Private industry interests castigate underdeveloped countries’ resistance to offering special tax incentives to foreign firms. Momentum gathers in the Americas and in the United Nations for developed countries to exempt the taxation of foreign investment income to encourage the flow of private capital to underdeveloped areas. The United States leaves economic aid to developing countries to the sphere of private enterprise. The Soviet Union begins providing aid to and forming trade relations with Asian and Arab nations. British foreign economic policy reorientates away from the Empire and Commonwealth and towards North America and Europe.

The United States contemplates terminating the Fiscal Division and Fiscal Commission but relents. The financing of economic development in underdeveloped countries becomes a priority agenda item in the Economic and Social Council. Inter-American relations deteriorate and the US tax treaty programme with underdeveloped countries takes a nosedive.

The United States calls for the elimination of double taxation in international air transport in the International Civil Aviation Organization, setting off a multifaceted and protracted jurisdictional conflict between the specialised agency and the United Nations spanning several years. During this saga, developing countries and the UN Secretariat would heatedly oppose promulgation of the residence exemption principle but are outmanoeuvred by developed countries’ successful tactics.