Top

Published in:

2017 | OriginalPaper | Chapter

The Nexus Between the WTO and the ECT in Global Energy Governance

Author : Anna Marhold

Published in: International Economic Law

Publisher: Springer International Publishing

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

This article discusses the nexus between the ECT and the WTO in global energy governance. The two treaty-based regimes each cover an area of the global energy governance patchwork. Moreover, they are connected in substance. While the former is concerned with providing a framework for the regulation of trade in virtually all goods and services, the latter offers a specialized regime for energy trade and investment regulation. Apart from discussing the origins of the ECT and its relationship to the WTO, the article examines where the treaties overlap and where they are at tension with each other. It does so in view of the changes that have taken place over the past two decades of their existence.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

previous chapter Renewable Energy and WTO Subsidy Rules: The Feed-In Tariff Scheme of Switzerland

next chapter “Ain’t No Sunshine”: Photovoltaic Energy Policy in Europe at the Crossroads Between EU Law and Energy Charter Treaty Obligations

The Energy Charter Treaty (entered into force 18 April 1998) 2080 UNTS 100; the World Trade Organization (WTO) was established on 1 January 1995. For the texts of the WTO agreements, see https://www.wto.org/english/docs_e/legal_e/legal_e.htm.

General Agreement on Tariffs and Trade (GATT), Geneva, 21 November 1947, entered into force 29 July 1948, 55 UNTS 194.

Preamble, Marrakesh Agreement Establishing the World Trade Organization.

Marhold (2013).

The inauguration of the ECT was in 1994—right before establishment of the WTO in 1995. The term “semi-distinct” is used here because the treaties are partly connected in substance through arts 4 and 29 ECT.

Investment and its dispute settlement are regulated in ECT Parts III and V, and the ECT additionally houses a Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA).

See Annex EM ECT. Art 1.5 ECT incorporates “Economic Activity in the Energy Sector” and art 7.10(b) ECT explicitly groups gas pipelines as “Energy Transport Facilities”.

Energy Charter Secretariat (2001) and Energy Charter Secretariat (2003).

Frasl (1996), pp. 460–461.

Ibid.

Arts 4 and 29 ECT.

The GATT and several WTO agreements are incorporated into the ECT “by reference” through art 4 ECT, but important exceptions exist.

Pauwelyn (2003), pp. 327 ff.

Energy products are taken up in WTO Members’ Schedules of Concessions, services are taken up in Members’ Schedules of Specific Commitments.

ECT, Annex EM.

ECT, Annex D, and arts 26 and 27.

See https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm (accessed 4 March 2016).

Major energy producing, exporting and/or transporting States who joined the WTO after 1995 are Angola (1996), China (2001), Ecuador (1996), Oman (2000), Qatar (1996), Russia (2012), Saudi Arabia (2005), Ukraine (2008) and the United Arab Emirates (1996).

See http://www.opec.org/opec_web/en/about_us/25.htm (accessed 4 March 2016).

Investments made during the period of provisional application (1998–2009) are protected until 29 October 2029.

WTO doc. WT/ACC/RUS/70, WT/MIN(11)/2, Report of the Working Party on the Accession of the Russian Federation to the World Trade Organization—Restricted, 17 November 2011.

Desta (2003), p. 539.

Governed by the rules of the WTO Dispute Settlement Understanding (DSU).

WTO (2010a), p. 54.

A case in point here is electricity: there is still no conclusive categorization of electricity in the WTO, although “electrical energy” is registered under code 2716 of the Harmonized System Convention (adopted 14 June 1983, entered into force 1 January 1988, 1503 UNTS 167); in EU law, however, electricity is explicitly considered a “good” and not a “service”. In ECJ, Case C-393/92 Almelo v Energiebedrijf IJsselmij [1994] ECR I-1477 [28] and Case C-158/94 Commission v Italy [1997] ECR I-5789 [17], the European Court of Justice has ruled that electricity, despite its intangible character, should be treated as a “good”.

Konoplaynik and Waelde (2006), p. 529; Waelde (1996).

