Mitsuo Matsushita

State-Owned Enterprises in the TPP Agreement

State-owned enterprises (SOEs) are enterprises owned by states or governments for the purpose of accomplishing some governmental purposes. Chapter 17 of the TPP provides the rules designed to require the Parties of the TPP to subject SOEs in their jurisdictions to disciplines as provided for in Chapter 17 so that behaviors of SOEs would not be harmful to private enterprises in the market of the Parties and would not be unduly disruptive of the operation of free market there. Chapter 17 defines SOEs as enterprises which primarily engage in commercial activities and in which Parties (a) own 50% or more of their stocks, (b) control 50% or more of voting rights through the ownership of share or (c) have the right to appoint more than one half of their governing bodies such as board of directors. Commercial activities are defined as activities oriented toward profit-making. Chapter 17 directs Parties to ensure that SOEs within their respective jurisdiction operate according to commercial activities and that Parties would not provide to SOEs financial assistance on non-commercial basis in their jurisdictions. All of such directives are designed to ensure that SOEs within the TPP act just like private enterprises and, therefore, the level playing field between SOEs and private enterprises is created. However, Chapter 17 provides many exceptions to the general rules. Exceptions consist of those of general nature and country-specific ones. In fact, about 70% of the whole pages (about 100 pages) is devoted to those exceptions. Chapter 17 is subject to review in 5 years after the TPP takes effect including whether to expand its scope or not. Therefore, it is expected that there may be substantial changes in future. Although Article XVII of the GATT stipulates rules of SOEs, its scope is limited to export and import trade. It is worthwhile that Chapter 17 in the TPP is the first international agreement which provides for and elaborates on comprehensive and detailed rules on SOEs and, in this sense, significant.

A Note on the China Rare Earths Case

The World Trade Organization’s dispute settlement mechanism has considered and decided several cases involving export restrictions. Among these cases the most important and most recent is the China Rare Earths Case. In this paper the authors analyze and evaluate the panel and Appellate Body opinions in the Rare Earths Case. Three points are especially important. First, the case brings out the fact of the disparity between import and export measures in the law of the WTO. Unlike import measures, WTO discipline with respect to export measures is haphazard, inconsistent and unfair. Second, the case highlights the issue of the relationship between WTO Accession Protocols and the WTO Agreement. The authors dispute the conclusion of the Appellate Body that the rules of the GATT, specifically the general exceptions, do not apply to certain parts of China’s Accession Protocol. Third, the case shows the limitations that apply under WTO law with respect to conservation measures of natural resources that move in international trade.

Implementing International Trade Agreements in Domestic Jurisdictions

John H. Jackson had diverse interests ranging from the question of interpreting the GATT to the issue of how the GATT and other international economic agreements are implemented domestically. I had an honor of co-authoring a book with him in which the subject matter is the implementation of the Tokyo Round Agreements. In the following passages, I would like to reflect on my experience in working with him on this subject. The book which is the product of a joint program between the three scholars from the USA, Europe, and Japan was published in 1984 as John H. Jackson, JeanVictor Louis and Mitsuo Matsushita, Implementing the Tokyo Round: National Constitutions and International Economic Rules (The University of Michigan Press, 1984). John Jackson was Hessel E. Yntema Professor of Law in the Law School at the University of Michigan. Jean-Victor Louis was a professor of law at the Free University of Brussels and I was a professor of law at the University of Tokyo. The purpose of this project was to compare the process of implementing the Tokyo Round Agreements in the constitutional structure of those three jurisdictions. Implementation in broad sense means the process through which international agreements are put into effect in the jurisdiction in which it is implemented and incorporated into the domestic legal order. This involves issues such as who negotiates international agreements, who proposes and pushes through the domestic legal process necessary to make them effective in domestic jurisdiction, who has the power to regulate international trade and other economic relationships with other nations, and if such power is not vested with the executive branch of the government, what is the scope and limitation of the executive branch delegated to it by the legislature? All such questions are related to the allocation of powers among the different branches of government to negotiate and conclude international economic agreements with foreign nations and put them into effect domestically. In the USA, the Congress has the power to regulate foreign commerce and, in a strict sense of the term, the executive branch is not vested with the power to regulate the international