File #2785: "2019_Book_ReformingWTORulesOnState-Owned.pdf"
Text
1|Preface|5
1|Acknowledgments|6
1|Introduction|7
1|Contents|11
1|Table of Cases|14
1|Abbreviations|18
1|Chapter 1: The Global Presence of SOEs and Their Receipts of Advantages|20
2|1 The Presence of SOEs Globally and the Grants of Advantages to SOEs|21
3|1.1 SOEs in the Global Economy|21
3|1.2 SOEs Receive Various Advantages from Their Governments|27
4|Financial Advantages|28
4|Monopolies and Exclusive Rights Advantages|28
4|Regulatory and Other Advantages|29
3|1.3 SOEs’ International Activities and Concerns Arose|30
2|2 The History of SOEs in the World Economy|34
3|2.1 Expanding Foreign Markets Before the Nineteenth Century|34
4|A Broader Context of Granting Monopolies and Regulatory Advantages to Enterprises|34
4|Reasons for Not Being Perceived as Problematic|36
3|2.2 Perceived as a Problem due to Interdependence and Globalization Since the Industrial Revolution|37
4|Different Extent of SOEs and the Grants of Advantages to Them|37
5|Capitalist (OECD) Countries: State Trading, Nationalization, Grants of Advantages|37
5|Developing Countries: STEs, Nationalization, Grants of Advantages, Import Substitution|39
5|Communist Countries: Nationalization of All Industries and State Trading|41
4|Why Did SOEs and Grants of Advantages Become Problematic?|42
5|Increased International Trade|42
5|Inefficient Performance of SOEs and the Government Bonds Markets|44
5|Changed Western Ideology|45
4|Reactions to the Problem|46
5|Privatization Waves|46
5|Reduction of the Number of STEs and the Grants of Advantages|47
3|2.3 SOEs Have Been Perceived as a Problem Targeted by Regulations|49
4|Global Efforts: Early GATT|49
5|Rules Regarding Subsidies (Financial Advantages)|50
5|Rules Regarding State Trading (Monopolies and Exclusive Rights)|54
5|Rules Regarding Regulatory Advantages|55
4|Regional Efforts: The European Community Developed Relevant Competition Rules|56
4|Other Regional Efforts Recently (The TPP Agreement)|59
3|2.4 Summary of Sect. 2|61
2|3 Economic Analyses|61
3|3.1 International Trade Increases National and World Welfare/Efficiency|62
4|The Comparative Advantage Theory|62
4|The New Trade Theories|64
3|3.2 International Trade Agreements Avoid Negative Externalities and Trade Wars|65
4|Why Don’t Countries Adopt Free Trade Policies|65
5|The Terms of Trade Argument and the Strategic Trade Argument|65
5|Political Economy Theory (Public Choice Theory)|67
4|International Trade Agreements Are Needed and Beneficial|68
3|3.3 The Grants of Advantages to SOEs Reduce World Welfare and Undermine International Trade Agreements|70
4|Grants of Financial Advantages and Regulatory Advantages to SOEs and Behavior Afterwards|70
5|World Welfare Effects|70
5|Undermine International Trade Agreements (Trade Wars)|76
4|Grants of Monopolies or Exclusive Rights to SOEs and Behavior Afterwards|77
5|World Welfare Effects|77
5|Undermine International Trade Agreements|80
4|Justifications May Work Weakly in Cases of Granting Advantages to SOEs|83
3|3.4 Summary|84
2|4 Conclusion|84
1|Chapter 2: The Extent, Nature, and Effect of Advantages Granted to Chinese SOEs|87
2|1 The Extent of Advantages Granted to Chinese SOEs|88
3|1.1 General Description of SOEs in China|88
3|1.2 The Extent of Advantages Granted to SOEs by Sectors|90
