WTO Regulation of Subsidies to State-Owned Enterprises (SOEs) - A Critical Appraisal of the China Accession Protocol

Abstract:     
The existence of a large number of state-owned enterprises (SOEs) in China and government subsidies to them has caused much concern among its trading partners. The Protocol on the Accession of China to the World Trade Organization (WTO) sets out certain provisions directly or indirectly addressing this concern. Among them are the provisions of an SOE-based specificity test and authorization for the importing country to use, on a permanent basis, alternative benchmarks in calculating Chinese subsidies. In addition, the Protocol excludes China from invoking the privatization exception available to developing country members under the Agreement on Subsidies and Countervailing Measures. This article provides a critical analysis of the Protocol approach towards the issue of SOE subsidies and examines its implications for economic reform in China and for the WTO legal system.

Number of Pages in PDF File: 47

Keywords: WTO, China, subsidies, SOEs, countervailing duties, specificity, nonmarket economy, accession

Accepted Paper Series