Why should there be international rules governing State-owned enterprises?

The subject that I have been following the most closely during these last few years in the frenetic international negotiating activities in which the US is currently engaged is the extent to which state-owned enterprises (SOEs) will be subject to international trading rules when they engage in commercial competition. In many countries, state ownership plays a major role in the national economy and often a dominant role in specific sectors. In cases where these SOEs are engaged in commerce, their presence can easily make a mockery of international trade agreements. Governments have been engaging in business for centuries, if not millennia. An early motivation for state ownership was raising revenue – for example, on the sale of salt or tobacco. That motivation, with the exception perhaps of gambling – i.e. state lotteries – and in some instances the sale of alcohol, has substantially eroded. What remains are two general categories of activity. With respect to one of these, public services, trade negotiators are not concerned. This involves, for instance, the provision of basic health and education, local public transportation, and sometimes utilities. Then there are state-owned companies that engage in commercial competition. This second category may have arisen out of...

Written by Alan Wolff