Abstract
“WTO and energy” has become a fashionable topic. Various key energy-exporting or transit countries have recently acceded to the WTO, bringing with them a substantial part of energy trade, and others are currently negotiating their accession. Unbundling of vertically integrated state-owned companies and technological developments have created room for private operators, which has boosted negotiations on energy services. More recently, the interface between trade and climate policies, as well as concerns surrounding energy security have also contributed to raise the profile of energy-related issues in the WTO.
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- 1.
“The Power and the Glory – A Special Report on Energy”, The Economist, June 2008.
- 2.
For a review of the various WTO provisions relevant for energy trade, see Marceau, The WTO in the Emerging Energy Governance Debate, Global Trade and Customs Journal 5 (2010) 3, pp. 83–93, and World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010.
- 3.
World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 179.
- 4.
See for instance, Government of Canada, Water Exports and the NAFTA, available at: http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/prb0041-e.htm.
- 5.
See, for instance, Cossy, Le statut de l'eau en droit international économique, in: Boisson de Chazournes/Salman (eds.), Les ressources en eau et le droit international, 2005, pp. 169–208; Brown Weiss, Water Transfers and International Trade Law, in: Brown Weiss/Boisson de Chazournes/Bernasconi-Osterwalder (eds.), Fresh Water and International Economic Law, 2005, pp. 61–89.
- 6.
Article 1.1(a)(1)(iii) provides that “… a subsidy shall be deemed to exist if: … a government provides goods or services other than general infrastructure, or purchases goods”.
- 7.
Report of the Appellate Body, United States – Final Countervailing Duty Determination With Respect To Certain Softwood Lumber From Canada, WT/DS257/AB/R / DSR 2004:II, 587 (hereinafter US – Softwood Lumber IV), para. 57.
- 8.
US – Softwood Lumber IV, para. 67.
- 9.
Id., para. 75.
- 10.
Id., paras. 63–64, 75.
- 11.
World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 162.
- 12.
These statements are found in WTO documents S/CSS/W/24 (United States), S/CSS/W/42/Suppl. 3 (Japan), S/CSS/W/59 (Norway), S/CSS/W144 (Cuba) and S/CSC/W/42/Rev.2 (Indonesia).
- 13.
For more information on the collective request and the energy services negotiations, see Cossy, Energy Services Under the General Agreement on Trade in Services (GATS), in: Selivanova (ed.) Energy Trade in WTO and Beyond: Current International Disciplines and Future Challenges, Kluwer Law International BV, The Netherlands, 2011.
- 14.
Communication from Australia, The European Communities, Hong Kong China, Japan, New Zealand, The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, and the United States, Joint report on informal discussion on environmental services in the context of the DDA, TN/S/W/28, 11th February, 2005.
- 15.
Unlike the GATT, the GATS does not contain an exception for measures relating to the protection of “exhaustible natural resources”. For more on this point, see World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 169.
- 16.
Cossy, Energy Services Under the General Agreement on Trade in Services (GATS), in: Selivanova (ed.) Energy Trade in WTO and Beyond: Current International Disciplines and Future Challenges, Kluwer Law International BV, The Netherlands, 2011. See also Background Note on Energy Services, Note by the Secretariat, S/C/W/311, 10th January, 2010, para. 77.
- 17.
Cossy, Energy Transport and Transit in the WTO, in: Pauwelyn (ed.), Global Challenges at the Intersection of Trade, Energy and the Environment, Center for Economic Policy Research (CEPR), 2010.
- 18.
Art. XI:1 states that: “No prohibition or restrictions other than duties or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any contracting party or the on exportation or sale for export of any product destined for the territory of any other contracting party”.
- 19.
Report of the Panel, Turkey – Textiles and Clothing, WT/DS34/R, 31st May, 1999, paras. 9.63–9.65.
- 20.
World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 166. In this context, an important question is to what extent a prohibitive export tax could be likened to a quantitative restriction, and thus be found to be incompatible with GATT Art. XI:1.
- 21.
Tariff protection is lowest in the mining and fuel sectors. See World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 114.
- 22.
Id., pp. 117, 119.
- 23.
China – Measures Related to the Exportation of Various Raw Materials, WT/DS394, --395 and --398. A panel was established in December 2009 to examine these claims and its conclusions were not known at the time of writing this contribution.
