Bridges Weekly Trade News Digest • Volume 10 • Number 23 • 28th June 2006

In Brief


EU TRADE CHIEF MOOTS NEW WTO ROUND ON ENERGY

EU Trade Commissioner Peter Mandelson has called for a new WTO round of negotiations that would address the energy sector and seek to treat oil and gas like other traded goods. In an interview with the Wall Street Journal on 23 June, he described how he envisioned applying WTO rules and procedures to trade in energy products. This could potentially require oil and gas producers to liberalise distribution networks, thus opening up access to Russia’s gas pipelines, currently under the monopoly control of Moscow .

Energy-importing industrialised countries would like to eliminate barriers to trade in energy as increasing global demand for oil and gas drives up prices. In exchange for a deal with producers unlikely to support liberalisation, Mandelson suggests offering them additional investment, and more security for their energy exports.

In a related development in the WTO services negotiations, a group of energy-importing nations and a few major energy exporters, including Canada, Saudi Arabia, the US, Australia, and the EU in February tabled a "collective request" to a group of developing countries including Brazil, China, Colombia, Ecuador, Egypt, India, Kuwait, Nigeria, Qatar, and the United Arab Emirates asking them to open up their markets to freer trade in energy services. The proposal covered sectors that encompass the core activities of oil and gas production, processing and distribution.

Oil and gas industries have traditionally been dominated by state-owned, vertically integrated utilities, engaged in the production, transport and distribution of energy products. This has left little margin for trade and competition in energy services. In addition, energy goods largely have been exempted from trade rules, based on GATT general exceptions for national security and the conservation of exhaustible natural resources.

At the same time, energy trade and investment has been subject to rules such as the Energy Charter Treaty. These, however, are limited in scope compared to what Mandelson has proposed.

ICTSD reporting; "EU Trade Chief Poses WTO Rules In Energy Sector," WALL STREET JOURNAL, 23 June 2006.