Is it too much to expect a uniform, consistent, and principled position from the U.S. government?
For instance, in the “foreign official” challenges (Carson, O’Shea, and Esquenazi / Rodriguez) the DOJ pledged allegiance to the OECD Convention and argued that the OECD Convention compelled a meaning of “foreign official” that included employees of SOEs.
As highlighted in my Supreme Court amicus brief filed in connection with the Esquenazi / Rodriguez cert petition, there were a number of problems with the DOJ’s position. Separately, the DOJ’s position was selective because it ignored OECD Convention commentary 15 which states:
“An official of a public enterprise shall be deemed to perform a public function unless the enterprise operates on a normal commercial basis in the relevant market, i.e., on a basis which is substantially equivalent to that of a private enterprise, without preferential subsidies or other privileges.” (emphasis added).
The chapter defines SOEs as follows.
state-owned enterprise means an enterprise:
(a) that is principally engaged in commercial activities; and
(b) in which a Party:
(i) directly owns more than 50 percent of the share capital;
(ii) controls, through ownership interests, the exercise of more than 50 percent of the voting rights; or
(iii) holds the power to appoint a majority of members of the board of directors or any other equivalent management body.
commercial activities means activities which an enterprise undertakes with an orientation toward profit-making and which result in the production of a good or supply of a service that will be sold to a consumer in the relevant market in quantities and at prices determined by the enterprise.
This chapter summary notes:
“[This] chapter provides broad coverage of SOEs that are principally engaged in commercial activity.”
“The SOE chapter includes commitments by TPP Parties to ensure that their SOEs make commercial purchases and sales on the basis of commercial considerations, except when doing so would be inconsistent with any mandate under which an SOE is operating that would require it to provide public services.”
“Whereas in 2000, there was only one SOE in the Fortune Global 50 list of the largest companies in the world, now there are close to a dozen.”
“SOEs exist in all TPP countries, are used for different purposes, and are regulated and managed in widely varying ways. Some SOEs provide public services, but other times, extensive government participation in economies through SOEs can distort competition to the detriment of private American firms and their workers. This can occur through SOEs that receive advantages from governments, such as preferential financing, including through State-owned banks; provision of goods or services from the government or from other SOEs at preferential prices or free of charge; direct subsidies and debt forgiveness, or other preferences. These preferences can tilt the playing field in favor of SOEs and against U.S. workers and businesses. Even where enforcement against SOEs in foreign markets has been pursued for anti-competitive behavior or other unlawful behavior, commercial SOEs have avoided prosecution by claiming sovereign immunity.”
“Concerns about the role of SOEs have grown in recent years because SOEs that had previously operated almost exclusively within their own territories are increasingly engaged in international trade of goods and services or acting as investors in foreign markets.”