Competitive Neutrality Principles in Australia: Lessons for the TPP negotiation on disciplines over state-owned enterprises

Since the beginning of 2015, the Trans-Pacific Partnership (TPP) negotiations have shown significant progress. Issues such as intellectual property and investment are usually pointed out as factors that have long been delaying the negotiations. In addition, "disciplines over state-owned enterprises (SOEs)" have been hotly debated. The proposal concerned, of which the exact contents have not yet been made public due to very strict TPP negotiations information control as a whole, was promoted by the United States in response to the strong concern of its domestic industries whereby preferential treatment granted by foreign countries to their SOEs or national flagship companies cause significant competitive distortion in the markets.

This paper overviews the negotiation process on the disciplines over SOEs based on the already public information and introduces the experience of Australia, one of the most advanced countries in terms of "competitive neutrality principles" which aim to remove competitive distortion caused by preferential treatment granted to SOEs, etc. Through the examination of the process in which Australia introduced these competitive neutrality disciplines, their contents, and concrete cases, we learn various lessons on the significance and background of draft disciplines over SOEs in the TPP negotiations, their possibility to be agreed upon, elements to be considered upon the introduction, as well as the desirable ways to domestically implement them after the introduction. We also examine the necessity for, and prospect the future of, the competitive neutrality principles, by comparing an Australia-type principle with other related disciplines.