State-Owned Enterprises. The chapter on State-Owned Enterprises (SOEs) and Designated Monopolies recognises each Party’s right to establish and maintain SOEs and monopolies, while aiming to establish a level playing field between state-owned or controlled companies and their competitors. There are exceptions to preserve each CPTPP Party’s ability to pursue policy objectives through SOEs and monopolies.
State-Owned Enterprises. Article 300.
State-Owned Enterprises. Today, state-owned enterprises (SOEs) still undertake an important share of the economic activity of developing countries.43 As discussed in Section 2.1.1 above, low domestic demand and the resulting naturally concentrated market structures in developing countries often require more monitoring by governments, which may prefer to control market dynamics through SOEs rather than observe and regulate the activities of private market players. SOEs, which are usually legal or natural monopolies, however, seem to operate significantly less efficiently than private firms, especially in developing countries.44 The reasons for the establishment of strong SOEs in developing countries are multiple. From an historical perspective, the colonial past of some developing countries created a strong desire to achieve greater national control of their economies. As a result, during 42 Ibid., pp. 410-1.
State-Owned Enterprises. 1. This Agreement does not prevent a Party from maintaining or establishing a state enterprise or a state-owned enterprise.
State-Owned Enterprises. 1. Nothing in this Agreement shall be construed to prevent a Party from maintaining or establishing State enterprises.
State-Owned Enterprises. Improving the Borrower’s water and sanitation efficiency through, inter alia: (i) implementing a financial management information system for sanitation, including modules of billing, charges, registry entries, financial, debt, and service interface; (ii) implementing georeferencing software to integrate information of availability and customer usage; (iii) designing and implementing a telemetry system, including a governance strategy to reduce losses and increase efficiency of the operation;
State-Owned Enterprises. The significant role of SOEs in China affects not only foreign, but all private firms, which traditionally have less access to funding both on average and especially in periods of cyclical policy restraint. With a declining return on assets and rising losses as a share of GDP, SOEs on average depress productivity growth in China. Moreover, numerous mergers of weak SOEs generally have not improved the performance of the sector as a whole. Nevertheless, in recent years, the flow of loans to SOEs has surged relative to that of private firms, and the SOE share of investment is rising again. Against this backdrop, promoting long-term economic growth and productivity enhancement likely entails a rebalancing of activity toward the private sector. Consistent with the Third Plenum reforms enacted in November 2013, rebalancing would provide a greater role for market forces in allocating resources. It also would help address the similar challenges that foreign firms active in China face from SOEs. International standards point to “competitive neutrality” as a useful principle for promoting a more efficient allocation of resources and limiting the economic distortions created by SOEs. According to the principle, the state should not discriminate between SOEs and private firms, seeking to ensure that the input costs (including the cost of finance) of an enterprise are not influenced by its ownership. To make the commitment to competitive neutrality credible, monitoring the cost of inputs will require thorough transparency by firms, while limiting implicit guarantees will require the imposition of effective budget discipline on SOEs to prevent reliance on government bailouts. The Need for a More Multilateral Approach For years, participants in this track II Dialogue have advocated the adoption of enforceable, transparent, and rules-based mechanisms to promote bilateral trade and cross-border financial flows, while securing property rights in ways that are in the interest of both countries. Examples of this approach include past proposals endorsing a Bilateral Investment Treaty (BIT) (with “ownership neutrality” and a short “negative list”) and prompt enactment of a Trade in Services Agreement (XXXX). Dialogue participants continue to believe that such measures are in the long-term economic interests of both countries and would help restore mutual confidence over the long term. Realistically, however, the broadening of the areas in dispute — including not just trade, but...
State-Owned Enterprises. In addition to Article 15.3, bearing in mind the relationship between the promotion of competition and other policy objectives, the Parties recognise that seeking to ensure that governments do not provide competitive advantages to state- owned enterprises simply because they are state owned can contribute to the promotion of competition.