4|The Coal Industry|91
4|The Civil Aviation Sector|95
4|The Petroleum and Petrochemical Sector|96
4|The Shipping and Shipbuilding Industry|100
4|The Telecommunications Sector|102
4|The Automotive Industry|104
4|The Steel Industry|106
4|The Non-ferrous Metals Sector|109
4|The Machinery and Equipment Sector|113
4|The Information Technology Sector|113
2|2 The Nature of Advantages Granted to Chinese SOEs|115
3|2.1 The Nature of Financial Advantages Associated with SOEs|115
4|SOEs as Givers of Financial Advantages|115
4|SOEs Receive More Financial Advantages in Various Forms with Less Transparency|120
3|2.2 The Nature of Advantages of Monopolies and Exclusive Rights|123
4|SOEs Are More Likely to Receive Monopolies or Exclusive Rights|123
4|Anti-competitive Behavior and Behavior Influenced by Governments After Receiving Monopolies or Exclusive Rights|125
3|2.3 The Nature of Regulatory and Other Advantages in Favor of SOEs|127
4|Mergers and Acquisitions Among SOEs Are Assisted by Governments and Exempted from Domestic Competition Laws|127
2|3 The Trade Effects of Advantages Granted to Chinese SOEs|129
2|4 Little Incentive in Domestic China to Deal with the Problems|133
3|4.1 Political Economy Theory Does Not Work Well in China|134
4|SOEs Have Strong Lobbying Power to Ask for Advantages Without Opposition from Counterparties|134
4|Potential Conflicts of Interest Can Be Well Handled|135
3|4.2 Little Incentive Domestically|137
3|4.3 The Historical and Ideological Factors|139
2|5 Conclusion|140
1|Chapter 3: The Existing WTO Rules Addressing the Problems and Their Weaknesses|142
2|1 The Existing WTO Rules|143
3|1.1 Financial Advantages Granted to SOEs|143
3|1.2 Monopolies or Exclusive Rights Granted to SOEs|144
4|Trade in Goods: Regarding Exclusive Trading Rights|144
4|Trade in Services|145
3|1.3 Regulatory Advantages Granted to SOEs|147
3|1.4 Advantages Granted to Chinese SOEs|148
4|Financial Advantages|148
4|Advantages of Grants of Monopolies and Exclusive Rights and Privileges|149
4|Regulatory Advantages|150
4|Additional Commitments Relevant to Advantages Received by SOEs|150
2|2 Weaknesses of the Existing WTO Rules Addressing the Problem|151
3|2.1 Financial Advantages Granted to SOEs|151
4|The Problem of SOEs Giving Advantages to Other SOEs|151
5|The “Private Body” (Entrust/Direct) Approach Within the SCM Agreement|152
5|The “Public Body” Approach Within the SCM Agreement|156
5|The Approach of Regulating the Behavior of SOEs|164
6|Conclusion of Sect. 2.1.1|165
4|The Problem of Upstream Subsidies in the Context of Chinese SOEs|165
5|The Subject Approach|166
5|The Recipient Approach|167
5|The Approach of “Benefits Pass-Through”|168
5|The Approach of Channeling Through “Income or Price Support” Within the SCM Agreement|170
6|Conclusion of Sect. 2.1.2|170
4|Chinese SOEs Receive Financial Advantages Before and During Their Privatization|170
4|The Element of “Benchmark Prices”|174
4|The Element of “Specificity”|176
4|Summary of Sect. 2.1|177
3|2.2 Monopolies and Exclusive Rights Granted to SOEs|178
4|Grants of Monopolies or Exclusive Rights|178
5|Grants of Monopolies or Exclusive Rights Are Not Prohibited Within the WTO|178
5|WTO Limits on Monopolies or Exclusive Rights Grants|180
6|Conclusion of Sect. 2.1|186
4|Regulating the Behavior of SOEs with Monopolies or Exclusive Rights|186
