Disciplining State Capitalism Under International Economic Law: Non-Discrimination vs. Competitive Neutrality
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Description
The increasing presence of state enterprises in global markets has given rise to an extensive debate about the appropriate approach to state capitalism under international economic law. One aspect of the discussion is the application of subsidies rules in the World Trade Organization (WTO) to the state sector; a concern largely triggered by a controversial decision of the then WTO Appellate Body that state-owned Chinese banks do not necessarily qualify as public actors to whom subsidies disciplines apply. This ruling has been greatly criticised and was qualified by the Appellate Body itself in later case law. In related scholarship, I have addressed its defects in some depth and proposed that state ownership and/or control should create a strong presumption that an enterprise is a ‘public body’ to which the subsidies rules ought to apply. Beyond the question of state enterprises there is also the broader issue of the adequacy of subsidies rules to address appropriately contemporary industrial policy (especially in the case of China), which also involves government influence on the (ostensibly) private sector. Setting the specialised WTO rules on subsidies aside, there is a more foundational divide between the traditional approach of international economic law to state enterprises, which focuses on the application of non-discrimination and related anti-protectionist norms to such entities, and an increasingly heard demand that IEL regimes incorporate a concept of ‘competitive neutrality’, which would in some way require states to establish a level playing field between state and private capitalism. In a recent paper on WTO reform the European Commission asserts the importance of SOEs is not yet matched with sufficient disciplines to capture any market-distorting behaviour. New international SOE rules should focus on the behaviour of SOEs in their commercial activities, in line with the disciplines already agreed in several free trade and investment agreements. Apart from industrial subsidies and SOE disciplines, there is a need to reflect on what other elements could be part of new WTO rules aiming at ensuring the principle of ‘competitive neutrality’ and ‘promoting a level playing field’. The present chapter aims to defend the traditional approach and to raise a number of problems with both the concept of competitive neutrality and its possible application in legal rules and norms in trade and investment.
Source Publication
State Capitalism and International Investment Law
Source Editors/Authors
Panagiotis Delimatsis, Georgios Dimitropoulos, Anastasios Gourgourinis
Publication Date
2023
Recommended Citation
Howse, Robert L., "Disciplining State Capitalism Under International Economic Law: Non-Discrimination vs. Competitive Neutrality" (2023). Faculty Chapters. 826.
https://gretchen.law.nyu.edu/fac-chapt/826
