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What does the CPTPP mean for state-owned enterprises? 

Summary/overview

The CPTPP will promote a level playing field between state-owned enterprises (SOEs) and their private competitors. This means that Canadian businesses operating in or seeking to expand into CPTPP markets will be able to compete fairly with government-owned companies. At the same time, the CPTPP also preserves the Canadian government’s ability to support domestic SOEs that provide public services.

The agreement does this through two key principles:

How the CPTPP will benefit Canadian companies

State-owned enterprises explained

State-owned enterprises (SOEs) are commercial entities that are owned or controlled by governments. They are different from entities that operate on a cost-recovery or not-for-profit basis (for example, public transportation systems). SOEs exist in many countries, including Canada and, particularly, in the Asia-Pacific. Some SOEs deliver public services, but many others operate in competition with private companies and are motivated by profit.

Canada seeks rules concerning controls in two situations where governmental conduct could affect international trade. The first is when the state itself operates a commercial enterprise—an SOE. The second is when the state gives official authorization to a monopoly. An SOE that has an official monopoly would fall under both situations.

SOEs and monopolies may receive various forms of commercial advantage from government, such as regulatory or financial preferences. These advantages can have trade-distorting effects and can give SOEs an unfair advantage when they compete with private companies in the market.

State-owned enterprises in the CPTPP

SOEs are already subject to general rules at the World Trade Organization. These rules aim to regulate an entity that is formally separate from government but whose conduct will still be attributed to the latter. The CPTPP builds on these existing rules, with provisions that provide a more level playing field for Canadian companies.The CPTPP focuses on the following four areas to help level the playing field for Canadian businesses:

The CPTPP chapter on SOEs includes exemptions from the rules, such as exemptions for SOEs with revenue below a certain dollar threshold and country-specific exclusions. Additionally, Canada and most other CPTPP countries have exemptions from certain rules for any SOE that is owned or controlled by a provincial, territorial or local government.

These exemptions and exclusions mean that all Canada’s existing Crown corporations will be able to continue operating as they do today.

How the CPTPP will impact SOEs

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