Asian regionalism and the shaping of state-owned enterprises rules in trade agreements

ABSTRACT

This article explores Asian regionalism in the context of rule-making for cross-border regulation of State-owned enterprises (SOEs). Asian regionalism is defined by the normative integration of the Association of Southeast Asian Nations (ASEAN) which features a ‘hard-law obligations with structured flexibility’ paradigm in handling systematic conflicts. On the intra-regional level, the ASEAN aims to create a level-playing field through soft harmonization of competition law and policy. On the multilateral level, several ASEAN countries joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which contains a set of rules dedicated to SOEs. These rules are paradigmatic of the emerging trend in cross-border SOE regulation. This article investigates whether and how the ASEAN way of structured flexibility is manifest in the emerging international rules on SOEs and its implications for cross-border SOE regulation.

KEYWORDS:

• State-owned enterprise
• CPTPP
• Asian Regionalism
• regional trade agreement
• ASEAN
• structured flexibility
• competitive neutrality

Acknowledgements

The author wishes to express their deepest gratitude to Professors Julien Chaisse and Pasha Hsieh, as well as all other distinguished participants of the Asia Pacific Law Review (APLR) & Singapore Management University (SMU) workshop, which took place in October 2022. Their invaluable insights and collaborative input significantly enriched earlier drafts of this article. In addition, the author is immensely appreciative of the two anonymous peer reviewers, whose astute and constructive critique was instrumental in honing and augmenting the manuscript's quality. Furthermore, the author conveys their heartfelt appreciation to the dedicated editorial team at the Asia Pacific Law Review and Taylor & Francis. Their outstanding editing expertise and meticulous attention to detail have considerably enhanced the final publication's quality, ensuring a polished and well-presented piece.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Mark Wu, ‘The “China, Inc.” Challenge to Global Trade Governance’ (2016) 57 Harvard International Law Journal 261; Julien Chaisse, ‘State Capitalism on the Ascent - Stress, Shock, and Adaptation of the International Law on Foreign Investment’ (2018) 27 Minnesota Journal of International Law 339.

2 See for instance, Ming Du, ‘China’s State Capitalism and World Trade Law’ (2014) 63 International & Comparative Law Quarterly 409; Wu (n 1); Petros C Mavroidis and Merit E Janow, China and the WTO: Why Multilateralism Still Matters (Princeton University Press 2021).

3 See for instance, Weihuan Zhou, ‘Rethinking the (CP)TPP as A Model for Regulation of Chinese State-Owned Enterprises’ (2021) 24 Journal of International Economic Law 572; Leonardo Borlini, ‘When the Leviathan Goes to the Market: A Critical Evaluation of the Rules Governing State-owned Enterprises in Trade Agreements’ (2020) 33 Leiden Journal of International Law 313; Minwoo Kim, ‘Regulating the Visible Hands: Development of Rules on State-Owned Enterprises in Trade Agreements’ (2017) 58 Harvard International Law Journal 225; Ines Willemyns, ‘Disciplines on State-owned Enterprises in International Economic Law: Are We Moving in the Right Direction?’ (2016) 19 Journal of International Economic Law 657.

4 The CPTPP was reached after the Trump administration withdraws from the negotiation of its predecessor, TPP, and signed on 8 March 2018. Its members so far include Australia, Canada, Japan, Mexico, New Zealand, Singapore, Vietnam, Brunei Darussalam, Chile, Malaysia, and Peru. Its SOE rules are primarily discussed during TPP negotiations, but the following analysis will refer to the agreement as CPTPP unless specification is necessary.

5 See for instance, Xueji Su, ‘Liberalising the Chinese Market: State-Owned Enterprise Disciplines in the EU-China Comprehensive Agreement on Investment’ (2022) 23 Journal of World Investment and Trade 545.

6 Thailand, the Philippines, and Indonesia indicated their intention to pursue membership. See Shannon Hayden and Javiera Heine, ‘CPTPP: Can We Expect Additional Southeast Asian Members Soon?’ The Diplomat, 10 March 2022.

7 Sylvestre Fleury and Jean-Michel Marcoux, ‘The US Shaping of State-Owned Enterprise Disciplines in the Trans-Pacific Partnership Journal of International Economic Law’ (2016) 19 Journal of International Economic Law 445.