- 24.
This dispute may be indirectly relevant for the energy sector as some of the raw materials at stake are being used by the renewable energy industry, in particular in the wind sector.
- 25.
Commission Communication, Tackling The Challenges in Commodity Markets and on Raw Materials, COM(2011) 25 final, 2nd February, 2011.
- 26.
See “DeFazio Urges Action Against OPEC Price Fixing”, 15th December, 2006, available at: http://www.defazio.house.gov/index.php?option=com_content&view=article&id=225:defazio-urges-action-against-opec-price-fixing&catid=57.
- 27.
Lautenberg, Busting Up the Cartel: The WTO Case Against OPEC, July 2004, available at: http://lautenberg.senate.gov/documents/foreign/OPEC%20Memo.pdf.
- 28.
World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 185.
- 29.
In Colombia – Ports of Entry, the fact that Colombia limited the number of ports through which goods could enter the country was found to be contrary to GATT Art. XI, even though there was no limit on the quantity of goods which could be imported through these ports. See Report of the Panel, WT/DS366/R, and the case-law quoted therein, paras. 7.233–7.240
- 30.
See Marceau, The WTO in the Emerging Energy Governance Debate, Global Trade and Customs Journal 5 (2010) 3, pp. 83–93. In the same sense, see also Broome, Conflicting Obligations for Oil Exporting Nations: Satisfying Membership Requirements of Both OPEC and the WTO, The George Washington International Law Review 38 (2006), pp. 409–436; Crosby, Background to WTO Rules and Production/Trade Restrictions in the Field of Energy, in: Pauwelyn (ed.), Global Challenges at the Intersection of Trade, Energy and the Environment, 2010, pp. 83–86. For a different view, see Desta, The Organization of Petroleum Exporting Countries, the World Trade Organization, and Regional Trade Agreements, Journal of World Trade 37 (2003) 3, pp. 523–551. This author argues that OPEC minimum export price requirements could be contrary to GATT Art. XI.
- 31.
World Trade Organization, World Trade Report 2010 – Trade in Natural Resources, 2010, p. 166.
- 32.
This view seems to be shared by the US government. When asked, during a 2004 press conference, whether he thought that it could be “theoretically possible to use the WTO to get at OPEC”, R. Zoellick, then US Trade Representative, replied: “Under WTO rules in general there’s no apparent basis to be able to compel people to sell things. … It would be like somebody coming to the United States and saying … we must dig up more of this metal or that metal or produce more of this or that product.” Press conference, US Trade Representative R. Zoellick and Bahraini Minister of Finance and National Economy Abdulla Hassan Saif, 27th May, 2004.
- 33.
GATT and Export Restrictions, Technical Note by the Secretariat, MTN/3B/9, 1st May, 1974.
- 34.
Negotiating Group on Natural Resource-Based Products, Natural Resource-Based Products: Two-Tier Pricing Issues, Submission from the United States, MTN.GNG/NG3/W/13, 8th June, 1988.
- 35.
Negotiating Group on Natural Resource-Based Products, Meeting of 29th April, 1987, Note by the Secretariat, MTN.GNG/NG3/2, para. 6.
- 36.
For instance, Art. 2.11 of US – Australia stipulates that “Neither Party may adopt or maintain any duty, tax, or other charge on the export of any good to the territory of the other Party, unless such duty, tax, or charge is adopted or maintained on any such good when destined for consumption in its territory”.
- 37.
Art. 2.11, entitled “Duties, Taxes or Other Fees and Charges on Exports”, stipulates that “Neither Party may maintain or institute any duties, taxes or other fees and charges imposed on, or in connection with, the exportation of goods to the other Party, or any internal taxes, fees and charges on goods exported to the other Party that are in excess of those imposed on like goods destined for internal sale”.
- 38.
Report of the Working Party on the Accession of Croatia to the World Trade Organization, WT/ACC/HRV/59, 29th June, 2000, para. 101.
- 39.
Protocol on the Accession of the People's Republic of China, WT/L/432, 23rd November, 2001.
- 40.
Report of the Working Party on the Accession of China, WT/ACC/CHN/49, 1st October, 2001.
- 41.
China – Measures Related to the Exportation of Various Raw Materials, WT/DS394, -395 and -398. The panel report was still pending at the time this contribution was written.
