Transcript Trade in energy

Energy-Related Issues
in Trade Agreements and
WTO Accession Negotiations
by
Simonetta Zarrilli
UNCTAD-DITC
March 2008
Past approach
•Until the 1980s most petroleum-exporting developing
countries were not contracting parties to the GATT
(exception: Gabon, Indonesia, Kuwait, Nigeria)
•« gentlemen’s agreement »
•Perception: little to gain from the GATT
Accession of energy-endowed countries
during and after UR and during DDA
Sept 86-March 2008
•Mexico (August 1986 - GATT)
•Venezuela (August 1990 - GATT)
•Brunei Darussalam (December 1993 – GATT)
•Qatar (April 1994 - GATT)
•United Arab Emirates (March 1994 - GATT)
•Bahrain (1993 – GATT)
•Ecuador (Janaury 1996 - WTO)
•Angola (January 1996 - WTO)
•Saudi Arabia (December 2005 - WTO)
•Vietnam (January 2007 - WTO)
Energy-endowed countries in the process of
acceding to the WTO
•Algeria
•Azerbaijan
•Cape Verde
•Iran
•Iraq
•Kazakhstan
•Lybia
•The Russian Federation
•Sudan
•Uzbekistan
•Yemen
Almost half of world oil exports, oil reserves
and natural gas reserves
are accounted for by countries which are
not members of the WTO
Accession negotiations could be seen
as a negotiation between importers and
exporters of energy
The Doha Ministerial Declaration opens
the multilateral negotiations to
acceding countries (para 48):
Negotiations shall be opened to:
(i) All Members of the WTO
(ii)States in the process of accession
and those that inform Members of their
intention to negotiate the terms of their
membership and for whom a WP is
established.
Energy-Related Issues in the WTO
Issues of interest for existing Members
•Access to energy sources
•Domestic prices and pricing policy (dual
pricing)
•Trade in energy services
Energy-Related Issues in the WTO
Issues of Interest for Acceding Countries
* Binding of tariffs; tariff escalation
* Taxation of petroleum products in
the consuming countries
* Technical regulations and
standards
* Transfer of Technology
Energy security
• Security of energy supply is one of the core elements of energy policy
and a vital interest to States. It includes geopolitical, economic, social
and environmental considerations
• Expected 50% increase in primary energy demand between now and
2030. Fossil fuels remain the dominant source of energy
• Rising oil and gas demand would accentuate the consuming countries’
vulnerability to supply disruption and resulting price shock. Doubts are
expressed about the ability of the energy industry to meet the demand.
According to IEA, the threat to the world’s energy security is “real and
growing”
• More than 90% of new oil supplies will come from the developing world
in the next twenty years. As new national players enter the oil supply
market, it is inevitable that international energy development will be
increasingly influenced by geopolitical concerns
• Tools to address energy security: energy efficiency, fuels and sources of
fuels diversification, increased production, enhanced and secured
physical infrastructure, and regional cooperation and trade.
Cooperation and strategic energy corridors between countries that
produce and export energy resources, particularly natural gas, are
being developed
The New Challenge for Energy:
The interlinkages with climate change
The goal
• To favour and encourage the production of alternative energy
sources and the “greening” of traditional energy sources (e.g.
“green” electricity, limits to GHG emissions for fossil fuels) because
of the need to reduce GHG emissions, energy security
considerations, increasing energy access, rural development, health
considerations
The instruments
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Trade bans
Technical regulations
Labelling and certification
Carbon taxes
Border adjustment taxes
Subsidies
Public procurement
Possible results
• Trade may enhance the availability of less-carbon intensive
goods and technologies and facilitate access to climate
change-related services. EGS negotiations at the WTO
• The quest for less carbone-intensive goods and technologies
will create new markets and new opportunities from which
all countries may in principle benefit
• Product differentiation in the market according to some
attributes, e.g. carbon content, sustainable production
• Unilateral measures
Possible implications for international trade
• Different sets of rules could apply to different categories of products: ex.
– Different energy sources
– “Green” and “non-green” electricity
– Certified biofuels and non-certified biofuels
– Energy-efficient products and energy inefficient products
Product differentiation may be linked to market access, market entry, tax
breaks and other incentives, and the fulfillment of renewable energy
obligations
Question
Which kind of product differentiation is legitimate and appropriate to
reach important non-trade objectives, including climate change
mitigation?
Some concluding remarks
WTO rules cover the energy sector. The energy portfolio plays a key role in
the negotiations on accession of energy-endowed countries. Once key
energy-endowed countries will join the WTO, the relevance of energyrelated issues in the WTO may increase. “Energy round”? “Trade pact”
for biofuels?
Energy security concerns play an increasing important role in the
international debate with possible repercussions on trade negotiations.
Access to energy sources.
WTO rules are not going to change in the foreseeable future, but they are
interpreted through jurisprudence. Jurisprudence is increasing providing
flexibility to Members to pursue non-trade goals, including climate change
mitigation
Trade may facilitate access to less-carbon intensive goods and technologies
and to services instrumental to climate change mitigation and
environmental protection. New markets may emerge from which all
countries may benefit
Trade may imply risks of unjustified product discrimination and trade
barriers. Genuine efforts to tackle climate change and protectionist
measures may end up in the same basket