8 Mitsuo Matsushita and Chin Leng Lim, ‘Taming Leviathan as Merchant: Lingering Questions about the Practical Application of Trans-Pacific Partnership’s State-Owned Enterprises Rules’ (2019) 1 World Trade Review 402.

9 Pasha L Hsieh, New Asian Regionalism in International Economic Law (CUP 2021), 70.

10 It also worth noting that CPTPP’s SOE rules differ in several ways from SOE rules in CAI. See, for instance, Su (n 5). Moreover, other rules relating to SOEs are already present in the China-ASEAN Free Trade Agreement (FTA), the China-Singapore FTA, and the China-Korea FTA (2015) but lacking in the China-Australia FTA (2015).

11 Julien Chaisse and Pasha L Hsieh, ‘Rethinking Asia-Pacific Regionalism and New Economic Agreement’ (2023) 31 Asia Pacific Law Review.

12 Hsieh (n 9) 8.

13 Paul J Davidson, ‘The ASEAN Way and the Role of Law in ASEAN Economic Cooperation’ (2004) 8 Singapore Year Book of International Law 165.

14 Rodolfo C Severino, South East Asia in Search of an ASEAN Community (Institute of Southeast Asian Studies 2008); Amitav Archarya, ‘Ideas, Identity, and Institution-Building: From the “ASEAN Way” to the “Asia-Pacific Way”?’ (1997)10 Pacific Review 319, 328. The official statement of the ASEAN way could be inferred from Article 2(2) of the ASEAN Charter. The article lays down the principles of ASEAN cooperation, including ‘reliance on peaceful settlement of disputes’, ‘non-interference in the internal affairs of ASEAN Member States’, and ‘enhanced consultations on matters seriously affecting the common interest of ASEAN’. See the Charter of the Association of Southeast Asian Nations, signed on 20 November 2007.

15 Tom Ginsburg, ‘Eastphalia Asian Regionalism’ (2010–11) 44 UC Davis Law Review 859; Tom Ginsburg, ‘Authoritarian International Law’ (2020) 114 American Journal of International Law 221.

16 Hsieh (n 9) 24, citing Sungjoon Cho and Jurgen Kurtz, ‘Legalizing the ASEAN Way: Adopting and Reimagining the ASEAN Investment Regime’ (2018) 66 American Journal of Comparative Law 233, 253–5; David Chin Soon Siong, ‘ASEAN’s Journey towards Free Trade’, in Chin Leng Lim and Margaret Liang (eds), Economic Diplomacy: Essays and Reflections by Singapore’s Negotiations (CUP 2011), 216.

17 Hsieh (n 9) 4.

18 Meredith A Crowley, Trade War: The Clash of Economic Systems Endangering Global Prosperity (CEPR Press 2019).

19 See, in general, William Megginson, Privatization, State Capitalism, and the Ownership of Business in the 21st Century (Now Publishers Inc 2018); On historical accounts, see Andrew Phillips and JC Sharman, Outsourcing Empire: How Company-States Made the Modern World (Princeton University Press 2020). Mention of SOEs in this section is made in a general, teleological sense, referring to the phenomenon that the state actively uses commercial arms to achieve developmental and societal goals. The scope of discussion is delimitated in a belief that such phenomenon is the essential attribute of state capitalism that has led to the intra-regional and multilateral regulatory attempts discussed in this article.

20 See in general, Luc Bernier, Massimo Florio and Philippe Bance, The Routledge Handbook of State-owned Enterprise (Routledge 2020).

21 Frank S Benyon, Direct investment, National Champions and EU Treaty Freedoms: From Maastricht to Lisbon (2010 Hart Publishing).

22 J Gregory Sidak and Daniel F Spulber, Deregulatory Takings and the Regulatory Contract: The Competitive Transformation of Network Industries in the United States (CUP 1997), 119–29.

23 Benyon (n 21).

24 Alexandr Svetlicinii, ‘The State-Owned Enterprises under the ASEAN Regional Competition Policy: Insights from the European Competition Network’ (2021) 11 KLRI Journal of Law and Legislation 6.

25 See James Putucheary, Ownership and Control in the Malayan Economy (INSAN 2004).

26 Krislert Samphantharak, ‘State Owned Enterprises in Southeast Asia’ (May 14, 2019) Forthcoming, Economic Development of Southeast Asia (2019) MIT Press, Available at SSRN <https://ssrn.com/abstract=3388390> accessed 25 March 2023.

