A growing number of PTAs have incorporated – albeit with potential remaining gaps – advanced disciplines on SEs. While some PTAs have embraced a “pincer” approach by addressing the issue of both SEs as recipients and providers of support, other PTAs have introduced disciplines only with respect to SEs as providers of support. The former approach has the benefit of capturing instances where SEs receive subsidies from the government or other SEs, without the need to prove that the providing SE is a “public body”. Evidence from the OECD MAGIC database suggests that this approach may be particularly relevant given that SEs receive on average more subsidies, notably BMB from state financial institutions, than their private competitors. At the same time, this approach fails to capture cases of subsidisation to private enterprises. This may be problematic as industrial sectors that have recently emerged, such as the digital (e.g. semiconductors and telecommunication equipment) and the clean energy sectors are characterised by a relatively low presence of SEs. In addition, by disciplining the conduct of SEs vis-à-vis downstream and upstream firms, most PTAs containing provisions on SEs could better deal with cases where SEs provide support on a systematic basis through, for example, the provision of below-market finance.
The geographical coverage of those PTAs remains, however, a key challenge if countries want to address meaningfully distortions stemming from government support and regulatory advantages to and through SEs. Given the geographical concentration of manufacturing SEs, the relevance and effectiveness of future disciplines on SEs may depend upon whether adhering countries include those jurisdictions where trade and competition issues in relation to industrial SEs have been significant.
Given that garnering multilateral consensus on common rules disciplining SEs as recipients and providers of support may prove very difficult, other options – albeit not constituting an alternative – could be explored. In this respect, the revised OECD SOE Guidelines could enable a convergence of views among countries on the various approaches, as well as on how trade and competition distortions may better be addressed. Encouraging more countries, notably outside the OECD area, to adhere to these Guidelines would be an important step in building greater awareness of issues related to the support provided to and through SEs and the actions necessary to address them.