Moderated by Mr Reinhard Quick, Vice-Chairman of BUSINESSEUROPE, the session focussed on multilateral and national rules on subsidies, state-owned enterprises and competition policies.

It was noted that the WTO does have some rules on trade-distorting subsidies. However, in the face of globalization and a changing international scenario, more challenges are emerging that might require stronger disciplines and institutions. To create new and more effective rules, a transparency exercise is also important. Full and timely notification of subsidies would lead to better information and better understanding of the effects of subsidies on the market and, thus, to more constructive discussions towards a multilateral solution. It was noted that while most free trade agreements include some subsidies provisions, they never go beyond what is already in the WTO agreements. This is testament to the fact that multilateral action on these issues cannot be substituted by bilateral agreements. The WTO is the ideal forum where this issue can be successfully addressed and resolved because it is the only place where rules are binding.

The panellists identified the difficulty of finding a common definition of what constitutes a state-owned enterprise and the extent of its market-distorting effects. In the WTO, there had been poor interest in state-owned enterprises until China and other emerging countries with a high number of state-owned enterprises started increasing their share of the international market. Recently, the issue has enjoyed more visibility and talks of competitive neutrality have been raised in the OECD and in other fora. State trading enterprises can be important for developing countries, especially in the management of natural resources. Although some work has been done in agriculture negotiations, agreement on a definition of state-owned enterprises remains elusive.

Competition policy was originally part of the so called “Singapore issues” but it was subsequently dropped. However, as private companies are operating globally, the need for multilateral rules is becoming more relevant. The lagging behind of global provisions on competition policies can be attributed to the fact that most developing countries until recently had little experience with competition policy drafting and implementation. The vacuum has been filled by national, private and other authorities. Although some bilateral agreements include competition policies, as in the case of subsidies, these provisions do not have real teeth. The Chinese representative said that if the WTO was able to accommodate the concerns of all WTO members (especially those with less experience in the matter), then it would be possible to have a fruitful discussion on competition policy and reach a multilateral agreement.

In conclusion, there is a need for more and better rules to deal with the complexity of globalization. Global problems require global solutions. One of the panellists wished for the Ministerial Conference in December to come out with guidelines on these issues.