How preferential trade agreements address market distortions from state enterprises

As large recipients and providers of subsidies, the activities of state enterprises (SEs) have the potential to distort trade flows given their growing role in manufacturing supply chains. Countries thus need to have adequate tools at the multilateral, plurilateral, and domestic levels to craft appropriate policy responses. This report focuses on disciplines on SEs that countries have been incorporating in the context of their preferential trade agreements (PTAs). It finds that these PTAs have the potential to go a long way in addressing the issue posed by subsidies and other forms of non-market practices to and by SEs, but the report highlights potential gaps within the disciplines. A key challenge remains their geographical coverage given that jurisdictions with larger subsidies to and by SEs have not yet concluded relevant PTAs.