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Taming Leviathan as Merchant: Lingering Questions about the Practical Application of Trans-Pacific Partnership's State-Owned Enterprises Rules

Published online by Cambridge University Press:  19 August 2019

Mitsuo Matsushita  and
C. L. Lim
Mitsuo Matsushita
Affiliation:
University of Tokyo
C. L. Lim*
Affiliation:
Chinese University of Hong Kong
*
*Corresponding author. Email: chin.leng.lim@post.harvard.edu.
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Abstract

The suspended provisions of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP will not substantially affect the Trans-Pacific Partnership (TPP) Chapter 17 on State-owned enterprises (SOEs). As a consequence, the original TPP scheme remains an important treaty model and poses complex questions notwithstanding a growing literature. This article discusses TPP but unlike current writings which focus on comparative treaty methods of SOE regulation, we focus on how TPP/CPTPP will actually operate, paying attention to how its framers have defined an SOE not least in how they have viewed complex crossholdings, excluded non-profits, and preserved a role for State monopolies. Our answers differ from some of the existing literature – particularly on complex cross-holdings. We also provide detailed illustrations of how TPP's non-discrimination, commercial basis, and non-commercial assistance rules might work and comment on the chances of a rule cascade triggered by TPP, particularly in the current state of heightened Sino-American rivalry and allegations of State control in China's economy.

Type
Research Article
Information
World Trade Review , Volume 19 , Issue 3 , July 2020 , pp. 402 - 423
Copyright
Copyright © Mitsuo Matsushita and C. L. Lim 2019

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References

1 In the terminology of the framers of the General Agreement on Trade and Tariffs (GATT).

2 See Executive Memorandum, 23 January 2017; Letter from Acting USTR to TPP Depository, 30 January 2017.

3 S. Donnan and D. Sevastopulo (2018), ‘Trump Opens Door to Rejoining TPP’, Financial Times, 25 January 2018.

4 Trans-Pacific Partnership Ministerial Statement, 11 November 2017, Singapore Ministry of Trade and Industry, www.mti.gov.sg (accessed 21 February 2018).

5 For the legally verified text of the CPTPP, dated 21 February 2018, New Zealand Ministry of Foreign Affairs, www.mfat.govt.nz (accessed 21 February 2018).

6 For the list of suspended provisions, see Trans-Pacific Partnership Ministerial Statement, 11 November 2017, supra n. 4, and now the CPTPP legally verified text, dated 21 February 2018, supra n. 5.

7 CPTPP's Article 3 states:

  1. 1.

    1. This Agreement shall enter into force 60 days after the date on which at least six or at least 50 per cent of the number of signatories to this Agreement, whichever is smaller, have notified the Depositary in writing of the completion of their applicable legal procedures.

  2. 2.

    2. For any signatory to this Agreement for which this Agreement has not entered into force under paragraph 1, this Agreement shall enter into force 60 days after the date on which that signatory has notified the Depositary in writing of the completion of its applicable legal procedures.

Article 1.3 of the CPTPP states further that in the event of inconsistency, such as with Article 30.5 of TPP, the CPTPP text prevails over the TPP text. Article 30.5 of TPP is not included in the CPTPP's list of suspended provisions in the TPP text, which Article 1 of the CPTPP incorporates by reference.

8 A. Panda (2018), ‘The CPTPP Trade Agreement Will Enter into Force on 30 December’, The Diplomat, 1 November 2018.

9 See Malaysia's carve-outs in the party-specific annexes (TPP, Annex IV) under Article 17.9, TPP. These are carve-outs to Article 17.4 (Non-discriminatory Treatment and Commercial Considerations) and Article 17.6 (Non-Commercial Assistance).

10 See especially, Fleury, J. S. and Marcoux, J.-M. (2016), ‘The US Shaping of State-Owned Enterprise Disciplines in the Trans-Pacific Partnership’, 19 Journal of International Economic Law 445CrossRefGoogle Scholar; Kim, M. (2017), ‘Regulating the Visible Hands: Development of Rules on State-Owned Enterprises in Trade Agreements’, 58 Harvard International Law Journal 225Google Scholar; and the special symposium papers in volume 16.4 of the World Trade Review.