5|Only Some SOEs Are Disciplined|186
5|Only Some Behavior Is Regulated|191
6|Conclusion of Sect. 2.2|205
3|2.3 Regulatory Advantages Granted to SOEs|206
2|3 Conclusion|208
1|Chapter 4: Proposals to the WTO Rules to Address the Problems|209
2|1 Commonalities|209
2|2 Trade Remedies Proposals|213
3|2.1 Financial Advantages|214
3|2.2 Monopolies or Exclusive Rights, and Regulatory Advantages|219
3|2.3 Conclusion|221
2|3 Trade Rules Proposals|222
3|3.1 Financial Advantages|222
3|3.2 Monopolies or Exclusive Rights|222
4|Regulating Behavior of SOEs with Monopolies or Exclusive Rights|223
3|3.3 Conclusion|226
2|4 Competition Rules Proposals|226
3|4.1 Financial Advantages|227
3|4.2 Monopolies or Exclusive Rights|228
3|4.3 Regulatory Advantages|229
3|4.4 Conclusion|230
2|5 Combinations|230
1|Chapter 5: General Assessments of the Proposals Within the WTO Framework|233
2|1 WTO as an Appropriate Forum to Implement the Proposals|233
3|1.1 WTO’s Legitimacy|233
3|1.2 Deficiency and Political Difficulties of Other Fora|239
2|2 From the WTO’s Legal Perspective|242
3|2.1 Negotiations|243
3|2.2 Amendment|243
3|2.3 MC/GC Decisions|244
3|2.4 The Dispute Settlement Mechanism|246
2|3 From WTO Members’ Political Perspective|248
3|3.1 Trade Remedies Approach|248
3|3.2 Trade Rules Approach|250
3|3.3 The Balanced Competition Rules Approach|252
4|Trade-Offs|252
5|From the Perspective of China: Pressure Faced by China|253
5|From the Perspective of Other Members|256
4|The Competition Laws Element|257
4|Proposed Framework|262
2|4 Conclusion|265
1|Conclusion|266
1|Bibliography|269
2|Treaties, GATT/WTO Legal Texts and Other Documents|269
2|Books|275
2|Journals and Working Papers|277
1|Acknowledgments|6
1|Introduction|7
1|Contents|11
1|Table of Cases|14
1|Abbreviations|18
1|Chapter 1: The Global Presence of SOEs and Their Receipts of Advantages|20
2|1 The Presence of SOEs Globally and the Grants of Advantages to SOEs|21
3|1.1 SOEs in the Global Economy|21
3|1.2 SOEs Receive Various Advantages from Their Governments|27
4|Financial Advantages|28
4|Monopolies and Exclusive Rights Advantages|28
4|Regulatory and Other Advantages|29
3|1.3 SOEs’ International Activities and Concerns Arose|30
2|2 The History of SOEs in the World Economy|34
3|2.1 Expanding Foreign Markets Before the Nineteenth Century|34
4|A Broader Context of Granting Monopolies and Regulatory Advantages to Enterprises|34
4|Reasons for Not Being Perceived as Problematic|36
3|2.2 Perceived as a Problem due to Interdependence and Globalization Since the Industrial Revolution|37
4|Different Extent of SOEs and the Grants of Advantages to Them|37
5|Capitalist (OECD) Countries: State Trading, Nationalization, Grants of Advantages|37
5|Developing Countries: STEs, Nationalization, Grants of Advantages, Import Substitution|39
5|Communist Countries: Nationalization of All Industries and State Trading|41
4|Why Did SOEs and Grants of Advantages Become Problematic?|42
5|Increased International Trade|42
5|Inefficient Performance of SOEs and the Government Bonds Markets|44
5|Changed Western Ideology|45
4|Reactions to the Problem|46
5|Privatization Waves|46
5|Reduction of the Number of STEs and the Grants of Advantages|47
3|2.3 SOEs Have Been Perceived as a Problem Targeted by Regulations|49
4|Global Efforts: Early GATT|49
