Categorized | CPA, National Security, Trade

SOEs, Russian style

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State-owned enterprises are not just a Chinese method of predatory trade.  Vietnam and Singapore have them.

And, of course, Russia, which is now joining the WTO, has its own style of SOEs.

BRUSSELS — Reacting to the latest attempt by the European Union to loosen its hold on energy supplies, Gazprom, the Russian gas export monopoly, said Wednesday that it would strongly contest an antitrust investigation and insisted that its pricing practices were in line with the rest of the industry.

In a statement, Gazprom also said it had the “status of a strategic organization” in Russia — an apparent reminder that the company, the world’s largest gas exporter, is controlled by the Kremlin.

If you are in an industry competing against foreign SOEs, it is astounding to watch the predatory pricing and market share grab and growth exhibited by the SOEs.  You see it first hand.  This problem needs to be addressed before more pretend “free trade” agreements put more industries at a disadvantage.

The political dynamic is that 60% of Democrats in Congress and 90% of Republicans vote for trade agreements.  They will pass if presented to Congress.  They will pass without addressing the major problems of SOEs, currency manipulation, value added taxes, and the trade deficit.  We have to be willing to advocate holding up new trade agreements in order to get resolution of those issues.  Its one of the only hooks to force a solution.

Otherwise the Administration, the Senate Finance Committee and the House Ways and Means Committee (the committees with trade jurisdiction) will not take us seriously.  They will smile, say they understand, pat us on the head, and ignore the problems.

An insufficient number of trade associations and companies have been willing to condition support for agreements upon resolving these problems.

That’s why CPA has led the charge for the 21st Century Trade Agreement Principles to create unity on the issue of what is acceptable for future agreements.

One Response to “SOEs, Russian style”

  1. Tom T. says:

    So Gazprom is the new Standard Oil octopus of predatory practices in this industry, eh?

    On your other note on our trade agreements, we must ask for the repeal of some of the ones we have, not just a limit on more. It probably won’t happen because the oligarchs here that are on top have more in common with Russia’s or China’s or Europe’s oligarchs. Predatory business practices and breaking the law with nothing more than seemingly empty scolding has made our oligarchs the top earners in society. Why would Gazprom or any other wanna-be oligarch support any rules that prevents them from running over the public interest when it comes to these economic games of brute force and power?

    Tom T.

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