11 See Fleury and Marcoux, supra n. 10, 450 et seq.; Willemyns, I. (2016), ‘Disciplines on State-Owned Enterprises in International Economic Law: Are We Moving in the Right Direction?’, 19 Journal of International Economic Law 657, 667ffCrossRefGoogle Scholar; Kim, supra n. 10, 240, 247.

12 Bhala, R. (2017), ‘TPP, American National Security and Chinese SOEs’, 16 World Trade Review 655CrossRefGoogle Scholar.

13 ‘Findings of the Investigation into China's Acts, Policies, and Practices related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974’, USTR, 22 March 2018, 23–24 (hereafter, ‘2018 Section 301 Report on China’). This is not necessarily to be taken to suggest acceptance of the premise that imposing technology transfer requirements is theft.

14 T. Miles (2018), ‘US and China Clash over “Technology Transfer” in the WTO’, Reuters, 28 May 2018.

15 M. Arnold (2018), ‘Western Banks Race to Win China's Belt and Road Initiative Deals’, Financial Times, 26 February 2018.

16 This is the case with Malaysia's East Coast Rail Link, the Multi-Product Pipeline, and the Trans-Sabah Gas Pipeline, see N. Bowie (2018), ‘How Far Will Malaysia Push China’, Asia Times, 25 July 2018.

17 Qin, J. Ya (2004), ‘WTO Regulation of Subsidies to State-Owned Enterprises – A Critical Appraisal of the China Accession Protocol’, 7 Journal of International Economic Law 863CrossRefGoogle Scholar.

18 See the special symposium papers in volume 16.4 of the World Trade Review.

19 Cf. Levy, P. I. (2017), ‘The Treatment of Chinese SOEs in China's WTO Protocol of Accession’, 16 World Trade Review 635CrossRefGoogle Scholar; Bhala, ‘TPP, American National Security’, supra n. 12.

20 This is not to say that the GATS has no notion of monopoly suppliers and exclusive service suppliers and does not in fact regulate them for MFN and specific commitments violations. See GATS Article VIII; Matsushita, M. et al. (2016), World Trade Organization, 3rd edn (Oxford: Oxford University Press), 577–578Google Scholar; Willemyns, supra n. 11, 664, 667 (observing that the activities of sensitive monopoly or exclusive service suppliers are in any case likely to be carved out under a WTO Member's GATS NT/MA commitments).

21 Matsushita, supra n. 20, 244.

22 Kim, supra n. 10, 238 citing the WTO Appellate Body in Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain (Canada–Wheat Exports and Grain Imports), WT/DS276/AB/R, 30 August 2005, para. 85 for the Appellate Body's view that, otherwise, a Member would be able to circumvent its non-discrimination obligations by acting through an STE.

23 TPP Article 17.3 addresses the issue of delegated authority, stating that each Party shall ensure that the exercise of such delegated governmental authority is not inconsistent with the (TPP) Party's own obligations under TPP – i.e. including the obligation to accord most favoured and national treatment.

24 A. Musacchio and S. G. Lazzarini (2012), ‘Leviathan in Business: Varieties of State Capitalism and their Implications for Economic Performance’, Harvard Business School Working Paper, No. 12-108, June 2012.

25 Matsushita, supra n. 20, 244; Kim, supra n. 10, 244–247; Mavroidis, P. and Cottier, T. (1999), ‘State Trading in the Twenty-First Century: An Overview’, in Cottier, T. et al. (eds.), State Trading in the Twenty-First Century, Vol. 1 (Ann Arbor, MI: University Michigan Press), 3Google Scholar.

26 Matsushita, supra n. 20, 245; see GATT Article XVII.1 (a) and (b).

27 Chapter 16 of TPP deals with competition policy generally and some part of Chapter 17 is relevant to competition policy matters (such as predatory practices). Although those two chapters cover different subject matters, the existence and activities of SOEs are an important concern for competition policy and the reader should be aware of this.