Art 29 ECT sets out temporary trade rules for ECT parties in the process of WTO accession.

See art 7.10(b) ECT, at 1: “‘Energy Transport Facilities’ consist of high-pressure gas transmission pipelines, high-voltage electricity transmission grids and lines, crude oil transmission pipelines, coal slurry pipelines, oil product pipelines, and other fixed facilities specifically for handling Energy Materials and Products”.

ECT PEEREA.

Art 4 ECT reads “Nothing in this Treaty shall derogate, as between particular Contracting Parties which are parties to the GATT, from the provisions of the GATT and Related Instruments as they are applied between those Contracting Parties”.

Supra, n. 9.

ECS (2003) viii.

Art 29.1 ECT.

Art 4 ECT.

Art 29.2(a) ECT. The exceptions are listed partly in Annex W of the ECT Trade Amendment, partly in art 29.2.b of the ECT and most importantly relate to the dispute settlement system of the WTO, which cannot be used for non-WTO Members. In their case, it is replaced in Annex D by a panel-based dispute resolution mechanism inspired by the DSU, less “heavy”.

Annex W(A) ECT.

Arts 29.3–29.5 ECT. However, export tariffs, which are highly relevant for the energy sector and utilized for “dual energy pricing”, also remain largely unregulated in the WTO, with the exceptions of some recent bindings on them in selected accession protocols (e.g. Russia and China).

In WTO law, it is still debated whether art V GATT covers fixed infrastructures such as gas pipelines. See on this issue Azaria (2009).

Frasl (1996), p. 484.

See the most recent informal text of the “Transit Protocol” dated 22 October 2010, TT87 22/01/2010.

Annex W (A)(b) ECT.

Annex W (A)(c) ECT.

Annex W (A)(iv) ECT. See also Defilla (2003).

Art 1.5 ECT.

ECT Parties made a commitment to provide protection of intellectual property rights, laid down in the Final Act of the International Conference and Decision by the Energy Charter Conference in Respect of the Amendment to the Trade-Related Provisions of the Energy Charter Treaty, Joint Declaration on Trade-Related Intellectual Property Rights.

Art 5 ECT “Trade-Related Investment Measures”, linked to Annex D and art 26 ECT.

Through Annex W (A) para 2.a ECT.

Agreement Establishing the World Trade Organization, art XII.1 and Annex W(A)(1) ECT.

GATS art 1.2(c).

Annex W (A)(b) ECT.

Art 10.3 ECT “Promotion, Protection and Treatment of Investments”.

See definitions of respectively “Economic Activity in the Energy Sector” and “Investment” in arts 1.5 and 1.6 ECT.

Mavroidis et al. (2010), pp. 802–819.

GATS art I.2.

GATS art II “General Obligations and Disciplines” and art XVII “National Treatment”.

Mavroidis (2013) and Molinuevo (2011).

Marceau (2011), p. 26.

Energy services identified by Members in WTO doc. TN/S/23, Report by the Chairman to the Trade Negotiations Committee, 28 November 2005. See WTO doc. MTN.GNS/W/120, Services Sectoral Classifications List, 10 July 1991.

See WTO doc. S/C/W/311 Energy Services—Background Note by the Secretariat, Doc, 12 January 2010, CPC [883].

Ibid., CPC [5115].

Ibid., CPC [887].

Ibid., p. 14.

See GATS arts II and XVI.

Dolzer and Schreuer (2008), p. 80.

See Table 1 below.