27 Ibid.

28 Ibid.

29 Latdavanh Songvilay, Sthabandith Insisienmay and Mark Turner, ‘Trial and Error in State-Owned Enterprise Reform in Laos’ (2017) 42 Asian Perspective 239.

30 Maureen Aung-Thwin and Thant Myint-U, ‘The Burmese Ways to Socialism’ (1992) 13 Third World Quarterly 67.

31 Dani Rodrik, Straight Talk on Trade: Ideas for a Sane World Economy (Princeton University Press 2018) 36.

32 See the categorization of Malaysian SOEs in Wan Khatina Nawawi, ‘Emerging Rules for State-Owned Enterprises: Chapter 17 of the CPTPP’, in Malaysia's Trade Governance at a Crossroads (Khazanah Nasional 2021).

33 PWC, ‘Cost-Benefit Analysis on the Potential Impacts of the CPTPP on the Malaysian Economy and Key Economic Sectors’, CPTPP Cost-Benefit Analysis (CBA), 2022. <25072022_CPTPP_Cost_Benefit_Analysis_Final_Report_-_for_publication.pdf (miti.gov.my)> accessed 25 March 2023.

34 2016 is the year when the CPTPP was signed. Pornchai Wisuttisak and Cheong May Fong, ‘Competition Law, State-Owned Enterprises and Regional Market Integration in ASEAN’ in Burton Ong (ed), The Regionalisation of Competition Law and Policy within the ASEAN Economic Community (CUP 2018).

35 General Statistics Office, Press Release on Preliminary Results of Economic Census in 2017(2018); See also OECD, OECD Peer Reviews of Competition Law and Policy: Viet Nam (2018), 17.

36 See in general, Richard W Carney, Authoritarian Capitalism: Sovereign Wealth Funds and State-Owned Enterprises in East Asia and Beyond (OUP 2018).

37 ‘Doi Moi’ is a comprehensive reform initiated by the Communist Party of Vietnam in 1986. This programme entailed gradually transitioning the economy from a centrally planned to a more market-oriented framework based on SOE equitization.

38 Le Ngoc Dang, Dinh Dung Nguyen and Farhad Taghizadeh-Hesary, ‘State-Owned Enterprise Reform in Viet Nam: Progress and Challenges’ (2020) ADBI Working Papers 2020 <State-Owned Enterprise Reform in Viet Nam: Progress and Challenges; Asian Development Bank (adb.org)> accessed 25 March 2023; Mark Beeson and Pham Hung Hung, ‘Developmentalism with Vietnamese Characteristics: The Persistence of State-Led Development in East Asia’ (2012) 42 Journal of Contemporary Asia 539.

39 The National Economic Policy (NEP) has been superseded by the National Development Policy in 1991, which was then replaced by the National Vision Policy in 2001. However, it is held that the latter two policies still adhere to NEP goals. See KS Jomo, ‘The New Economic Policy and Interethnic Relations in Malaysia: Identities, Conflict and Cohesion’ (2004) United Nations Research Institute for Social Development, Programme Paper 7, 18–21.

40 Samphantharak (n 26).

41 KS Mokhtar and others, ‘The New Economic Policy (1970–1990) in Malaysia: The Economic and Political Perspectives’ (2013) 1 International Journal on Media & Communication 12, 13.

42 See ‘Cost-Benefit Analysis’ (n 33).

43 Singapore has two types of SOE: statutory board and government-linked companies.

44 Cheng-Han Tan and others, ‘State-Owned Enterprises in Singapore: Historical Insights into a Potential Model for Reform’ (2015) 28 Columbia Journal of Asian Law 61.

45 Law No 5/1999 on Anti-Monopoly Practice and Unfair Business Competition, Articles 2 and 51. See also Hikmahanto Juwana, ‘An Overview of Indonesia’s Antimonopoly Law’ (2002) 1 Washington University Global Studies Law Review 185, 199.

46 Burton Ong, ‘Competition Law and Policy in the ASEAN Region Origins, Objectives and Opportunities’ in Ong (n 34) 2–3.

47 Ibid.

48 Mark J Roe, ‘Political Preconditions to Separating Ownership from Corporate Control’ (2000) 53 Stanford Law Review 539; Christopher Chen, ‘Solving the Puzzle of Corporate Governance of State-Owned Enterprises: The Path of the Temasek Model in Singapore and Lessons for China’ (2016) 36 Northwestern Journal of International Law and Business 303; See the perspective of how the legal origins might impact ownership structure and corporate governance in Rafael La Porta and others, ‘Corporate Ownership Around the World’ (1999) 54 The Journal of Finance 471.

