Multilateral and Regional Trade Agreements and the Energy Sector

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Multilateral and Regional Trade Agreements and
the Energy Sector

• Expert Group Meeting on Enhancing Regional Energy
  Security Cooperation in Asia and the Pacific
• Bangkok, 9-11 December 2009

Joong-Wan Cho Chief, Trade Policy Section Trade
and Investment Division United Nations ESCAP
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Presentation Outline

• Multilateral (WTO) Agreements on Energy Trade
• Regional Trade Agreements on Energy Trade
• Bilateral FTAs on Energy and Environment
• Remaining Challenges in Energy Trade
• Energy Security Framework
• Subregional Efforts towards the Enhancement of
  Energy Security
• The Way Forward Next Steps

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• Multilateral (WTO) Agreements on Energy Trade

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WTO in the Emerging Energy Governance

• WTO Design and Energy Trade WTO rules do not
  exclude energy but are not specifically designed
  to deal with it
• The ongoing DDA Negotiations include liberalizing
  trade in environmental goods Wind turbines,
  solar panels, geothermal energy sensors, fuel
  cells, electricity meters and associated parts
  and components
• Para. 31 (iii) of the DDA Remove barriers to
  trade in environmental services extremely slow
  progress
• Trade facilitation negotiation on the issue of
  transit The scope of application of the article
  V of GATT disciplines on transit.

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WTO in the Emerging Energy Governance

• Energy issues in WTO Accessions
• NAMA
• Energy-related Services (e.g., pipeline
  services)
• Future issue the relationship between energy
  trade rules under RTAs and bilateral FTAs in the
  context of WTO dispute settlement mechanism.

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• Beyond the WTO Regional Trade Agreements
• and Bilateral FTAs Affecting
• Energy Trade and Investment

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Regional Trade Agreements
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Regional Trade Agreements on Energy Trade

• ASEAN FTA (AFTA) The Framework Agreement on
  Enhancing ASEAN Economic Cooperation
  Prescribing standards in regional cooperation in
  energy that could serve as models in future
• NAFTA Chap. 6 (Energy and Basic Petrochemicals)
  with aim towards a single North American energy
  market
• MERCUSOR for the Latin American Region

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Regional Trade Agreements on Energy Trade

• Energy Charter Treaty (ECT)
• - Stand-alone treaty that is specific to the
  energy sector
• - Multilateral trade and investment treaty in
  energy field with 53 contracting parties
• - Applies by reference WTO rules to all trade
  in energy products and materials
• - Covers transit and investment protection
  issues
• - Sovereignty over natural resources
• - Environment / Energy Efficiency Issues
• - Technology transfer, access to technology
  and
• - Dispute settlement.

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Regional Trade Agreements on Energy Trade

• ECT does not impose
• - National energy policies
• - Privatization
• - Mandatory third party access.
• More information available on www.encharter.org

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Bilateral Free Trade Agreements
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Remaining Challenges in Energy Trade A Summary

• There is no clear definition and scope of energy
  goods and services trade WTO rules can be
  applied case by case without consistency
• Trade in energy goods is not much dealt with and
  is not covered by a separate agreement in WTO
• Although trade in energy services is covered by
  GATS, no universal definition of energy services
  exist
• Negotiations for the DDA (launched in Nov. 2001)
  takes a long time to reach an agreement under
  single undertaking mode of trade negotiation
• RTAs and bilateral FTAs rarely contain specific
  rules and details on energy trade issues (except
  ECT)
• Despite increasing demands on sustainable and
  renewable energy and to mitigate GHGs emissions
  and climate change , there is a lack of
  multilateral and regional trade cooperation
  framework on renewable energy trade to date.
  

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• Energy Security

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Energy Security Framework - APEC Energy Security
Initiative Short-Term Measures

• Improving Transparency of the Global Oil Market
• Ensuring Maritime Security
• Implementing a Real-Time Emergency Information
  Sharing System
• Encouraging Members to Have emergency Mechanisms
  and Contingency Plans in Place.

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Energy Security Framework - APEC Energy Security
Initiative Long-Term Measures

• Facilitating Investment, Trade, and Technology
  Cooperation in Energy Infrastructure, Natural Gas
  (Incl. LNG), Clean Fossil Energy, Renewable
  Energy, Hydrogen and Fuel Cells.

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Subregional Efforts towards the Enhancement of
Energy Security

• Potential for Increase in Oil and Gas Production
  from North and Central Asia by East Asian
  Countries (Refer to next slide)
• Indias Energy Trade with Neighboring Countries
  Nepal and Bhutan
• Power (Electricity) Exchange and Trade in
  South-East Asia
• Subregional and Multilateral Cooperation.

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Investment in Central and West Asia by PRC, Japan
and ROK
Source ADB, Energy Outlook 2009
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The Way Forward Next Steps

• Promote inter-subregional cooperation as the main
  modality of the Trans-Asian Energy System (TAES)
  initiated by ESCAP Subregional organizations
  can take advantage of inter-subregional
  cooperation that brings economies of scale and
  synergy in energy infrastructure.
• Promote and facilitate clean/renewable energy
  trade and investment under the post-2012 climate
  and post-Doha development framework.

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Thank You for Kind Attention
e-mail choj_at_un.org