Article XVII. State Trading Enterprises

Abstract

The World Trade Organization (WTO) does not determine the level of state involvement in Members' economies. Several of its Members (now including China) operate under systems with significant government involvement in the economy. WTO Members may also maintain state-controlled enterprises that direct imports, exports or distribution of goods. However, Article XVII prevents Members from sidestepping core General Agreement on Tariffs and Trade (GATT) disciplines through such enterprises. Art. XVII:1 imposes an obligation of non-discrimination on state trading enterprises. Art. XVII:2 exempts certain imports from that obligation and imposes on them the less stringent obligation of fair and equitable treatment. Under Art. XVII:3, negotiations will be conducted to further limit obstacles created by State trading enterprises, and Art. XVII:4 sets up a notification system. The Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994 (Understanding) forms part of the GATT 1994. Keywords: General Agreement on Tariffs and Trade; non-discrimination; state trading enterprises; World Trade Organization (WTO)