5|Rules Regarding Subsidies (Financial Advantages)|50
5|Rules Regarding State Trading (Monopolies and Exclusive Rights)|54
5|Rules Regarding Regulatory Advantages|55
4|Regional Efforts: The European Community Developed Relevant Competition Rules|56
4|Other Regional Efforts Recently (The TPP Agreement)|59
3|2.4 Summary of Sect. 2|61
2|3 Economic Analyses|61
3|3.1 International Trade Increases National and World Welfare/Efficiency|62
4|The Comparative Advantage Theory|62
4|The New Trade Theories|64
3|3.2 International Trade Agreements Avoid Negative Externalities and Trade Wars|65
4|Why Don’t Countries Adopt Free Trade Policies|65
5|The Terms of Trade Argument and the Strategic Trade Argument|65
5|Political Economy Theory (Public Choice Theory)|67
4|International Trade Agreements Are Needed and Beneficial|68
3|3.3 The Grants of Advantages to SOEs Reduce World Welfare and Undermine International Trade Agreements|70
4|Grants of Financial Advantages and Regulatory Advantages to SOEs and Behavior Afterwards|70
5|World Welfare Effects|70
5|Undermine International Trade Agreements (Trade Wars)|76
4|Grants of Monopolies or Exclusive Rights to SOEs and Behavior Afterwards|77
5|World Welfare Effects|77
5|Undermine International Trade Agreements|80
4|Justifications May Work Weakly in Cases of Granting Advantages to SOEs|83
3|3.4 Summary|84
2|4 Conclusion|84
1|Chapter 2: The Extent, Nature, and Effect of Advantages Granted to Chinese SOEs|87
2|1 The Extent of Advantages Granted to Chinese SOEs|88
3|1.1 General Description of SOEs in China|88
3|1.2 The Extent of Advantages Granted to SOEs by Sectors|90
4|The Coal Industry|91
4|The Civil Aviation Sector|95
4|The Petroleum and Petrochemical Sector|96
4|The Shipping and Shipbuilding Industry|100
4|The Telecommunications Sector|102
4|The Automotive Industry|104
4|The Steel Industry|106
4|The Non-ferrous Metals Sector|109
4|The Machinery and Equipment Sector|113
4|The Information Technology Sector|113
2|2 The Nature of Advantages Granted to Chinese SOEs|115
3|2.1 The Nature of Financial Advantages Associated with SOEs|115
4|SOEs as Givers of Financial Advantages|115
4|SOEs Receive More Financial Advantages in Various Forms with Less Transparency|120
3|2.2 The Nature of Advantages of Monopolies and Exclusive Rights|123
4|SOEs Are More Likely to Receive Monopolies or Exclusive Rights|123
4|Anti-competitive Behavior and Behavior Influenced by Governments After Receiving Monopolies or Exclusive Rights|125
3|2.3 The Nature of Regulatory and Other Advantages in Favor of SOEs|127
4|Mergers and Acquisitions Among SOEs Are Assisted by Governments and Exempted from Domestic Competition Laws|127
2|3 The Trade Effects of Advantages Granted to Chinese SOEs|129
2|4 Little Incentive in Domestic China to Deal with the Problems|133
3|4.1 Political Economy Theory Does Not Work Well in China|134
4|SOEs Have Strong Lobbying Power to Ask for Advantages Without Opposition from Counterparties|134
4|Potential Conflicts of Interest Can Be Well Handled|135
3|4.2 Little Incentive Domestically|137
3|4.3 The Historical and Ideological Factors|139
2|5 Conclusion|140
1|Chapter 3: The Existing WTO Rules Addressing the Problems and Their Weaknesses|142
2|1 The Existing WTO Rules|143
3|1.1 Financial Advantages Granted to SOEs|143