28 USTR, ‘Trans-Pacific Partnership: Likely Impact on the US Economy and Specific Industry Sectors’, May 2016, 454 et seq.

29 Willemyns, supra n. 11, 675; J. Kelsey, ‘The US-proposed Annex on State-owned Enterprises for TISA, dated 6 October 2015’, uniglobalunion.org.

30 These are, according to a USTR report, the US–Singapore FTA's Chapter 12; US–Australia FTA's Chapter 14; US–Peru FTA's Chapter 13; US–Chile FTA's Chapter 16, US–Columbia FTA's Chapter 13 and the US–Korea FTA's Chapter 16. See USTR, ‘Trans-Pacific Partnership’, supra n. 28, 454. See further, Fleury and Marcoux, supra n. 10, 451.

31 Musacchio and Lazzarini, supra n. 24, 14.

32 USSFTA, Article 12.8.5 and Article 12.8.6(b); Fleury and Marcoux, supra n. 10, 452.

33 Matsushita et al., supra n. 20, 244. See the GATT's Article XVII, and Ad Article XVII.

34 WTO Appellate Body Report, US – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China (US–AD & CVD (China)), WT/DS379/AB/R, 25 March 2011, para. 290; reversing the Panel report in US–AD & CVD (China), WT/DS379/R, 23 July 2010, on which see para. 8.94.

35 Kim, supra n. 10, 232 et seq.

36 Article 17.1, TPP (definition of SOEs).

37 For which, see the discussion in the next section, below.

38 Article 17.13.5, and Annex 17-A, TPP.

39 See too Fleury and Marcoux, supra n. 10, 461.

40 Article17.2.2–Article 17.2.4, TPP.

41 Article 17.13, TPP.

42 Article 17.2.5, TPP.

43 Article 17.2.6, TPP.

44 Article 17.2.8 and Article 17.2.10, TPP.

45 Article 17.13.2, TPP.

46 Article 17.2.7, TPP.

47 Article 17.9. See Schedule to Annex IV, Annex 17-D relating to the sub-central level, and Annexes 17-E (Singapore) and 17-F (Malaysia). The Singapore and Malaysian annexes to Chapter 17 concern Singapore's Government Investment Corporation Private Limited and Temasek Holdings (Private) Limited, and Malaysia's Permodalan Nasional and Lembaga Tabung Haji, discussed further in this article below in Section 5 (cross-holdings).

48 See Article 17.4, TPP.

49 See Fleury and Marcoux, supra n. 10, 457–458 for fuller treatment of this extension of SOE disciplines in TPP, following the USSFTA.

50 For this US concern in the 2018 Section 301 Report on China, see supra n. 13, 33 (discussing the significance of purchases by China's three largest airlines – AirChina, China Eastern, and China Southern).

51 See for SOEs Article 17.4.1(a) (‘purchase or sale of a good or service’), Article 17.4.1(b)(ii) (‘accords to a good or service supplied by an enterprise that is a covered investment’), Article 17.4.1(c), including Article 17.4(1)(c)(ii); and likewise for designated monopolies Article 17.4.2(a), Article 17.4.2(b)(ii), and Article 17.4.2(c).

52 See Article 17.4(1)(b)(i). See also Fleury and Marcoux, supra n. 10, 457.

53 Article 17.4.1(a), TPP.

54 Article 17.4.1(b) and Article 17.4.1(c), TPP.

55 GATT, Article XVII, see also Ad Article XVII.

56 Article 17.4.1 (a), (b)(ii), (c)(ii).

57 Cf. NAFTA, Article 1502. Also Article 1503 which applies to state-trading enterprises at the sub-central level and imposes the obligation of non-discrimination upon these.

