Abstract
The World Trade Organization is by many accounts the most successful international organization in history. Yet it has been slow to address head-on the problems in one of the largest sectors of the global economy—energy. Indeed, fuel exports alone constitute roughly 18% of global merchandise exports, the single largest category. Historically, this reluctance to engage with energy can be explained partially by the fact that many major fossil fuel-producing nations were outside of the GATT. Today, however, most such nations are WTO members. While the WTO dispute settlement system has become an active tool for regulating government support of the renewable energy sector, active WTO regulation of the fossil fuel sector remains limited. This chapter presents an overview of WTO rules and how they apply or might apply to the energy sector. It further argues that this differential treatment between fossil fuels and renewable energy reflects (a) the greater number, and the identity, of nations that aspire to be “producers” of renewable energy, and (b) the expected growth in renewable energy in years to come.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
Appellate Body Reports, Canada—Certain Measures Affecting the Renewable Energy Generation Section, Canada—Measures Relating to the Feed-in Tariff Program, 5.85, WTO Doc. WT/DS412/AB/R, WT/DS426/AB/R (adopted May 24, 2013) [hereinafter Canada—Renewable Energy].
- 2.
Appellate Body Report, United States—Standards for Reformulated and Conventional Gasoline, WTO Doc. WT/DS2/AB/R (adopted May 20, 1996) [hereinafter United States—Gasoline].
- 3.
World Trade Organization, The 128 countries that had signed GATT by 1994, available at: https://www.wto.org/english/thewto_e/gattmem_e.htm (accessed Sept. 10, 2015).
- 4.
World Trade Organization, Members and Observers, available at: https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm (accessed Sept. 10, 2015).
- 5.
The GATT that currently applies to WTO members is the GATT (1994), which incorporates the GATT (1947), that is, the original GATT, plus some understandings and protocols adopted by GATT parties over the years.
- 6.
See Understanding on Rules and Procedures Governing the Settlement of Disputes arts. 16.4 & 17.14, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1867 U.N.T.S. 410 [hereinafter ‘DSU’].
- 7.
See DSU arts. 6–8 (establishing timelines for the establishment of a panel).
- 8.
DSU Article 17.
- 9.
Marrakesh Agreement Establishing the World Trade Organization Article IV.5, April 15, 1994, 1867 U.N.T.S. 410 [hereinafter ‘Marrakesh Agreement’].
- 10.
Marrakesh Agreement Article IV.6.
- 11.
Subsidies questions posed by India to the United States under article 25.8 of the Agreement on Subsidies and Countervailing Measures—State Level Renewable Energy Sector Subsidy Programs With Local Content Requirements. WTO Committee on Subsidies and Countervailing Measures; Certain Local Content Requirements in Some Of The Renewable Energy Sector Programs—Questions By India to the United States. WTO Committee on Trade-Related Investment Measures.
- 12.
Chemicals, International Trade Statistics 2013, available at: https://www.wto.org/english/res_e/statis_e/its2014_e/its14_merch_trade_product_e.pdf. Chemicals were the second largest exported product at $2001 billion and 10.9% of world merchandise trade.
- 13.
GATT Article XX(g).
- 14.
Apellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (adopted November 6, 1998) 128 (holding that living resources qualify as ‘exhaustible natural resources’ in the same way that non-living natural resources such as, inter alia, petroleum do).
- 15.
See United Nations Conference on Trade and Employment, March 1948, Havana Charter for an International Trade Organization, articles 10 & 45, U.N. Sales No. 48.II.D.4, E/CONF.2/78 (1948).
- 16.
Agreement on Agriculture & Agreement on Textiles and Clothing, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 410.
- 17.
Vienna Convention on the Law of Treaties Article 31.3(b), May 23, 1969, 1155 U.N.T.S. 331.
- 18.
Dual pricing refers to a situation in which a country mandates a domestic fuel price lower than the global price of the same fuel. The artificially low domestic price of fuel acts both as an export restriction (because more fuel is consumed domestically rather than exported) and as a subsidy to domestic industries that consume fossil fuels.