3|1.2 Monopolies or Exclusive Rights Granted to SOEs|144
4|Trade in Goods: Regarding Exclusive Trading Rights|144
4|Trade in Services|145
3|1.3 Regulatory Advantages Granted to SOEs|147
3|1.4 Advantages Granted to Chinese SOEs|148
4|Financial Advantages|148
4|Advantages of Grants of Monopolies and Exclusive Rights and Privileges|149
4|Regulatory Advantages|150
4|Additional Commitments Relevant to Advantages Received by SOEs|150
2|2 Weaknesses of the Existing WTO Rules Addressing the Problem|151
3|2.1 Financial Advantages Granted to SOEs|151
4|The Problem of SOEs Giving Advantages to Other SOEs|151
5|The “Private Body” (Entrust/Direct) Approach Within the SCM Agreement|152
5|The “Public Body” Approach Within the SCM Agreement|156
5|The Approach of Regulating the Behavior of SOEs|164
6|Conclusion of Sect. 2.1.1|165
4|The Problem of Upstream Subsidies in the Context of Chinese SOEs|165
5|The Subject Approach|166
5|The Recipient Approach|167
5|The Approach of “Benefits Pass-Through”|168
5|The Approach of Channeling Through “Income or Price Support” Within the SCM Agreement|170
6|Conclusion of Sect. 2.1.2|170
4|Chinese SOEs Receive Financial Advantages Before and During Their Privatization|170
4|The Element of “Benchmark Prices”|174
4|The Element of “Specificity”|176
4|Summary of Sect. 2.1|177
3|2.2 Monopolies and Exclusive Rights Granted to SOEs|178
4|Grants of Monopolies or Exclusive Rights|178
5|Grants of Monopolies or Exclusive Rights Are Not Prohibited Within the WTO|178
5|WTO Limits on Monopolies or Exclusive Rights Grants|180
6|Conclusion of Sect. 2.1|186
4|Regulating the Behavior of SOEs with Monopolies or Exclusive Rights|186
5|Only Some SOEs Are Disciplined|186
5|Only Some Behavior Is Regulated|191
6|Conclusion of Sect. 2.2|205
3|2.3 Regulatory Advantages Granted to SOEs|206
2|3 Conclusion|208
1|Chapter 4: Proposals to the WTO Rules to Address the Problems|209
2|1 Commonalities|209
2|2 Trade Remedies Proposals|213
3|2.1 Financial Advantages|214
3|2.2 Monopolies or Exclusive Rights, and Regulatory Advantages|219
3|2.3 Conclusion|221
2|3 Trade Rules Proposals|222
3|3.1 Financial Advantages|222
3|3.2 Monopolies or Exclusive Rights|222
4|Regulating Behavior of SOEs with Monopolies or Exclusive Rights|223
3|3.3 Conclusion|226
2|4 Competition Rules Proposals|226
3|4.1 Financial Advantages|227
3|4.2 Monopolies or Exclusive Rights|228
3|4.3 Regulatory Advantages|229
3|4.4 Conclusion|230
2|5 Combinations|230
1|Chapter 5: General Assessments of the Proposals Within the WTO Framework|233
2|1 WTO as an Appropriate Forum to Implement the Proposals|233
3|1.1 WTO’s Legitimacy|233
3|1.2 Deficiency and Political Difficulties of Other Fora|239
2|2 From the WTO’s Legal Perspective|242
3|2.1 Negotiations|243
3|2.2 Amendment|243
3|2.3 MC/GC Decisions|244
3|2.4 The Dispute Settlement Mechanism|246
2|3 From WTO Members’ Political Perspective|248
3|3.1 Trade Remedies Approach|248
3|3.2 Trade Rules Approach|250
3|3.3 The Balanced Competition Rules Approach|252
4|Trade-Offs|252
5|From the Perspective of China: Pressure Faced by China|253
5|From the Perspective of Other Members|256
4|The Competition Laws Element|257
4|Proposed Framework|262
2|4 Conclusion|265
1|Conclusion|266
1|Bibliography|269
2|Treaties, GATT/WTO Legal Texts and Other Documents|269
2|Books|275
2|Journals and Working Papers|277