23 - Rules for State-Owned Enterprises in Chapter 17 of the Trans-Pacific Partnership Agreement: Balancing Market-Oriented Discipline and Policy Flexibility for States

Summary

State-owned enterprises (“SOEs”) – that is, entities in which a government or the State has some form of direct or indirect ownership or control – occupy an increasingly important share of the global economy and international commerce. SOEs commonly operate like, and therefore can be considered in much the same way as, any other enterprise in either national or international markets. However, to the extent that they are controlled by a State, SOEs may pursue government policy objectives, rather than, or in addition to, the strictly commercial interests of the enterprise itself.² Moreover, a State’s investment in an SOE can create incentives for the State to give preferential treatment to the SOE when compared to other economic actors. Given these dynamics, the presence of SOEs in a given market potentially generates a range of issues for governments and for actual or potential competitors of the SOE.