58 Fleury and Marcoux, supra n. 10, 455, tracing this to the model embraced under the US–Singapore FTA.

59 Kim, supra n. 10, 244, 236, 257.

60 See Article 17.6, TPP.

61 Article 17.1, TPP. Cf. WTO SCM Agreement, Article 2.

62 See Article 1.2 and 2, WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement).

63 Qin, supra n. 17, 889–890.

64 Article 17.1–17.3, TPP. See further, Article 17.7 and 17.8.

65 See further, Nedzel, N. E. (2008), ‘Antidumping and Cotton Subsidies: A Market-Based Defense of Unfair Trade Remedies’, 28 Northwestern Journal of International Law & Business, 215Google Scholar.

66 Article 17.6.1, TPP.

67 Article 17.6.2, TPP.

68 In the parlance of the General Agreement on Trade in Services (GATS).

69 Article 17.6.3, TPP.

70 Article 17.6.3, TPP.

71 Article 17.6.4, TPP.

72 Article 5, WTO SCM Agreement. See also GATT Article XVII(4)(c) (which speaks of a GATT Contracting Party's belief that its interests are adversely affected by SOE activity).

73 Article 17.7, TPP, cf. SCM Agreement Article 6.3.

74 Fleury and Marcoux, supra n. 10, 459–460 (describing it as a ‘breakthrough’); Willemyns, supra n. 11, 671.

75 Article 17.7.1(a), TPP.

76 Article 17.7.1(b), TPP.

77 Article 17.7.1(c), TPP.

78 Willemyns, supra n. 11, 671.

79 Article 17.7.1(d) and Article 17.7.1(e), TPP.

80 Article 17.8, TPP, cf. GATT Article VI and SCM Agreement, arts. 15.3 and 15.4.

81 Article 17.8.4, TPP, cf. SCM Agreement Article 15.5.

82 Article 17.8.5; cf. the language in the SCM Agreement, Article 15.7 and Article 15.8.

83 Article 17.6(4); see also Fleury and Marcoux's remarks, supra 10, 460.

84 Article 17.10, TPP.

85 See Kim, supra n. 10, 250.

86 Cf. WTO SCM Agreement, Article 1 where a subsidy is defined as ‘a financial contribution by a government or any public body within the territory of a Member’.

87 Panel Report, US–AD & CVD (China)), paras. 8.79, 8.94.

88 See further, Wang, J. (2016), ‘State Capitalism and Sovereign Wealth Funds: Finding a “Soft” Location in International Economic Law’, in Lim, C. L. (ed.), Alternative Visions of the International Law on Foreign Investment: Essays in Honour of Muthucumaraswamy Sornarajah (Cambridge: Cambridge University Press), 405, 412–414Google Scholar. On the test of majority control, see Ding, R. (2014), ‘“Public Body” or Not? Chinese State-Owned Enterprises’, 48 Journal of World Trade 167, 173–174Google Scholar, also cited by Wang, at 413.

89 Appellate Body Report, US–AD & CVD (China)), paras. 290, 317, 322.

90 Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef (Korea–Beef), WT/DS161/R, 31 July 2000, para. 766; Kim, supra n. 10, 237.

91 Appellate Body Report, US–AD & CVD (China), para. 290.

92 Appellate Body Report, United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India (US–Carbon Steel (India)), WT/DS436/AB/R, 8 December 2014, 4.17–4.30, 4.52; Kim, supra n. 10, 239.

93 The rule in The Parlement Belge (1879) 4P.D.129.

94 Krajina v. Tass Agency [1940] 2 All E.R. 274.

95 These cases are discussed briefly, for example, in Lim, C. L. (2012), ‘Beijing's ‘Congo’ Interpretation, Commercial Implications’, 128 Law Quarterly Review 6, 7Google Scholar.

96 Baccus Srl v. Servicio Nacional del Trigo [1957] 1 Q.B. 438.

97 The issue is discussed more amply in Greig, D.W. (1976), International Law (London: Butterworths), 235–237Google Scholar, which, although apparently dated, provides a still remarkably useful analysis of these issues. Lord Denning had considered the existence of a separate legal personality to be persuasive; Mellenger v. New Brunswick Development Corp [1971]2AllE.R.593; Trendtex Trading Corp v. Central Bank of Nigeria [1977] Q.B.529.

