The WTO in the Emerging Energy Governance Debate

By Marceau, Gabrielle | Proceedings of the Annual Meeting-American Society of International Law, Annual 2012 | Go to article overview

The WTO in the Emerging Energy Governance Debate


Marceau, Gabrielle, Proceedings of the Annual Meeting-American Society of International Law


Demand for energy is growing as the world population and economic prosperity, in particular in developing countries, increases. More than with any other product, energy products and natural resources are concerned with international trade. Natural resources are generally concentrated in a small number of countries, while their consumers are located in many.

The World Trade Organization (WTO) is not an energy-specific organization, but several of its new members are energy-producing countries. With increasing global energy demands and the need for trade governance in that area, the WTO is becoming increasingly sensitive to energy issues.

The General Agreement on Tariffs and Trade (GATT)/WTO rules were not initially designed to address energy issues per se, but several GATT/WTO rules can directly or indirectly affect trade in energy. My presentation is divided into four parts. First, I will give some examples of GATT rules that can affect trade in energy. I will highlight the fact that, faced with the lack of specificity of these WTO rules to energy, members have negotiated specific rules for the governance of energy trade outside the GATT/WTO agreements. Second, I will discuss where the ongoing Doha negotiations could improve upon those WTO rules that have implications for trade in energy. Third, in the context of the recent accessions of energy-producing countries, I will give examples of the energy-specific commitments being sought from these new WTO members by the existing WTO membership. Finally, I will discuss the additional and specific energy-related provisions being sought by governments in the context of their regional trade agreements.

EXISTING RULES IN GATT/WTO

The WTO regulates trade in goods, trade in services, and trade-related intellectual property rights. The GATT/WTO agreements apply to all products (past, present, and future), including energy-related products.

The GATT prohibits discrimination between all imported like products (under the "most-favoured-nation" (MFN) requirement in GATT Article I), or between imported and domestic products (under the "national treatment" requirement in GATT Article II). One issue is to determine whether two products are "like." GATT/WTO caselaw has determined that two products are "like" if, a priori, they "compete" with one another in a specific market. In practice this rule will determine whether energy-efficient products are "like" energy-inefficient products (and whether renewable and non-renewable energy products are "like"), and therefore whether such "like" products should be regulated and taxed in the same manner.

The GATT rule prohibiting quantitative restrictions on imports or exports at the border is also relevant (GATT Article XI). Members have expressed concerns in relation to licensing requirements governing access to oil and gas pipelines and other export distribution networks, which could have the effect of restricting the volume of oil and gas exported, and could therefore be inconsistent with the requirements of GATT Article XI.

Another basic rule of the GATT is included in Article V, which prescribes freedom of transit, and prohibits in that context MFN and national treatment violations, as well as unreasonable charges and regulations imposed on the traffic of products in transit.

The WTO rules on general subsidies--prohibiting export subsidies and allowing specific domestic subsidies so long as they do not cause adverse effects to the interests of other members (and the absence of exceptions for green subsidies within these rules)--are relevant to energy trade. "Dual pricing," a frequent practice by energy-producing countries, may be a "subsidy" governed by the disciplines of the Agreement on Subsidies and Countervailing Measures.

The GATT also contains a rule on state-trading enterprises (GATT Article XVII) and obliges them to behave on the basis of "commercial considerations. …

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