- 42.
Report of the Working Party on the Accession of Ukraine to the World Trade Organization, WT/ACC/UKR/152, 25th January, 2008, paras. 229–230, 240.
- 43.
Communication from the European Communities, Negotiating Proposal on Export Taxes, TN/MA/W/11/Add.6, 27th April, 2006.
- 44.
Art. 3.1 of the EC proposed text reads: “Export taxes may be maintained and listed in Members’ schedules for a limited number of products, at low levels and only in so far as: a) they are necessary, in conjunction with domestic measures, to maintain financial stability, to satisfy fiscal needs, or to facilitate economic diversification and avoid excessive dependence on the export of primary products; and b) they do not adversely affect international trade by limiting the availability of goods to WTO Members in general or by raising world market prices of any goods beyond the prices that would prevail in the absence of such measures, or otherwise cause serious prejudice to the interests of developing country Members”.
- 45.
Communication from the European Communities, Revised Submission on Export Taxes, TN/MA/W/101, 17th January, 2008.
- 46.
Communication from Japan, Text-Based Proposal for Negotiation on Enhanced Transparency on Export Restrictions, TN/MA/W/15/Add.4, 18th April, 2006.
- 47.
The last version is contained in Communication from Chile; Costa Rica; Japan; Republic of Korea; the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Ukraine and the United States, Enhanced Transparency on Export Licensing, TN/MA/W/15/Add.4/Rev.7, 23rd November, 2010.
- 48.
TN/MA/W/103/Rev.3, p. 53.
- 49.
The content of this section builds on Cossy, Energy Transport and Transit in the WTO, in: Pauwelyn (ed.), Global Challenges at the Intersection of Trade, Energy and the Environment, Center for Economic Policy Research (CEPR), 2010.
- 50.
There has been a long and still unsettled controversy as to whether electricity is a good or a service. The majority view seems to consider it as a good.
- 51.
See Azaria, Energy Transit Under the Energy Charter Treaty and the General Agreement on Tariffs and Trade, Journal of Energy & Natural Resources Law 27 (2009) 4, pp. 559–595.
- 52.
Note that the Panel in Korea – Various Measures on Beef described the legal status of Art. XVII:1(a) in the GATT framework in the following terms: “Article XVII.1(a) establishes the general obligation on state trading enterprises to undertake their activities in accordance with the GATT principles of non-discrimination. The Panel considers that this general principle of non-discrimination includes at least the provisions of Articles I and III of GATT.” (Report of the Panel, Korea – Various Measures on Beef, WT/DS161 and --/169, emphasis added, finding not reviewed by the Appellate Body). The question arises whether this finding might be broadened to include other GATT obligations, such as Art. V, or, at least, the non-discrimination obligations contained in Art. V.
- 53.
WTO, Article V of the GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/2, 12th January, 2005.
- 54.
Report of the Panel, Colombia – Indicative Prices and Restrictions on Ports, WT/DS366/R, circulated on 27th April, 2009. For a discussion of the possible consequences of applying the Panel's findings in this case to energy transit through fixed infrastructure, see Azaria, Energy Transit Under the Energy Charter Treaty and the General Agreement on Tariffs and Trade, Journal of Energy & Natural Resources Law, Vol. 27 No 4, 2009, pp. 559–595.
- 55.
The article on third-party access in the draft Transit Protocol provides that owners or operators of transport facilities shall “negotiate in good faith with any other Contracting Parties or Entities of Contracting Parties requesting access to and use of Available Capacity for Transit”. Hence, it grants negotiating rights to private parties, but does not ensure third-party access per se.
- 56.
Azaria, Energy Transit Under the Energy Charter Treaty and the General Agreement on Tariffs and Trade, Journal of Energy & Natural Resources Law, Vol. 27 No 4, 2009, p. 572.
- 57.
Energy Charter Secretariat, The Energy Charter Treaty – A Reader's Guide, available at: http://www.encharter.org/index.php?id=20.
- 58.
Report of the Working Party on the Accession of Ukraine to the World Trade Organization, WT/ACC/UKR/152, para. 367 (emphasis added).
- 59.