Table 1

Resolution of conflict, issue-area and procedural overlap—a comparison between the WTO and the ECT

	WTO	ECT	WTO rules in ECT: resolution of conflict
Trade in energy goods	– GATT – TBT – TRIMs – TRIPs – Trade Remedy Agreements: Anti-Dumping, Subsidies and Safeguards – Market Access Agreements: Import Licensing, Rules of Origin, Customs Valuation and Preshipment Inspection Not directly relevant for trade in energy goods: – SPS – Other WTO Agreements: Agreement on Agriculture, Textiles – Plurilaterals, not binding on all WTO Members (GSP, Government Procurement, Civil Aircraft)	– Trade Provisions ECT (arts 4, 5, 6 and 29 ECT^a) – Art 5 ECT “Trade Related Investment Measures” – Art 7 ECT “Transit” (ECT Transit Protocol to be elaboration on ECT and this Article) – Transit Protocol (under negotiation—Most recent informal text available: TT87 22/01/2010) NB The aim of the Transit Protocol is to complement the ECT while being in accordance with art 7 ECT (Draft art 3 Transit Protocol)	GATT 1994 incorporation into ECT by reference (art 4 ECT): – GATT 1994 Applies: (a) Among ECT/WTO Members (art 4 ECT) (b) Between ECT/WTO Members and non-WTO ECT Parties (art 29.2(a) ECT)^a – Trade Provisions ECT (art 4 s, 5, 6 and 29 ECT) apply among non-WTO ECT Parties only (art 29.1 ECT)^a – Art 7 ECT creates additional obligations for ECT/WTO Members (i.e. art 7 prevails over art V GATT—the so-called “WTO-plus effect of the ECT”—The same would account for an ECT Transit Protocol (Draft art 3 Transit Protocol) Main exception to GATT incorporation by reference (Art 4 ECT): – Schedules of Concessions art II GATT are not incorporated into the ECT, but ECT has “Best-endeavours” clause (arts 29.3–29.5) ECT^a) WTO Agreements excluded from incorporation into ECT: (a) Plurilaterals, not binding on all Members (Annex W ECT), e.g. Government Procurement, Civil Aircraft) (b) WTO Agreements, not directly relevant for ECT (Annex W ECT), e.g. Agreement on Agriculture, SPS, Textiles) (c) The WTO Special and Differential Treatment provisions do not apply in the ECT, except for paras 1–4 of the Enabling Clause (through Annex W, section A, para 2(a) ECT) Conflict not solved: – TRIMS not incorporated in ECT (Annex W(A)(iv) ECT), but similar article in art 5 ECT “Trade Related Investment Measures” – TRIPS not incorporated in ECT (Annex W(A)(c) ECT), but commitment to provide protection of intellectual property rights (Final Act of the International Conference and Decision by the Energy Charter Conference in Respect of the Amendment to the Trade-Related Provisions of the Energy Charter Treaty, Joint Declaration on Trade-Related Intellectual Property Rights)
Trade in energy services	– GATS	– “Economic Activity in the Energy Sector” (art 1.5 ECT) – Transit Protocol (under negotiation—Most recent informal text available: TT87 22/01/2010)	– Art 11 ECT “Key Personnel” takes up issues treated as specific commitments under the GATS (the so-called “WTO-plus effect of the ECT” Conflict not solved: GATS not incorporated in ECT (Annex W(A)(b), but energy services nevertheless covered in ECT as “Economic Activity in the Energy Sector”
Resolution energy trade disputes	– DSU	– Annex D “Interim Provisions for Trade Dispute Settlement” – Art 7.7 ECT for Transit disputes	– DSU Applies: (a) Among ECT/WTO Members (Art 4 ECT) – Annex D Applies: (a) Between ECT/WTO Members and non-WTO ECT Parties (art 29.7 ECT^a) (b) Among non-WTO ECT Parties (art 29.7 ECT^a) – Art 7.7 ECT creates additional obligations for ECT/WTO Members (the so-called “WTO-plus effect of the ECT”)
Energy investment protection	– GATS Mode 3 “Commercial Presence”	– Part III ECT “Investment Promotion and Protection”	Conflict not solved: Overlap/tension where GATS Mode 3 investment protection coincides with ECT Part III (because GATS not incorporated in ECT)
Resolution energy investment disputes	– DSU for GATS Mode 3 disputes	– Part V ECT “Dispute Settlement”: (a) Investor-State (art 26 ECT) (b) State-State (art 27 ECT, non-trade matters only)	Conflict not solved: (Stems from issue-area conflict) Overlap/tension where GATS Mode 3 investment protection disputes coincide with ECT Part III, State-State disputes (art 27 ECT) (post-establishment). However, see art 16 ECT “Relation to Other Agreements” regarding Part III and V of the ECT. WTO/ECT complementarity regarding Investor-State disputes (Art 26 ECT)
Environmental protection	– Possible through Art XX GATT NB Also see WTO Decision on Trade and Environment	– Art 19 ECT “Environmental Aspects” – Environmental Protocol (PEEREA)	– Art 19 ECT and the Environmental Protocol (PEEREA) create additional obligations for ECT/WTO Members (the so-called “WTO-plus effect” of the ECT)

