The puzzle of SOEs by Luca Rubini from the University of Turin, presented at UCL on 15 June 2022.

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The puzzle of
SOEs
Luca Rubini (University of Turin)
UCL, 15° June 2022

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Roadmap
 The «brics»: SOEs and
their issues, sustainability
 The «puzzle»
 Lack of regulation: why?
 What to do?
 Stumbling blocks

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The «brics»
SOEs as increasingly key
actors in international markets
(trade and investment: e.g.
green technology, BRI)
Issues: distortions, «deep
pockets», lack of transparency
Sustainability – good but vague
Relations between SOEs and
sustainability: tools of public
policy

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«Puzzle»
“… a problem designed to test
ingenuity or knowledge” (Oxford
English Dictionary)

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The «puzzle»
 Increasing importance of SOES/sustainability but
arguably lack of international regulation - in
general and specifically on SOEs/sustainability
 One example: “climate change”

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Lack of
regulation:
«sustainability» Relatively new concept
Absent in 1947 (GATT)
Clear recognition in WTO Preamble but still very
vague
Very few legal provisions that make it operational for
SOEs and their action (e.g. «general exceptions»)
Example of «green subsidies»

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z
Impact?
LEGAL UNCERTAINTY (example Canada –
Renewable Energy/FIT dispute)

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Lack of
regulation:
«SOEs»
SOEs are not new but neither GATT nor WTO
provide significant regulation: mostly non-
discrimination
Why? «Liberal understanding» (Sapir & Mavroidis,
2021)
Investment laws and their bias: protecting
«investors»
FDI screening: limited and exceptional
Domestic competition laws: common but uncertain /
limited application

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What to do?
Some say: «do
nothing!» (Howse,
2020, 2021)
Others (majority):
we need new rules
on sustainability
and on SOEs

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Ideas and paths for reform
 Multilateral - first best but very difficult
 Plurilateral initiatives - more promising (building blocks for
future generalization and codification)
 See PTAs like CPTPP, EU-Vietnam; but also EU law!
 Unilateral action – perhaps only concrete possibility in the short
term (see, e.g., EU and its proposed regulation on CBAM and
foreign subsidies)

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Obstacles
 Reaching agreement: caledoiscopic world, very different from
1980s/1990s
 Overlapping crises
 Knowledge – need for transparency, evaluation and epistemic
communities – prepare negotiations
 Narratives, e.g. SOEs and «special rules»: the «free market»
mantra (US); idea of «competitive neutrality» (read «equality»)

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Many thanks!
 L.rubini@unito.it