This research review surveys the most important scholarly writings in economics and political science that explain the drivers and constraints to freer world trade.
Gary Clyde Hufbauer and Euijin Jung
Sherry Stephenson and Gary C. Hufbauer
This chapter addresses the main issues relating to state-owned enterprises and international trade policy. It sets the stage by summarizing available data (mainly from OECD sources) on the size and number of SOEs in major countries, with a particular focus on service sector SOEs. The chapter also provides rough estimates of the importance of service sector SOEs in world markets and identifies the main challenges raised by SOEs in international trade, particularly for cross-border trade (Mode 1) and overseas foreign direct investment (Mode 3). The chapter further identifies the major shortcomings in the WTO GATS with respect to SOEs and summarizes existing rules and disciplines dealing with SOE practices in selected preferential trade agreements (as of end-2014). It also references the OECD Guidelines on Corporate Governance of SOEs and the Competitive Neutrality Framework as potential best practices. The chapter suggests possible disciplines that could be agreed in the WTO and in future trade agreements. These will need to be analyzed together with the SOE chapter of the recently concluded Trans-Pacific Partnership (TPP) agreement.