^aArticle 29 ECT sets out transitional arrangements and ceases to exist for an ECT Party when it joins the WTO. The application of art 29 ECT will end only upon universal WTO membership of all ECT Parties

Art 3.2 DSU.

See connection with art 4 ECT.

McRae (2004), p. 3.

WTO doc. WT/DS412AB/R, WT/DS426/AB/R, Appellate Body Report, Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-in Tariff Program, 6 May 2013; WTO doc. WT/DS412/R, WT/DS426/R, Panel Report, Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-in Tariff Program, 19 December 2012.

Cosbey and Mavroidis (2014), p. 9.

Art 27 ECT; this article does explicitly not apply to energy trade disputes, see art 28 ECT.

Art 26 ECT.

Art 7.7 ECT.

ECT art 29 and Annex D.

ECT arts 6 and 19.

Frasl (1996), p. 478.

Art 4 ECT and Energy Charter Secretariat (2003), p. viii.

In conjuncture with art 29.7 ECT.

As set out in arts 17 and 20 DSU. See also Frasl (1996), p. 479.

Ibid.; Frasl (1996), p. 495; Energy Charter Secretariat (2001), p. 37, and Azaria (2009).

Art 7.7(b) and (c) ECT.

See Azaria (2009), p. 589.

Ibid., p. 591, referring to the traveaux preparatoires of the ECT: European Energy Charter Conference Secretariat 22.4.94/2647.

Meyer (2012), p. 390.

Left out are the ECT countries who apply the ECT provisionally, or have applied it provisionally in the past: Russia, Belarus, Australia, Iceland and Norway.

See Table 1.

It goes without saying that rules on TRIMs, TRIPs and GATS within the WTO are much more elaborate than the rules provided on these topics in the ECT.

Part III ECT.

Note, however, that in the case of art 26 of the ECT, the investor would be the litigating party, while under the DSU it would be a State, namely a WTO Member.

Pauwelyn (2003), p. 443 and art 1.1 DSU.

WTO doc. WT/DS413/R, Panel Report, China—Certain Measures Affecting Electronic Payment Services, 16 July 2012.

In contrast, see the extensive list of dispute settlement cases litigated under the ECT, “Investor-State Dispute Settlement Cases” on http://www.energycharter.org.

In fact, in case parties to a dispute failed to settle it amicable pursuant to art 26.1 ECT, art 26.2 ECT gives the investor three options for submitting the dispute for resolution: “(a) to the courts or administrative tribunals of the Contracting Party to the dispute; (b) in accordance with any applicable, previously agreed dispute settlement procedure; or (c) in accordance with the following paragraphs of this Article” (the latter referring to the ad hoc dispute settlement procedure provided for in the ECT).

Pauwelyn (2006), [25], citing Wolfrum and Matz (2003), pp. 159–163.

Wolfrum and Matz (2003), pp. 159–163.

Ibid., p. 161.

Ibid.

Ibid., p. 159.

Energy Charter Secretariat (2001, 2003).

100

WTO, WTO News, Lamy Calls for Dialogue on Trade in Energy in WTO, 29 April 2013, http://wto.org/english/news_e/sppl_e/sppl279_e.htm (accessed 4 March 2016).