49 See for instance in Chen (n 48). Temasek Holdings was established in 1974 in a bid to manage the government’s investments in government-linked companies. Temasek managed a net portfolio valued at SGD 403 billion as at 31 March 2022, anchored in Asia (63%), including Singapore (27%) and China (22%), with growing portfolio in the Americas (21%), and in Europe, Middle East and Africa (12%). Temasek, Temasek Review 2022 <www.temasek.com.sg/en/news-and-resources/news-room/news/2022/temasek-review-2022-so-every-generation-prospers#:~:text=Singapore%2C%20Tuesday%2012%20July%202022,TSR)2%20was%205.81%25> accessed 25 March 2023.

50 Khazanah Nasional Berhad, Corporate Profile – Our Companies <www.khazanah.com.my/Our-Investments/Sectors> accessed 25 March 2023.

51 The term ‘equitization’ is used mainly in Vietnam as the country’s preferred term for privatization.

52 John Nellis, ‘Privatization and Enterprise Reform in Transition Economies: A Retrospective Analysis. Washington, World Bank Operations Evaluation Department’ (2002). As noted, ‘By 1988, SOEs were given autonomous control over output, wages, pricing, and investments – the process known as commercialization. This change was aimed to improve productivity and efficiency, but the enterprises remained under state ownership’ Songvilay and others (n 29).

53 Kim (n 3).

54 Leonor M Briones, ‘Philippines Public Enterprise in the 80s: Problems and Issues’ (1985) Development Research News Volume III (4).

55 Nawawi (n 32).

56 According to the OECD report (n 34) 19, ‘The number of wholly owned SOEs has already been reduced significantly from 12,000 in 1991–780 now, and this was achieved via equitization, mergers, closures and sell-offs. For instance, from 2011 to 2016, 537 SOEs were equitized with a total enterprise value of VND 789.9 trillion (USD 35 billion)’.

57 See Tan and others (n 44).

58 Some make cautions against a ‘wholesale adoption’ and transplantation of Temasek for SOE reforms, as the model is rooted in Singapore’s unique political, social, and economic context. See for instance Chen (n 48).

59 It has been suggested, ‘While Thailand received acclaim as a regional leader in corporate governance in private enterprises, the same could not be said of corporate governance among SOEs (who adopt the Ministry of Finance corporate governance guidelines)’. See Khongmalai and others, ‘Empirical Evidence of Corporate Governance in Thai State-owned Enterprises’ (2010) 10 Corporate Governance 617, 629. Besides, the World Bank also recommended that Thailand improves SOE governance by making the state a more effective owner. See the World Bank, ‘Thailand makes significant improvements in Corporate Governance practices’ 25 April 2013 <www.worldbank.org/en/news/press-release/2013/04/25/thailand-makes-significant-improvements-in-corporate-governance-practices> accessed 25 March 2023.

60 Wisuttisak and Fong (n 34).

61 Ibid.

62 Bui Van Dung, ‘SOE Innovation: Status Quo and Challenges’ (2006) CIEM Working Paper. Central Institute for Economic Management.

63 See in general David Hulme, Mark Turner, and Willy McCourt, Governance, Management and Development: Making the State Work (Bloomsbury Publishing London 2015); Richard W Carney and Krislert Samphantharak, ‘State Capitalism in East Asia’ in Mike Wright and others (eds), The Oxford Handbook on State Capitalism and the Firm (OUP 2019).

64 Yasmin Sungkar, ‘Indonesia’s State Enterprises: From State Leadership to International Consensus’ (2008) 1 Journal of Indonesian Social Sciences and Humanities 95, 101.

65 Wisuttisak and Fong (n 34) 103.

66 Corporate, The Edge Malaysia Weekly, 25–31 July 2016, ‘The State of the Nation: Who Controls Corporate Malaysia?’ The State of the Nation: Who controls Corporate Malaysia?. The Edge Markets. accessed 25 March 2023.