98 Appellate Body Report, US–AD & CVD (China)), para. 290.

99 Section 1603(b)(2). See Karaho Bodas Co. LLC v. Perusahaan Pertambangan Minyak dan Gas Bumi Negara, 313 F 3d 70, 75–76 (2d Cir. 2002) cert. denied, 123 S Ct 2256.

100 Patrickson v. Dole Food Co., 251 F 3d 795, 807–808 (9th Cir. 2001); Mendenhall v. Saudi Aramco, 991 F Supp 856 (SD Tex 1998); see further Dickinson, A., Lindsay, R., and Loonam, J. P. (2004), State Immunity: Selected Materials and Commentary (Oxford: Oxford University Press), para. 3.018Google Scholar.

101 United Kingdom State Immunity Act 1978, section 14(2). See further, Dickinson et al., supra n. 100, para. 4.101.

102 USFSIA, Section 1603.

103 See Article 17.2.10, TPP.

104 For a comparison, see treatment of transactions that were closely connected as a single concentration under Recital 20 of the EU Merger Regulation in Case M.7850 – EDF/CGN/NNB Group of Companies.

105 Golden shares are commonly found in post-privatization scenarios, see Musacchio and Lazzarini, supra n. 24, 14. See also (e.g.) Adolff, J. (2002), ‘Turn of the Tide? The “Golden Share” Judgements of the European Court of Justice and the Liberalization of the European Capital Markets’, 8 German Law Journal 3Google Scholar.

106 Kim, supra n. 10, 244 cites an Inside US Trade report of an aide to the House Ways and Means Committee pointing this out as an unforgiveable loophole.

107 Musacchio, A. and Lazzarini, S. G. (2015), ‘Chinese Exceptionalism or New Varieties of State Capitalism?’, in Liebman, B. L. and Milhaupt, C. J. (eds.), Regulating the Visible Hand (Oxford: Oxford University Press), 403, 404Google Scholar.

108 While one who posseses voting rights can choose whether or not to exercise them, adding the word ‘control’ to the word ‘rights’ would seem superfluous unless it were intended to include de facto ‘control’ of the exercise of such voting rights within the scope of the rule.

109 See Musacchio, A. and Lazzarini, S. G. (2014), Reinventing State Capitalism (Cambridge, MA: Harvard University Press), 227CrossRefGoogle Scholaret seq for the example of State pension funds; also Musacchio and Lazzarini, supra n. 107, 403, 422.

110 See the example of Ping An Insurance in C. J. Milhaupt and W. Zheng (2015), ‘Reforming China's State-Owned Enterprises’, in Liebman and Milhaupt, supra n. 107, 175, 179.

111 See Musacchio and Lazzarini, supra n. 107, 403, esp. 422 et seq; also Lin, Li-Wen and Milhaupt, C. J. (2013), ‘We are the (National) Champions: Understanding the Mechanisms of State Capitalism in China’, 65 Stanford Law Review 697Google Scholar for an analysis of the ‘networked hierarchy’ of Chinese State capitalism where a top–down governance structure within State-owned corporate groups combines with links to other SOEs.

112 Johan, S. A. et al. (2013), ‘Determinants of Sovereign Wealth Fund Investment in Private Equity vs. Public Equity’, 44 Journal of International Business Studies 155CrossRefGoogle Scholar.

113 Article 17.10.1.

114 Article 17.10.3(e), 17.10.4, 17.10.5.

115 Article 17.10.3(a)–(d). See Kim, supra n. 10, 250–251.

116 Annex 17-B, para. 9, discussed in Kim, supra n. 10, 251.

117 Musacchio and Lazzarini, supra n. 24, 14–15.

118 See Footnote 13 in Chapter 17, TPP.

119 Musacchio and Lazzarini, supra n. 24, 15.

120 This is likely to change in Khazanah's case; ‘Khazanah Clearly Straying from its Original Purpose, says PM’, New Straits Times, 6 July 2018.

