State trading enterprises (STEs) may be high on the agenda in the forthcoming WTO negotiations on agricultural trade. Much of the concern of many countries appears to be that the existence of STEs distort competition on export markets and act in a manner similar to the use of export subsidies. It is shown in this paper, inter alia, that the trade distorting effect of STEs depends on the specification of the underlying benchmark against which to gauge the impact of the state trading enterprise, i.e. whether domestic and/or world markets are characterised as being competitive or oligopolistic.


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