67 See Nguyen Manh Hai and Michael O’Donnell, ‘Reforming State-Owned Enterprises in Vietnam: The Contrasting Cases of Vinashin and Viettel’ (2017) 41 Asian Perspective 215; See also ‘SOE divestment a priority in CPTPP era’ Vietnam Investment Review <www.vir.com.vn/soe-divestment-a-priority-in-cptpp-era-65586.html> accessed 25 March 2023.

68 See, for instance, Michael Ewing-Chow, ‘Culture Club or Chameleon: Should ASEAN Adopt Legalization for Economic Integration?’ (2004) 8 Singapore Year Book of International Law 225, 237; Davidson (n 13).

69 Alexandr Svetlicinii, ‘State Capitalism in ASEAN: The State-Owned Enterprises Under the ASEAN Regional Competition Policy’ in Asian Yearbook of International Economic Law 2021 (Springer 2021).

70 ASEAN, ASEAN Economic Community Blueprint 2025 (Jakarta, 2015) para 25.

71 Huong Ly Luu, ‘Regional Harmonization of Competition Law and Policy: An ASEAN Approach’ (2012) 2 Asian Journal of International Law 291, 320.

72 Ibid.

73 Ibid; Lawan Thanadsillapakul, ‘The Harmonization of ASEAN Competition Laws and Policy from an Economic Integration Perspective’ (2004) 3 Uniform Law Review 749, 770.

74 AEGC serves as a forum for discussing and co-ordinating regional co-operation in competition policy, with the goal of promoting a healthy competitive environment in ASEAN. Implementation of the tasks and activities relating to competition policy, as targeted for delivery under the AEC Blueprint, will be overseen by the AEGC.

75 ASEAN, ‘ASEAN Regional Guidelines on Competition Policy’, August 2010 <www.aseansec.org/publications/ASEANRegionalGudelinesonCompetitionPolicy.pdf> accessed 25 March 2023.

76 ASEAN, ‘Handbook on Competition Policy and Law in ASEAN for Business’ 24 August 2010 <www.aseansec.org/25532.htm> accessed 25 March 2023.

77 ASEAN Regional Guidelines on Competition Policy, at i.

78 Ibid, Arts 3.2-3.4

79 Ibid, Art 3.1.3.

80 Ibid, Art 3.1.2.

81 Luu (n 71).

82 Ibid.

83 Ibid.

84 ASEAN Regional Guidelines on Competition Policy, Art 3.5.4.

85 Ibid, Art 4.4.1.

86 Ibid, Art 3.5.1.

87 Ibid.

88 Svetlicinii (n 24).

89 ‘Competition Neutrality: Challenges of Application for Vietnam’ World Trade Institute Working Paper No. 19/2016<www.wti.org/research/publications/1035/competitive-neutrality-challenges-of-application-for-vietnam/> accessed 25 March 2023; Svetlicinii (n 69); OECD Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).

90 See Borlini (n 3); Wu (n 1).

91 Kim (n 3).

92 For instance, the US-Australia FTA, Art 14.4; the US-Singapore FTA, Art 12.3.2(d)(ii); and North American Free Trade Agreement (NAFTA), Chapter 15. See an overview in Fleury and Marcoux (n 7).

93 Fleury and Marcoux (n 7).

94 Kim (n 3).

95 TPP, Art 17.1; See also Matsushita and Lim (n 8).

96 The CPTPP, Art 17.1.

97 But see Matsushita and Lim (n 8).

98 The US-Singapore FTA, Arts 12.8.5,12.8.6(b) and Annex 12A; See also Borlini (n 3).

99 The EU-Vietnam FTA, Art11.1(g). See also the EU-Japan Economic Partnership Agreement (EPA), Art13.1 (h).

100 Normally the control should be ‘strategic’ or ‘in accordance with its laws and regulations’ in the parlance of the EU’s agreement. However, the ambiguity of this language in effect renders this rule rather capacious and inclusive.

101 In the earlier bilateral agreement practice, the definition of SOEs is based (1) on a combination of a delegation of governmental authority and government ownership/control; (2) solely on a delegation of governmental authority; or (3) solely on government ownership/control. See for instance Kim (n 3) and Jaemin Lee, ‘State Responsibility and Government-Affiliated Entities in International Economic Law’ (2015) 49 Journal of World Trade 117.

102 Xueji Su, ‘From Effect to Behavior – Regulating State-Owned Enterprises as Competitors in Trade Agreements’ (2023) 57 Journal of World Trade 532.

