Regulating SOEs Through the SCM Agreement: Utilizing the ‘Public Body’ Jurisprudence to Cover SOEs

Abstract

In January 2020, trade ministers from the EU, the US, and Japan proposed several amendments to the WTO Subsidies and Countervailing Measures (SCM) Agreement. One of the proposals was to examine whether to incorporate state-owned enterprises (SOEs) into the definition of the public body in the SCM Agreement. A similar approach was adopted in the EU’s white paper of June 2020. These proposals present that the current WTO jurisprudence is not adequate to regulate financial contributions by SOEs. On the other hand, recent international trade agreements suggest another type of SOE regulation by providing a set of independent norms on SOEs. As such, there are two options for regulating subsidization by SOEs in the current international trade regime: a combined scheme and a separate scheme. This article argues that a combined scheme that regulates SOEs through public body concept in the WTO SCM Agreement is a more adequate formula than a separate one. Considering aggravating trade disputes among major trading partners surrounding the SOEs a better method to regulate SOEs in a single and coherent WTO SCM Agreement is suggested. state-owned enterprises, SCM Agreement, subsidization, public body, governmental authority, combined scheme, separate scheme