This paper provides a Canadian perspective on the debate about state trading enterprises in the World Trade Organization. STEs carry out important economic functions as part of national policies. STEs can do this without distorting competitive equilibrium in trade. From an economic and legal standpoint, STEs can properly function within the WTO system. The paper comments on why WTO rules on STEs may be practically meaningless, given the lack of application of the STE rules in WTO dispute resolution. The suggestion is made that the direction of legal inquiry into STEs should focus on the question of trade influence, rather than on the political question of government control of STEs. The real economic trade effects of STEs are the important aspects of STE study, not the ideological aspects of STE governance.


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