- 19.
WTO, Ministerial Declaration of November 14, 2001, WT/MIN(01)/DEC/1.
- 20.
Appellate Body Report, China—Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R (adopted February 22, 2012); Appellate Body Report, China—Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WTO Doc. WT/DS431/AB/R, WT/DS432/AB/R, WT/DS433/AB/R (adopted August 29, 2014).
- 21.
The Saudi concessions, for example, provided that pricing of domestic sales of natural gas would be on the basis of commercial considerations, with an eye toward recovering costs plus a reasonable profit.
- 22.
See United States—Gasoline, supra note 2.
- 23.
Request for Consultations by Argentina, European Union and a Member State—Certain Measures Concerning the Importation of Biodiesels, WTO Doc. WT/443/1 (August 17, 2012); Request for Consultations by Argentina, European Union—Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, WTO Doc. WT/DS459/1 (May 23, 2013).
- 24.
Request for Consultations by Indonesia, European Union—Anti-Dumping Measures on Biodiesel from Indonesia, WTO Doc. WT/DS480/1 (June 17, 2014); Request for Consultations by Argentina, European Union—Anti-Dumping Measures on Biodiesel from Argentina, WTO WT/DS473/1 (January 8, 2014). Anti-dumping duties are duties imposed on imported products that are sold below ‘normal’ value. The idea is to impose a duty equal to the difference between the ‘normal’ value (ideally the market value if there is a free market price) and the price at which the goods are actually sold. Such a duty should, in theory, level the playing field between ‘dumped’ imports and domestic products. Anti-dumping duties, because they respond to the private pricing decisions of importers, are imposed at the national level. An exporting country whose importers are subject to anti-dumping duties may then challenge the imposition of those duties before the WTO. See Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, April 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125, 1141 (1994).
- 25.
Request for Consultations by Russia, European Union and its Member States—Certain Measures Relating to the Energy Sector, WT/DS476/1, S/L/409, G/L/1067; G/SCM/D102/1; G/TRIMS/D/40; S/L/409; WT/DS476/1, May 8, 2014.
- 26.
Request for Consultations by the United States, India—Certain Measures Relating to Solar Cells and Solar Modules, WTO Doc. WT/DS456/1 (Feb. 11, 2013).
- 27.
Request for Consultations by China, European Union and Certain Member States—Certain Measures Affecting the Renewable Energy Generation Sector, WTO Doc. WT/DS452/1 (Nov. 5, 2012).
- 28.
Appellate Body Report, United States—Countervailing and Anti-dumping Measures on Certain Products from China, WTO Doc. WT/DS449/AB/R (July 7, 2014). China challenged, inter alia, the application of countervailing and anti-dumping duties to ‘non-market’ economies, as well as the resulting duties.
- 29.
World Energy Outlook 2013, International Energy Agency, available at: http://www.iea.org/textbase/npsum/weo2014sum.pdf. Depending on what one classifies as a subsidy, the amount of fossil fuels subsidies can be quite a bit higher.
- 30.
World Energy Outlook 2013, International Energy Agency, available at: http://www.iea.org/textbase/npsum/weo2014sum.pdf.
- 31.
As discussed above and below, the EU also imposes anti-dumping duties on biofuels from certain countries (Indonesia and Argentina).
- 32.
GATT Article I.
- 33.
GATT Article XXIV.
- 34.
GATT Article III.
- 35.
Not surprisingly, although the ban is written in absolute terms, it is subject to exceptions. See, for example, GATT Article XIII.
- 36.
Export duties are not covered by Article XI, although export duties can restrict exports in similar ways to non-tariff barriers. For that reason, some nations have proposed binding export duties as well as import duties. See Alan Yanovich, WTO Rules and the Energy Sector, in Regulation of Energy in International Trade Law: WTO, NAFTA, and Energy Charter 9 (Yulia Selivanova, ed. 2011).
- 37.
China—Raw Materials; China—Rare Earths, supra note 31.
- 38.
GATT Article V(2).
- 39.
GATT Article V(3)–(5).
