Vietnam rejects US push on state firms in trade talks

Oct 28 (Reuters) – Vietnam on Friday rejected a U.S. proposal to establish new trade rules for state-owned companies, which Washington says often benefit from unfair subsidies and protections.

The United States floated its plan in negotiations this week on the nine-country Trans-Pacific Partnership, or TPP, a free-trade zone that would stretch across much of the Pacific Rim.

Despite the disagreement, President Barack Obama and leaders of the eight other TPP countries are expected to announce next month in Hawaii they are committed to finishing the talks and have the “broad outlines” of a final deal. It could take as much as another year to conclude the ambitious negotiations.

Washington wants strong rules on state-owned enterprises in the TPP partly because the pact could become the foundation for future trade talks with China, a country with more than 20,000 state-owned companies.

A study conducted for the U.S.-China Economic and Security Review Commission by the Washington consulting firm Capital Trade Inc said firms under various forms of Chinese state ownership controlled 50 percent of China’s economy, with huge impact on economic policy and trade.

U.S. negotiator Barbara Weisel said the proposal was drawn up after consulting with the business community and labor unions, which feel strongly that state-owned enterprises enjoy unfair support.

The United States for the first time this week also outlined its ideas on protecting workers’ rights, another potentially contentious area of negotiation.

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An Analysis of State-owned Enterprises and State Capitalism in China, Oct 26, 2011