The Organisation for Economic Co-operation and Development has published an assessment of how preferential trade agreements address subsidies and other market distortions involving state enterprises. It finds that these agreements can regulate state enterprises as both recipients and providers of support, filling gaps in World Trade Organization rules, but their reach remains limited. Only 95 of 386 preferential trade agreements in force as of December 2025, about 24%, contained state enterprise disciplines, and none concluded by China, the Gulf Cooperation Council or its member countries included dedicated rules despite the prevalence of state ownership in their manufacturing sectors. The strongest agreements use broad definitions covering direct and indirect state ownership or control, require state enterprises to act on commercial terms and without discrimination, restrict noncommercial assistance and impose transparency requirements. Remaining gaps include exemptions for subcentral state enterprises, weak enforcement of transparency obligations and incomplete coverage of tax concessions, equity investment, support to private firms and abnormally low procurement bids. OECD data also indicate that state enterprises receive more subsidies on average than private competitors, while a hypothetical exercise suggests grants and below market borrowing may mask prolonged financial distress among firms with at least 25% government ownership.
2026-09-06OECD
Organisation for Economic Co-operation and Development finds major gaps in preferential trade agreement rules for state enterprises
The Organisation for Economic Co-operation and Development finds that preferential trade agreements can curb subsidies and other distortions involving state enterprises, but only about 24% of agreements in force contain relevant disciplines. No agreement concluded by China, the Gulf Cooperation Council or its members includes dedicated state enterprise rules. Existing provisions also leave gaps involving subcentral entities, tax concessions, equity investment, transparency enforcement and support to private firms.