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State-owned enterprises muddle TPP talks

Keywords: Tags  Trans-Pacific Partnership, TPP, state-owner enterprises, Steel Manufacturers Association. daniel watson, catherine ngai

WASHINGTON — Discussions on how to manage state-owned enterprises (SOEs) may come under increased scrutiny in future negotiations over what could be one of the largest trade agreements to date—the proposed Trans-Pacific Partnership (TPP).

SOEs, or government-owned corporations, are entities in which governments can take part in commercial activities—a structure some say may prevent the corporations from acting in a commercial manner due to potential subsidies or benefits.

While talks to nail down details of the TPP are still underway, steel producers may be among those feeling the effects if forced to compete against foreign competitors with government backing, industry sources said.

"We want to ensure that where state-owned enterprises compete with private investment ... we keep a level playing field," Daniel Watson, deputy assistant for North America at the U.S. Trade Representative’s Office, said during a panel discussion at the Steel Manufacturers Association’s annual members’ conference in Washington. "It sounds like a simple principle, it makes good sense, but it’s not the easiest thing to encode in trade negotiations."

The TPP is a proposed trade pact between the United States and Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Trade experts say that a successful TPP could ultimately mean a future "gold standard" for trade transparency with China.

Steel interests generally support the partnership, arguing that current U.S. trade policies are ineffective and often allow for dumped and subsidized goods to enter the country without consequences. But they warn that steel-producing SOEs can have anti-competitive behaviors.

Watson said an additional challenge is that SOEs can range from being "purely commercial" to "purely public service," depending on the country, which creates further confusion when trying to define the term.

"Not all trading partners have found this easy to deal with as it’s a complicated issue. But the U.S. government has made it a high priority," he said.

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