103 Luca Rubini and Tiffany Wang, ‘Chapter 16: State-owned Enterprises’ in Handbook of Deep Trade Agreements (World Bank 2020), 465.

104 See, for instance, a series of EPAs signed between Japan and ASEAN countries.

105 On the variations of competition requirements see, for instance, the Japan-Singapore EPA, Art 66.1; the Singapore-Australia FTA, Chapter 12; the ASEAN-China FTA, Art 8; and the China-Singapore FTA, Art 70.

106 Nawawi (n 32).

107 The Singapore-Korea FTA, Art 15.4.

108 The CPTPP, Chapter 16.

109 Although explicit competitive neutrality rule is lacking, Chapter 17 proscribes regulatory neutrality. See the CPTPP, Art 17.5.

110 See, for example, the CPTPP, Art 17.4(1)(b)(ii). The non-discrimination and commercial considerations requirements are modelled on GATT Article XVII (State Trading Enterprises), while the NCA rules are on the Agreement on Subsidies and Countervailing Measures (SCM Agreement). But in contrast with the WTO panels’ reading of Article XVII, which had treated commercial considerations as merely an indicator of compliance with non-discrimination obligation, the emerging SOE rules set the commercial considerations and non-discrimination disciplines cumulative. See Appellate Body Report, Canada-Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 8 August 2004, para 85.

111 Fleury and Marcoux (n 7). ‘Commerciality’ is only vaguely defined in the emerging SOE rules. See Su (n 102).

112 The pros and cons of non-commercial assistance rule are widely discussed in literature. See, for instance, Matsushita and Lim (n 8); Kim (n 3); Zhou (n 2).

113 Non-commercial assistance rule does not cover the situation where an SOE provides service in its domestic market.

114 Matsushita and Lim (n 8) 17.

115 See ibid.

116 Kim (n 3) 250.

117 The CPTPP, Art 17.10.

118 The major norm entrepreneur for the new SOE rules is the US. See Fleury and Marcoux (n 7).

119 ‘Reach of TPP’s SOE Disciplines Limited by Definition, Scope, Exceptions’ (Inside US Trade, 6 November 2015).

120 Matthew Schewel, ‘US Official Touts TPP Progress’; Identifies IP, Canada, Malaysia As Obstacles’ (Inside US Trade, 4 October 2015).

121 Kim (n 3) 259.

122 ‘TPP Countries Face Challenges on SOEs, Including Focus on Ownership’ (Inside US Trade, 11 March 2013).

123 ‘Under the Radar: TPP Parties Wrestle Over Carveouts On Services, SOEs’ (Inside US Trade). See also in Kim (n 3).

124 ‘Australia Narrow Differences on SOEs, But Challenges Still Remain’ (Inside US Trade, 9 August 2013).

125 Office of the USTR, ‘Trans-Pacific Partnership Negotiation Updates – Round 9: Lima’ (28 October 2011) <www.ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-negotiation-updates/round-9-lim> accessed 25 March 2023.

126 ‘Malaysia Softens Its Position on SOEs, Tobacco Carveout Language’ (Inside US Trade, 13 December 2013).

127 Bandar Seri Begawan, ‘Malaysia Minister Outlines “Serious Difficulties” with SOEs, Other TPP Issues’ (Inside US Trade, 6 September 2013).

128 Ben Hancock, ‘TPP Countries Face Vietnamese Demand for Extensive SOE Exceptions’ (Inside US Trade, 12 September 2014).

129 Ibid.

130 ‘TPP Countries Face Challenges’ (n 122).

131 Ibid.

132 ‘TPP SOE Principles Would Prevent Exceptions for Future Entities: Sources’ (Inside US Trade, 18 December 2014); ‘TPP Ministers Give Guidance On SOE Exceptions, Discuss Other Rules Issues’ (Inside US Trade, 31 October 2014).

133 See for instance, Raj Bhala, ‘Exposing the Forgotten TPP Chapter: Chapter 17 as a Model for Future International Trade Disciplines on SOEs’ (2017) 14 Manchester Journal of International Economic Law 2. But note that the US had an ‘opportunistic’ stance on this score and listed several of its own SOEs for exemption. Therefore, as pointed out, ‘it became difficult to convince other countries to limit their number of SOEs in the carve-out’. Willemyns (n 3).

