Publications

Trade and Investment Rules for Energy

I. Maintaining open Markets - Border Measures and Energy Trade

Recommendations

Given concerns of the energy sector over improper or unwarranted use of border measures, and given areas of uncertainty surrounding the degree to which the GATT exceptions can be invoked to support their use, the Task Force has developed a set of recommendations aimed at assisting both industry and governments in addressing climate change issues while at the same time ensuring the continued flow of transborder energy trade under applicable WTO rules and disciplines.

• Trade in energy, both primary forms and energy-related goods and services, is critical to global economic development and international energy security.
   
• Trade-inhibiting border taxes and other border restrictions affecting energy would be counterproductive to economic development, and to efforts to stabilize the global financial system and restart and stimulate economic growth, all of which are matters of universal concern.
   
• Governments should therefore adhere to the principle that any border measures affecting energy trade must comply with the open market objectives and legal obligations in the GATT and the WTO Agreement. To this end, all like forms of energy and energy products, whether imported or domestic, must be accorded equivalent treatment and equal competitive opportunities in the importing country in accordance with the requirements of the GATT and the WTO Agreement.
   
• In pursuing GHG reduction efforts, governments should not circumvent otherwise applicable GATT and WTO Agreement obligations respecting energy trade through improper or unwarranted recourse to the exceptions in GATT Article XX. Recourse to these exceptions should only be invoked where demonstrably justified and should not be discriminatory or disguised trade restrictions.
   
• Governments should therefore fully respect all GATT and WTO Agreement rules and disciplines in pursuing measures to reduce GHG emissions, including efforts to implement the UNFCCC and the Kyoto Protocol in the post-2012 period. Governments should also agree that environmental concerns, including the implementation of GHG reduction measures, should be addressed through means other than the use of trade measures.
   
• Governments should take steps to apply the foregoing recommendations, as appropriate, in future WTO negotiations and at the meeting of the UNFCCC Conference of Parties (COP) in Copenhagen in December 2009, and in future COP meetings.