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India feels RCEP may frame tighter rules on state-owned enterprises
Oct 11, 2018

With the US, the European Union (EU) and Japan planning new rules on industrial subsidies and state-owned enterprises (SOEs) specifically targeting China to fix its market-distorting behaviour, India believes member countries of the Regional Comprehensive Economic Partnership (RCEP) led by Japan may formulate tighter rules on SOEs in the ongoing negotiations.
A joint statement issued last month by the three economies after a meeting of their trade ministers said new rules on SOEs will aim at creating a more level playing field for their workers and businesses.
The ministers highlighted the importance of securing a level playing field given the challenges posed by third parties developing SOEs into national champions and setting them loose in global markets, resulting in distortions that negatively affect farmers, industrial producers, and workers in the ministers’ home countries, it said.
The regulations are expected to focus on lending by state-owned banks to a company irrespective of its creditworthiness, including due to implicit government guarantees, subsidies to an ailing enterprise without a credible restructuring plan, and subsidies leading to or maintaining overcapacity.
The trilateral partners continue exploring how to increase the costs of transparency and notification failures and how to strengthen the ability to obtain information on subsidies. The ministers also confirmed their commitment to continue working together to maintain the effectiveness of existing WTO (World Trade Organization) disciplines, according to the joint statement.

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