The Power of Boilerplate: Decentralized Multilateralism and the International Tax Regime

Why do complex regimes emerge and how do they spread? How do states exercise power in decentralized, bilateral governance regimes? When is bilateralism truly bilateral and when is it just multilateralism in disguise? This article sheds light on these questions by analyzing one of the pillars of the post-war economic order: the international tax system. The taxation of multinational enterprises is governed by a system composed of thousands of Bilateral Tax Treaties (BTTs) signed between pairs of national governments. We argue that despite the bilateral nature of BTTs, their legal content is largely determined on a multilateral basis by a small group of economically powerful governments. By drafting and promoting ``boilerplate" legal language, and by leveraging network effects, OECD countries were able to build a coherent, encompassing, quasi-multilateral regime to govern the taxation of multinationals in most of the world. We test and find support for our arguments about the role of network effects and the power of boilerplate using inferential network analysis and an automated text analysis of a corpus of 3200 treaty texts.