134 The CPTPP, Annex 17-D.

135 On which see a discussion in Fleury and Marcoux (n 7) and Kim (n 3).

136 The CPTPP, Art 17.1, fn 1.

137 CPTPP, Art 17.1, fn 4.

138 Member(s) of the International Forum of Sovereign Wealth Funds or endorses the Generally Accepted Principles and Practices (‘Santiago Principles’) issued by the International Working Group of Sovereign Wealth Funds, October 2008, or such other principles and practices as may be agreed to by the Parties. See the CPTPP, Art 17.1.

139 In the US-Singapore FTA (Art 12.8) the threshold is SGD 50 million.

140 The CPTPP, Art 17.6.4. During the negotiations, Malaysian Minister Mustapa Mohamed praised what he called ‘goodwill and a willingness to demonstrate flexibilities on the part of some of the TPP countries’ and indicated that the change on SOEs sufficiently addresses his country’s worries that the US SOE proposal would constrain the operation of its large number of SOEs, many of which are owned in part by KNB. See in ‘Under the Radar’.

141 ‘Malaysia Flags Major TPP Outstanding Issues, Says US Needs TPA to Close’ (Inside US Trade, 28 February 2014).

142 The CPTPP, Art 9.12.1.

143 The CPTPP, Art 10.7.1.

144 The CPTPP, Art 11.10.1.

145 The CPTPP, Art 9.12.2, Art 10.7.2, and Art 11.10.2.

146 This exception is also conditioned on these financial services being ‘not intended to displace commercial financing’ or are ‘offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market’.

147 The CPTPP, Art 17.2.4.

148 But according to footnote 3 of the chapter, the excluded sovereign wealth funds must be ‘free from investment direction from the government of the Party’. In contrast, USMCA’s SOE provision spans similar scope of entities as those included in the CPTPP. Yet, it does not include CPTPP-like exemptions that exclude SWF or the situations where an SOE provides ‘goods or services exclusively to that Party for purposes of carrying out that Party’s governmental functions’. See the USMCA, Chapter 22. See also Jack Caporal, ‘US seeks NAFTA State-owned Enterprise Provisions That Go Beyond TPP’s’ (Inside US Trade, 27 October 2017).

149 The CPTPP, Art 17.13.

150 As provided in the CPTPP, annex 17-E and annex 17-F, respectively.

151 See in Part Eight of the Schedule of Vietnam; Part Three of the Schedule of Brunei Darussalam.

152 The CPTPP, annex 17-C.

153 The CPTPP, annex 17-E, fn 37.

154 See the US-Singapore FTA, Art 12.8.1(e).

155 ‘Cost-Benefit Analysis’ (n 33).

156 Schedule of Malaysia.

157 ‘Cost-Benefit Analysis’ (n 33).

158 Ibid.

159 Khazanah also participates in the International Forum on Sovereign Wealth Funds. See US Department of State, Malaysia Investment Climate Statement 2016, ‘Competition from State-Owned Enterprises – Sovereign Wealth Funds’.

160 According to the Malaysian government, ‘Upon ratification and EIF of the CPTPP, the threshold set for the preference in upstream activities is 70% of PETRONAS’ annual budget for purchases of goods and services. This threshold will gradually decline to 40% by the sixth year. As for downstream activities, preferences for purchase of goods and services are subject to the threshold of 40% of PETRONAS’ annual budget for purchases upon ratification and EIF of the CPTPP’. See in ‘Cost-Benefit Analysis’ (n 33).

161 Ibid.

162 They have previously done so on the basis of a negative list.

163 Schedule of Viet Nam, 1.

164 Ibid, 7.

165 Anh Tuan Nguyen, ‘The Role of State-Owned Enterprises in Shaping Vietnam’s Competitive Landscape’ in Deborah Healey (ed), Competitive Neutrality and Its Application in Selected Developing Countries (UNCTAD Research Partnership Platform Publication Series 2014).

166 Ibid.

167 Ibid.

168 See also Annex 11 to the EU-Vietnam FTA.

169 See the similar remarks regarding subsidy rules in Andreas F Lowenfeld, International Economic Law (2nd edn, OUP 2008), iv.

170 See Su (n 102).

171 See for instance Kim (n 3).

172 See for instance Zhou (n 3); Borlini (n 3); Matsushita and Lim (n 8); Su (n 102); Su (n 5); Bhala (n 133).