investment patterns. Thus, consideration of the two hypotheticals may shed some light on the policy issues at stake inCuno, as well as on the desirable outcome if the Supreme Court were to decide Cuno on the merits.


This article was republished at: Avi-Yonah, Reuven S. "Passport to Toledo: Cuno, the World Trade Organization, and the European Court of Justice." State Tax Notes 39, no. 2 (2006): 121-9; and Avi-Yonah, Reuven S. "Passport to Toledo: Cuno, the WTO, and the ECJ." Tax Notes Int'l 41, no. 3 (2006): 289-97. Reprinted with the permission of Tax Analysts.