Liberalising the Chinese Market: State-Owned Enterprise Disciplines in CAI

In: The Journal of World Investment & Trade
Xueji Su Faculty of Law, The Chinese University of Hong Kong Hong Kong China

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The newly-concluded EU-China Comprehensive Agreement on Investment (CAI), characterised by a number of market liberalisation clauses, is the black sheep in the investment agreement family. This article pins down one principal investment liberalisation discipline provided in CAI – the State-owned enterprise (SOE) rule. The article concerns the capability and problems of the new SOE rule in addressing market access issues arising from the competition and incumbency of SOEs. Dedicated SOE disciplines are not an innovation of CAI. Nor does the rule seem strikingly different from state-of-the-art treaty practice. However, delving into the nuances, the article finds that, when it comes to market liberalisation, CAI blurs out the stringent, clear-cut approach the Trans-Pacific Partnership/Comprehensive and Progressive Agreement for Trans-Pacific Partnership model is intended to establish. Further, because both bodies of rules leave plenty of room for interpretation, the effectiveness of the new SOE rule, in general, remains uncertain and susceptible to politicization.

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