Abstract
International trade in energy may be discussed from various points of view. The elements chosen by the authors in this chapter refer to prominent and current discussions within the WTO and South America. At a glance, the article aims to shed light on regulatory issues in the multilateral trade arena, on subsidies concerns and on selected topics referring to energy integration in South America. As it refers to complex and multifaceted subject matters, it is not the objective of this chapter to exhaust the discussion on the energy-related topics of each of the subchapters herein proposed. On the contrary, the idea is to call attention to the current international debate on energy, with focus on South America, as well as to provide elements for further debate.
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Notes
- 1.
Information available at: <http://www.energycharter.org/>. Access on 25 Aug. 2015. Currently, there are 53 signatories with 49 ratifications.
- 2.
According to Selivanova (2007), these rules, however, are not adequate to deal with some aspects of energy trade, to the extent that the WTO has a greater focus on barriers to imports than exports, and in the case of the energy sector, the biggest barriers are set in exportation.
- 3.
See Article XX (g), GATT 1994.
- 4.
WTO (2010), p. 115. It is noteworthy that an external factor to trade determines an increase or decrease in tariffs, energy security, which end up influencing prices.
- 5.
The subject is discussed in several ways in the WTO. In what regards the oil extraction, for example, the WTO understands that drilling is a service on mining if it is based on a contractual relationship and performed by a distinct entity; but it may provide added value in case the product is extracted by the oil owner himself. The same principle can be applied to gas liquefaction, petroleum refining and regasification (Yanovich 2011).
- 6.
In accordance with the Appellate Body Report (WT/DS70/AB/RW), Canada—Aircraft, para. 47: “the universe of subsidies is vast. Not all subsidies are inconsistent with the SCM Agreement”.
- 7.
As stated in the IMF study (2013), “[…] the company held a monopoly on oil-related activities in the country until 1997, when the government opened the sector to competition. Since then, other foreign and domestic companies have entered the market”.
- 8.
The IMF study states that: “The government subsidizes fuel consumption through PETROBRAS, taking advantage of its dominant position in the domestic market. The government also adjusts a tax (or subsidy) on gasoline and diesel to further stabilize retail prices. For instance, fuel prices charged by PETROBRAS were not increased together with international prices after the 2008 price shock, giving rise to subsidies that were absorbed by the company. Domestic prices for gasoline and diesel remain lower than export prices, resulting in estimated subsidies of around 1% of GDP in recent years. Moreover, fuel excises were reduced to zero in mid-2012; although this is a temporary measure, it does not have a specified end-date. In part to make up for these losses, the government indirectly subsidizes PETROBRAS through the Brazilian Development Bank (BNDES), which lends at below market rates. Estimating the cost of these subsidies is difficult, and they are likely reflected in the budget below the line. The authorities plan to introduce a new pricing mechanism, but it is unclear whether this will close the gap with international prices.” (Di Bella et al. 2015).
- 9.
Di Bella et al. (2015) affirmed that: “Long-term electricity prices are set through a system of contract auctions, in which total long-term demand from the various distribution companies is matched, in a bidding process, to different combinations of potential supply, with the most competitive bids receiving long-term power supply contracts Long-term electricity prices are set through a system of contract auctions, in which total long-term demand from the various distribution companies is matched, in a bidding process, to different combinations of potential supply, with the most competitive bids receiving long-term power supply contracts.”
- 10.
According to IEA (2013), electricity tariffs in Brazil have increased in recent years and, by 2012 the average price paid by industrial and residential clients reached US$178/mWh and US$237/MWh, higher than most comparators. Concerns about the impact of higher prices on the economy led the government to reduce some taxes and to renew large power generation concessions, in exchange for reduced power costs; this was expected to result in lower tariffs for industrial clients of up to 28% in 2013. Direct subsidies from the government to the electricity sector take mostly the form of transfers to the public hydroelectric facility Itaipu, part of ELECTROBRAS, which operates at a loss. The cost of this subsidy in 2013 was reflected in the budget as the Energetic Development Account (CDE) and as revenue receivables from Itaipu, totaling about 0.2% of GDP. As of early January 2015, the CDE had a negative balance of about U.S. $2 billion (0.1% of GDP) related to 2014 spending but for which transfers to the energy sector were delayed until 2015 (Di Bella et al. 2015).
- 11.
Organization of Ibero-American States (OEI). Communiqué of Brasilia, 2000a. Available online at: <http://www.oei.es/oeivirt/cimeira1.htm/>. Access on 26 Aug 2015.
- 12.
Organization of Ibero-American States (OEI). Initiative for the Integration of the South American Regional Infrastructure (IIRSA), 2000b. Available online at: <http://www.oei.es/oeivirt/cimeira1.htm/>. Access on 26 Aug 2015.
- 13.
Interamerican Development Bank (IDB). Consensus of Guayaquil on Integration, Security, Infrastructure and Development, 2002. Available from <http://www10.iadb.org/intal/intalcdi/PE/2010/05282.pdf>. Access on 26 Aug 2015.
- 14.
Union of South American Nations (UNASUR). Constitutive Treaty, 2008. Available from <http://www.unasursg.org/uploads/0c/c7/0cc721468628d65c3c510a577e54519d/Tratado-constitutivo-english-version.pdf>. Access on 26 Aug 2015.
- 15.
Venezuela People’s Power Ministry for Energy and Oil. Margarita Declaration, 2007. Available from <http://uniondelsur.menpet.gob.ve/interface.sp/database/fichero/free/116/11.PDF>. Access on 26 Aug 2015.
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The authors are very grateful for the valuable inputs to this article provided by Carolina Bohrer and Andrezza Fontoura.
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Barral, W., Amaral, R., Soares, T. (2018). International Trade in Energy: A Glance at Selected Issues. In: Fontoura Costa, J., Rosado de Sá Ribeiro, M., Xavier Junior, E., Rocha Gabriel, V. (eds) Energy Law and Regulation in Brazil. Springer, Cham. https://doi.org/10.1007/978-3-319-73456-9_13
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