121 Annexes to the Agreement – Annex IV, Schedule of Malaysia.

122 Perhaps, although one can also imagine the retort that our entire argument is wrong, that the extensive listing of SOEs was done ex abundante cautela.

123 Contra Kim, supra n. 10, 244, citing differences with the US–Singapore FTA, 257. The rule in Article 12.8.5(b) of the US–Singapore FTA (USSFTA) is, on our view, still capable of being subsumed under TPP/CPTPP Article 17(1)(b) and (c), even if the design of the USSFTA rule is different. Art.12.8.5(b) of the USSFTA states that: ‘[W]here the government and its government enterprises, alone or in combination, own 50% or less, but more than 20%, of the voting securities of the entity and own the largest block of voting rights of such entity, there is [a] rebuttable presumption that effective influence exists.’

124 Annex 17-E.

125 Annex 17-F.

126 Cf. the EU's Technology Transfer Block Exemption Regulations (the ‘TTBR’), Commission Regulation (EC) No. 316/2014 on the Application of Article 101(3) of the Treaty to Categories of Technology Transfer Agreements, 2014 O.J. (L93) 17.

127 2018 Section 301 Report on China, supra n. 13, 30.

128 See for the US position Thomas J. Philipson and Richard A. Posner, ‘Antitrust in the Not-For-Profit Sector’, NBER Working Paper 12132, March 2006, 3. For EU law, see Van Landewyck v. Commission [1980] ECR 3125, para. 88.

129 Shibaura Slaughter House v. Municipality of Tokyo, S. Ct. Decision of Dec. 14, 1989, Minshu (S. Ct. Civil Cases Reporter), Vol. 43, No. 12, p. 2078 et seq.

130 WTO Appellate Body Report, Canada – Wheat Exports and Grain Imports, WT.DS276/AB/R, 30 August 2004, para. 100, 161; Matsushita et al., supra n. 20, 245–246.

131 As Willemyns has pointed out, we should not forget the independent application of TPP(/CPTPP) Chapter 16, which requires Parties to ‘endeavor to apply its national competition laws to all commercial activities in its territory’ (Article 16.1.2); Willemyns, supra n. 11, 671.

132 NTT v. JFTC, 17 December 2014, Hanrei Taimuzu (Court Cases Reporter), No. 1339, 55 et. seq.

133 Article 17.2.10, TPP.

134 For the US case-law, see Underhill v. Hernandez (1893) 65 Fed. 577; Oetjen v. Central Leather Co. (1918) 246 US 297, 304; Banco Nacional de Cuba v. Sabbatino (1964) 376 US 398. For the English and Anglo-Commonwealth doctrine, see Lord Wilberforce's judgment in Buttes Gas and Oil Co v. Hammer (No. 3) [1982] AC 888, 930. The Anglo-Commonwealth doctrine is derived from US case-law which itself is derived from English law (see Blad v. Bamfield (1674) 3 Swan. 604, 607; Duke of Brunswick v. King of Hanover (1844) 6 Beav. 1; (1848) 2 H.L.Cas. 1; both cited by Lord Wilberforce, 932). For the English and Anglo-Commonwealth position, see also Lord Justice Rix's judgment in Yukos Capital S.A.R.L. v. OJSC Rosneft Oil Company [2012] EWCA Civ. 855. For further reference, see (e.g.) Crawford, J. (2012), Brownlie's Principles of Public International Law, 8th edn (Oxford: Oxford University Press), 72–87CrossRefGoogle Scholar for an overview; and for the Anglo-Commonwealth view, McLachlan, C., Foreign Relations Law (Cambridge: Cambridge University Press, 2014), 523–545CrossRefGoogle Scholar. For non-justiciability from a comparative perspective, see also Crawford, pp. 103–110, although in England Mr. Justice Hamblen in the court below in Yukos once observed that the Act of State doctrine appears to have no equivalent in civil law; see Lord Justice Rix in Yukos, at [40].

