Article: Ensuring State Owned Enterprise Commercial Considerations under GATT, CPTPP, and JEEPA - Journal of World Trade View Article: Ensuring State Owned Enterprise Commercial Considerations under GATT, CPTPP, and JEEPA by - Journal of World Trade Article: Ensuring State Owned Enterprise Commercial Considerations under GATT, CPTPP, and JEEPA 58 3

The GATT regulates state trading enterprises by imposing the commercial considerations requirement, which has been incorporated with some modifications into the chapters on state-owned enterprises ( State Owned Enterprises) of free trade agreements (FTAs) and economic partnership agreement (EPAs). This requirement has significance as an underlying principle disciplining State Owned Enterprises even against recent issues, such as distortions in competition due to competitive advantages or overcapacity and oversupply backed by privileges not normally available to private companies. Indeed, State Owned Enterprises discipline should differ depending on whether they pursue certain policy objectives as governments do or fiscal revenue as private companies do, and the regulatory approach to recent problems varies accordingly. The commercial considerations requirement prohibits mixing these objectives, thereby dictating the discipline to which each State Owned Enterprise is subject. In this light, the commercial considerations requirement in the GATT is narrow in scope, and invites the challenging question of whether to cover State Owned Enterprises performing governmental functions and, if so, how to devise effective and acceptable institutional guarantees to ensure compliance. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Japan-EU EPA (JEEPA) appear to attempt to address these issues; however, their effectiveness is open to question, as certain State Owned Enterprises are neither subject to the commercial considerations requirement nor regulated as entities pursuing policy objectives under these agreements.

Journal of World Trade