Geneva Debates Energy Trade Rules

The WTO is in need of a constructive and forward-looking discussion on trade and energy issues, Director-General Pascal Lamy said on Monday, 29 April. Such an approach, he explained, is necessary if the 159-member body wishes to participate effectively in the future of global energy governance.

Lamy, who was speaking at a workshop on trade and energy held at the WTO’s Geneva headquarters, was one of several presenters to emphasise the crucial role of renewables in helping supply the planet’s growing demand for energy while reducing adverse environmental impacts.

However, the Director-General cautioned that countries urgently need to begin discussing the trade implications of ramping up renewable energy in order to ensure success.

“A discussion on the trade-related aspects of measures to promote clean energy, which is both rooted in political reality and informal, remains almost completely absent from the WTO in spite of the existence in the organisation’s institutional structure of dedicated fora for such discussions,” Lamy said.

With this in mind, the workshop - organised by Brussels-based Energy Charter Secretariat - aimed to generate discussion on the subject, while helping clarify the system of trade regulation in the energy sector and finding ways to improve it. A range of experts from around the world attended the meeting and discussed issues ranging from international regulation to investment rules to adaptation of current trade law.

With the accession of several fossil fuel-rich countries in recent years - including Saudi Arabia, Ukraine, and Russia - and an array of other energy giants such as Kazakhstan, Libya, Iran, and Iraq in the process of joining the WTO, discussion of energy-related issues at the global trade body will certainly increase.

Workshop participants discussed the possible development of an individual WTO agreement on energy, such as that seen for agriculture or textiles, but generally agreed that such a move would be unlikely. Both the complexity of achieving consensus on such a sensitive issue and the potential fragmentation of the multilateral trading system would make such a move undesirable, several experts said.

A more likely scenario, experts indicated, is to rely on the use of the WTO’s dispute settlement system and to agree to specific terms at the point of a country’s accession.

Maxim Medvedkov, Russia’s Head of Trade Negotiations, noted that while many of the provisions of the General Agreement on Tariffs and Trade (GATT) are applicable to energy exports- particularly relating to transit - these rules do not sufficiently address pertinent issues, such as trade with countries within regional trading blocs, like the EU.

Medvedkov stressed that, although the existing multilateral rules are too vague to be relied on exclusively, they could be more useful and effective if ambiguities are clarified.

The lack of clear global rules in energy trading is an opportunity to begin a conversation on the establishment of a system of rules for trade in fossil fuels and clean energy technologies, according to Ricardo Meléndez-Ortiz, Chief Executive of ICTSD, the publisher of Bridges.

He said that an important contribution to the development of a multilateral approach should be a dialogue on Sustainable Energy Trade Initiatives between energy and trade policy makers. The lack of such an agreement - even at the national level - demonstrates the need for such discussions in order to ensure energy objectives are in sync with the goals of sustainable development.