The 1991 United Nations Central Product Classification, which is being used by WTO Members for scheduling their specific commitments, defines pipeline transportation of fuels as follows: “transportation via pipeline of crude or refined petroleum and petroleum products and of natural gas” (CPC 7131). For basic information on key GATS concepts, see WTO Secretariat, The General Agreement on Trade in Services – An Introduction, 2006, available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm.
- 60.
Ukraine – Schedule of Specific Commitments, GATS/SC/144, 10th March, 2008.
- 61.
Cossy, Energy Services Under the General Agreement on Trade in Services (GATS), in: Selivanova (ed.) Energy Trade in WTO and Beyond: Current International Disciplines and Future Challenges, Kluwer Law International BV, The Netherlands, 2011.
- 62.
Communication from the European Communities, WTO Trade Facilitation – Strengthening WTO Rules on GATT Article V on Freedom of Transit, G/C/W/422, 30th September, 2002. The EC also notes “the need to better clarify the interface between the freedom of transit for third country vehicles and vessels guaranteed by GATT Article V and the fact that, under the GATS, the right to provide a transport service in or across the territory of a third country depends on specific commitments having been made by that third country”.
- 63.
Proposal by The Former Yugoslav Republic of Macedonia, Mongolia, Switzerland and Swaziland, Transit – Third Revision of Textual Proposal, TN/TF/W/133/Rev.3, 26th June, 2009, para. 1.
- 64.
Id., para. 2.
- 65.
Art. XVII(1) reads as follows: (a) Each contracting party undertakes that if it establishes or maintains a State enterprise, wherever located, or grants to any enterprise, formally or in effect, exclusive or special privileges,* such enterprise shall, in its purchases or sales involving either imports or exports, act in a manner consistent with the general principles of non-discriminatory treatment prescribed in this Agreement for governmental measures affecting imports or exports by private traders. (b) The provisions of subparagraph (a) of this paragraph shall be understood to require that such enterprises shall, having due regard to the other provisions of this Agreement, make any such purchases or sales solely in accordance with commercial considerations,* including price, quality, availability, marketability, transportation and other conditions of purchase or sale, and shall afford the enterprises of the other contracting parties adequate opportunity, in accordance with customary business practice, to compete for participation in such purchases or sales.
- 66.
Negotiating Group on Trade Facilitation, Summary Minutes of the Meeting Held from 13th–17th October, 2008, TN/TF/M/26, para. 16.
- 67.
Proposal by The Former Yugoslav Republic of Macedonia, Mongolia, Switzerland and Swaziland, Transit – Third Revision of Textual Proposal, TN/TF/W/133/Rev.3, 26th June, 2009, para. 6.
- 68.
Negotiating Group on Trade Facilitation, Draft Consolidated Negotiating Text – Revision, TN/TF/W/165/Rev.7, 25th February, 2011. The text is reproduced here without brackets.
- 69.
The current draft reads as follows (Art. 11.2): “Each Member undertakes that if it establishes or maintains a State enterprise or if an enterprise has, formally or in effect, exclusive or special privileges, such enterprise shall, in its regulations, formalities [fees] and charges – including transportation charges –, on or in connection with traffic in transit, comply with the provisions on traffic in transit of this Agreement and otherwise act solely in accordance with commercial considerations”.
- 70.
The current draft reads as follows (Art. 11.5): “With respect to all regulations and formalities imposed on or in connection with traffic in transit, including charges for transportation, traffic regulations, safety regulations and environmental regulations, Members shall accord to traffic in transit treatment no less favourable than that accorded to export or import traffic/domestic traffic/traffic which is not in transit. This principle refers to like products being transported on the same route under like conditions”.
- 71.
Pascal Lamy, Speech at the 20th World Energy Congress, November 2007, available at: http://www.wto.org/english/news_e/sppl_e/sppl80_e.htm.
- 72.
World Energy Council, Trade and Investment Rules for Energy, 2009.
Acknowledgments
Views and opinions expressed in this paper are personal and cannot be attributed to WTO Members or the WTO Secretariat. I want to thank Gabrielle Marceau for her useful comments on this paper.
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Cossy, M. (2012). Energy Trade and WTO Rules: Reflexions on Sovereignty over Natural Resources, Export Restrictions and Freedom of Transit. In: Herrmann, C., Terhechte, J. (eds) European Yearbook of International Economic Law 2012. European Yearbook of International Economic Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23309-8_9
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