101

International Energy Charter, Agreed Text for Adoption in The Hague at the Ministerial Conference on the IEC on 20 May 2015, http://www.energycharter.org/fileadmin/DocumentsMedia/Legal/IEC_EN.pdf (accessed 31 May 2016).

102

The 1991 Energy Charter, also known as the European Energy Charter, was the founding document for the Energy Charter Treaty and provides the political foundation for the Charter process.

103

See Preamble to the text of the 2015 Charter.

104

Ibid.

105

International Energy Charter (2015) Title I—Objectives [1].

106

Ibid.

107

Wolfrum and Matz (2003).

Azaria D (2009) Energy transit under the energy charter treaty and the general agreement on tariffs and trade. JERL 27:559–596

Cosbey A, Mavroidis (2014) A turquoise mess: green subsidies, blue industrial policy and renewable energy: the case for redrafting the subsidies agreement of the WTO. EUI Working Paper RSCAS 2014/17, Robert Schuman Centre for Advanced Studies, Global Governance Programme–No 82

Defilla S (2003) Energy trade under the ECT and accession to the WTO. JERL 21:428–446

Desta M (2003) The organization of petroleum exporting countries, the World Trade Organization, and regional trade agreements. JWT 37:523–551

Dolzer R, Schreuer C (2008) Principles of international investment law. Oxford University Press, OxfordCrossRef

Energy Charter Secretariat (2001) Trade in energy: WTO rules applying under the energy charter treaty. Brussels

Energy Charter Secretariat (2003) Applicable trade provisions of the energy charter treaty. Brussels

Frasl I (1996) The trade rules of the GATT and related instruments and the energy charter treaty. In: Waelde Y (ed) The energy charter treaty: an east-west gateway for investment and trade. Kluwer Law International, London, pp 459–499

Konoplaynik A, Waelde T (2006) Energy charter treaty and its role in international energy. JERL 24:523–558

Marceau G (2011) The WTO in the emerging energy governance debate. In: Pauwelyn J (ed) Global challenges at the intersection of trade, energy and the environment. The Graduate Institute, Geneva, pp 25–41

Marhold A (2013) The World Trade Organization and energy: fuel for debate. ESIL Reflections 2(8):1–6

Marhold A (2015) Fragmentation and the Nexus between the WTO and the ECT in global energy governance – a legal-institutional analysis twenty years later. JWIT 16:389–435

Mavroidis P (2013) Regulation of Investment in the trade regime. In: Drabek Z, Mavroidis P (eds) World scientific studies in international economics: vol 21, regulation of foreign investment – challenges to international harmonization. World Scientific, London, pp 13–56

Mavroidis P, Bermann G, Wu M (2010) The law of the World Trade Organization. West Publishing, Egan

McRae D (2004) What is the future of the WTO dispute settlement? JIEL 7:3–21CrossRef

Meyer T (2012) The architecture of international energy governance. ASIL Proceedings 106:389–398

Molinuevo M (2011) Protecting investment in services – investor state arbitration versus WTO dispute settlement. Kluwer Law International, Alphen aan den Rijn

Pauwelyn J (2003) Conflict of norms in public international law – how WTO law relates to other rules of international law. Cambridge University Press, CambridgeCrossRef

Pauwelyn J (2006) Fragmentation of International Law, Max Planck Encyclopaedia of Public International Law

Waelde T (1996) The energy charter treaty: an east-west gateway for investment and trade. Kluwer Law International, London

Wolfrum R, Matz N (2003) Conflicts in international environmental law. Springer, BerlinCrossRef

WTO (1999) The legal texts: the results of the Uruguay round of multilateral trade negotiations. Cambridge University Press, Cambridge

WTO (2010) World Trade Report 2010, Trade in Natural Resources

Title: The Nexus Between the WTO and the ECT in Global Energy Governance
Author: Anna Marhold
Publisher: Springer International Publishing
Book: International Economic Law
Print ISBN: 978-3-319-44644-8

Electronic ISBN: 978-3-319-44645-5

Copyright Year: 2017
DOI: https://doi.org/10.1007/978-3-319-44645-5_11

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"