135 Article 17.5.2, TPP. Fleury and Marcoux, supra n. 10, 458–459.

136 2018 Section 301 Report on China, supra n. 13, 33.

137 For further discussion, see also Willemyns, supra n. 11, 678 (Article 17.5 does not contain an exclusive jurisdiction clause).

138 Article 17.4.1(b) and Article 17.4.1(c), TPP.

139 Article 17.7.1(a) and Article 17.7.1(b), TPP.

140 Article 17.7.1(c), TPP.

141 SWFs are SOEs for the purpose of TPP where the treaty's definitional requirements are met. Thus, an SWF is an SOE where it is more than 50% owned by a TPP party, or where a TPP party has more than 50% voting rights, or where a TPP party has the power to appoint the majority of the board members under Article 17.1. As such an SWF/SOE is subject to the disciplines which TPP applies to the SOEs of a forum State.

142 Sornarajah, M. (2011), ‘Sovereign Wealth Funds and the Existing Structure of the Regulation of Investments’, 1 Asian Journal of International Law 267CrossRefGoogle Scholar.

143 See Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen, ICSID Case No. ARB/14/30, Decision on Jurisdiction (31 May 2017).

144 Article 17.2.

145 Section B, Chapter 9.

146 TPP/CPTPP, Article 28.3.1.

147 Cf. TPP/CPTPP, Article 9.6.2 (FET and FPS do not require treatment in addition to or beyond that which is required by’ customary international law); 9.6.3 (‘breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article’).

148 In other words, acting in rivalry to shape the rules of the international trading system, see further, Fleury and Marcoux, supra n. 10, 449–450.

149 This is not to say that figuring out the size of implicit subsidies will be straightforward. SOEs may issue bonds that are not priced using the fundamentals of the firm but according to the sovereign's balance sheet; Wagner et al. (2015), ‘Implicit Bailouts and the Debt of Wholly State-Owned Enterprises’, SSRN working paper. Policy bank loans contain large subsidies which are difficult to quantify; Lazzarini, S. G. et al. (2015), ‘What Do State-Owned Development Banks Do? Evidence from BNDES, 2002–09’, 66 World Development 237CrossRefGoogle Scholar.

150 See (e.g.) Bhala, supra n. 12, 661.

151 Ibid.

152 ‘China Mulls Over Joining the TPP’, China Radio International, 27 March 2014.

153 See GATS Article XV. Implicating a long-standing discussion about having a multilateral regime for services sector subsidies regulation.

154 F. Gang and N. C. Hope (2014), ‘The Role of State-Owned Enterprises in the Chinese Economy’, in US–China 2022: Economic Relations in the Next 10 Years (HK: CUSEF), describing this process which began in the mid-1990s as a ‘dramatic restructuring’ of Chinese SOEs, 2, 5.

155 See e.g. J. Mullen, ‘How Did China End Up Posing as the Defender of Global Trade’, CNN, 10 April 2018.

156 See e.g. Bremmer, I. (2010), The End of the Free Market: Who Wins the War between States and Corporations? (New York: Portfolio)Google Scholar.

157 M. Miller and F. Cheng (2017), ‘China Says Framework for SOE Reform “Basically Complete”’, Reuters, 28 September 2017; contra H. Sender (2017), ‘China's State-Owned Business Reform a Step in the Wrong Direction’, Financial Times, 26 September 2017.

158 See the 2018 Section 301 Report on China, supra n. 13.

159 See Chong, S. and Lim, C. L. (2015), ‘The Convergence of China's Foreign and Domestic Investment Regimes and China's Investment Treaty Commitments’, 32 Journal of International Arbitration 461Google Scholar. The new Chinese Foreign Investment Law regime has just been passed and will come into force in January 2020.

160 J. Perlez (2015), ‘Q. & A.: Henry Paulson on Dealing with China’, New York Times, 24 April 2015; D. Lehr (2015), ‘Why China–US Investment Treaty Matters’, Paulson Institute, 13 February 2015; W. Chen (2017), ‘China–US BIT Remains Possible, Say Experts’, China Daily, 7 November 2017.