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STATE TRADING ENTERPRISES NOTIFICATION REQUIREMENTS

STATE TRADING ENTERPRISES NOTIFICATION REQUIREMENTS. Jo Mckeagg Rules Division October 2010. Why are there WTO rules regarding STEs? What is an STE? Why is transparency of STEs important?. WHY RULES ON STEs WERE NEGOTIATED.

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STATE TRADING ENTERPRISES NOTIFICATION REQUIREMENTS

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  1. STATE TRADING ENTERPRISESNOTIFICATION REQUIREMENTS Jo Mckeagg Rules Division October 2010

  2. Why are there WTO rules regarding STEs? What is an STE? Why is transparency of STEs important?

  3. WHY RULES ON STEs WERE NEGOTIATED • A State Trading Enterprise may have significant power in a given market. • Principles of non-discrimination (MFN & NT) and market access may not be preserved. • It may be possible for governments, acting directly or indirectly through STEs, to create trade distortions. Number 1

  4. WHAT IS A STATE TRADING ENTERPRISE? • GATT Article XVII refers, without attempting an actual definition, to three types of enterprises: • State enterprises (owned by the state) • Enterprises granted special privileges • Enterprises granted exclusive privileges

  5. WHAT IS A STATE TRADING ENTERPRISE? • A working definition was provided in the Understanding. • Governmental and non-governmental enterprises • Granted exclusive or special rights or privileges • In the exercise of which they influence through their purchase/sales the level/direction of imports/exports

  6. WHAT IS A SATE TRADING ENTERPRISE? ♦ Definition in the Understanding focuses on exclusive rights and privileges enjoyed by the state trading enterprise (functions of the enterprise) and their influence on imports and exports (possible trade distortions), rather than whether it is a state enterprise (government ownership of the enterprise) ♦ It does not apply to government procurement

  7. EXCLUSIVE OR SPECIAL RIGHTS OR PRIVILEGES? • What is NOT an exclusive or special right or privilege? • Interpretative Note to Article XVII:1(a) reads as follows: Governmental measures imposed to ensure standards of quality and efficiency in the operation of external trade, or privileges granted for the exploitation of national natural resources but which do not empower the government to exercise control over the trading activities of the enterprise in question, do not constitute “exclusive or special privileges” • What is an exclusive or special right or privilege?

  8. TYPES OF STATE TRADING ENTERPRISES (examples) ♦ Marketing boards Engaged in trading vs. engaged in regulating trade (Interpretative Note to Article XVII) ♦ Statutory marketing boards ♦ Export marketing boards ♦ Regulatory marketing boards ♦ Fiscal monopolies ♦ Canalising agencies ♦ Foreign trade enterprises ♦ Boards or corporations resulting from nationalised industries Numbers 2 and 3

  9. OBJECTIVES OF STEs • Some examples: • income support for domestic producers • price stabilization • expansion of domestic output • continuity in domestic food supply • protection of public health and strategic control • management of important domestic resources • fulfilment of international commitments on quantity and/or price • administration of quantitative restrictions

  10. WTO OBLIGATIONS CONCERNINGSTATE TRADING ENTERPRISES Four main rules based on fundamental GATT/ WTO principles: ♣ Commercial Considerations and Non-discrimination ♣ Not used as a way to implement WTO inconsistent measures such as quantitative restrictions ♣ Preservation of the value of tariff concessions (i.e. not erode negotiated benefits) ♣ Transparency – regular notifications

  11. NOTIFICATION REQUIREMENTSNumber 4

  12. WHAT HAPPENS ONCE ANOTIFICATION IS MADE? • Frequency of notifications. New and Full every two years • Distribution to all WTO Members as a WTO document • Review by the Working Party on State Trading enterprises (a standing WTO body) • Additional information from notifying Member if requested Numbers 5 and 6

  13. THE RECORD OF NOTIFICATIONS • Generally, not good. Why? • Fear? Lack of information? Resource issues? Data problems? • Ongoing discussion in the Working Party on improving compliance with the obligation to notify. • Informal consultations • Review frequency of notifications again in 2012 at the latest Numbers 7 and 8

  14. Example of a Notification Numbers 9 and 10

  15. True or False .... • STEs are prohibited by the WTO. • State trading exists in relation to both agricultural and industrial goods. • The rules on state trading enterprises apply to imports only. • Members can decide whether they wish to notify. • All STEs are Monopolies. • New and Full notifications are due every 2 years.

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