Publications

Trade and Investment Rules for Energy

III. Aiding the Movement and Delivery of Energy Services

Background

The GATS is the key multilateral instrument for liberalizing trade in services. It is a "bottom-up" agreement, i.e., it requires specific commitments by member States set out in separate schedules as opposed to applying universally to all services and subject only to defined exceptions (that is, "top down"). However, the GATS currently incorporates few direct energy related commitments by member States.

Under the Doha Development Declaration, the mandate of the negotiators was to open up the GATS and to achieve "progressively higher levels of liberalization with no a priori exclusion of any service sector or mode of supply," giving special attention to sectors and modes of supply of interest to developing countries. While energy was not singled out in the Declaration, several energy-related proposals were tabled by like-minded governments. Overall, however, GATS negotiations suffered because of a lack of progress in agriculture and Non-Agricultural Market Access (NAMA). A further limitation was the "offer-request formula" in the GATS, which has proven to be complex, inefficient, and cumbersome.

An additional stumbling block in the Doha Round was the absence of the listing of energy services in the WTO Services Sectoral Classification List (Document W/120), or in the U.N. Central Product Classification list (CPC). That meant that energy services were discussed under a variety of different headings in the GATS negotiations instead of being addressed in a comprehensive manner. Nevertheless, advances in the GATS agenda were made on several fronts, and even though agreement in the Doha Round has not yet been achieved, the general acceptance of the need to expand trade in energy services indicates the growing importance that WTO members attach to this issue. The various proposals tabled in the Doha Round can therefore provide a point of departure for further examination of this issue by WEC.

Settling on specified norms or standards for expanding energy services trade seems all the more critical given the current global economic crisis and the need to reactivate international business activity. The question is how to repackage and expand some of the more acceptable Doha Round proposals in a way that effectively commends them for action by governments and by the private sector.