Public Body’ or Not: Chinese State-Owned Enterprise

Abstract

Chinese state-owned enterprises (SOEs) pose an increasing number of challenges to the international trade regime. One of the issues is how to regulate state-owned enterprises under the World Trade Organization's rules on subsidies. This paper tackles the issue of what criteria decide whether an SOE can be a 'public body' that provides subsidies to other enterprises under the Agreement on Subsidies and Countervailing Measures. Appellate Body's jurisprudence on this issue is not clear, and the debate regarding the proper line between 'public body' and 'private body' continues. This paper is the first attempt to provide a systematic and objective analysis of three different approaches in interpreting the term 'public body', providing a framework for further discussions on the proper legal status of Chinese SOEs under the World Trade Organization (WTO) legal regime. By examining the negotiation history and varying approaches to the issue, this paper identifies the problems of current Appellate Body's approach and provides proposals for future clarification. Taking Chinese SOEs as examples, this paper also analyzes potential impact of different approaches on SOEs.