- 40.
See United States—Gasoline, supra note 2.
- 41.
See SCM Agreement Article 14.
- 42.
Canada—Renewable Energy 5.246.
- 43.
SCM Agreement Article 2.
- 44.
SCM Agreement Article 3.
- 45.
SCM Agreement Article 5.
- 46.
GATT Article VI.
- 47.
GATT Article VI.1.
- 48.
GATT Article VI.3.
- 49.
See supra notes 34–39.
- 50.
TBT Agreement Article 2.1.
- 51.
TBT Agreement Article 2.2.
- 52.
TBT Agreement Article 2.4.
- 53.
TBT Agreement Article 2.7.
- 54.
TBT Agreement Article 4.1. The obligation distinguishes between central government standardizing bodies and local and non-governmental standardizing bodies. The former are required to adhere, while the central government must only make best efforts to ensure that the latter adhere. The Agreement also establishes procedures for assessing the conformity of regulations and standards. See TBT Agreement Article 5.
- 55.
Request for Consultations by Argentina, European Union—Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, WTO Doc. WT/DS459/1 (May 23, 2013).
- 56.
WTO-UNEP, Trade and Climate Change, Report by the United Nations Environment Programme and the World Trade Organization 118 (2009).
- 57.
Id.
- 58.
See, for example, United States—Certain Countries of Origin Labeling (COOL).
- 59.
TRIMS Articles 2 & 3.
- 60.
See Canada—Renewable Energy 5.104.
- 61.
A complication that Yanovich notes is that not all states consider state-owned enterprises operating in the energy sector to be State Trading Enterprises within the meaning of GATT Article XVII. Alan Yanovich, WTO Rules and the Energy Sector, in Regulation of Energy in International Trade Law: WTO, NAFTA, and Energy Charter 28 (Yulia Selivanova, ed. 2011).
- 62.
The only exceptions are services ‘supplied in the exercise of governmental authority,’ GATS Article I.3(b), and air traffic rights and services directly related to the exercise of such rights, GATS Annex on Air Transport.
- 63.
GATS Articles II, III, and VIII.
- 64.
GATS Articles VIII and IX.
- 65.
GATS Articles XVI and XVII.
- 66.
GATS Article XVIII.
- 67.
See WTO, World Trade Report 2010: Trade in Natural Resources 194–95 (2010).
- 68.
TRIPS Agreement Articles 3 and 4.
- 69.
TRIPS Agreement Article 66.2.
References
Agreement on Agriculture & Agreement on Textiles and Clothing. (1994, April 15). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125.
Agreement on implementation of Article VI of the General Agreement on Tariffs and Trade. (1994, April 15). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125, 1141.
Agreement on Subsidies and Countervailing Measures. (1994, April 15). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of Uruguay Round, 33 I.L.M. 1125. Available at http://www.wto.org/english/docs_e/legal_e/24-scm.pdf
Agreement on Technical Barriers to Trade. (1994, April 15). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Agreements on Trade in Goods.
Agreement on Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods. (1994). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125.
Agreement on Trade-Related Investment Measures. (1994, April 15). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125.
Appellate Body Report. (1996, May 20). United States—Standards for reformulated and conventional gasoline. WT/DS2/AB/R, 35 I.L.M. 603.
Appellate Body Report. (1998). United States—Import prohibition of certain shrimp and shrimp products. WT/DS58/AB/R. Adopted 6 Nov 1998.
Appellate Body Report. (2012, January 30). China—Measures related to the exportation of various raw materials. WT/DS394/AB/R, WT/DS395/AB/R, WT/DS/398/AB/R.
Appellate Body Report. (2012, June 29). United States—Certain country of origin labeling (COOL) requirements, WT/DS384/AB/R, WT/DS386/AB/R.
Appellate Body Reports. (2013). Canada—Certain measures affecting the renewable energy generation section, Canada—Measures relating to the feed-in tariff program. WTO Doc. WT/DS412/AB/R, WT/DS426/AB/R. Adopted 24 May 2013.
Appellate Body Report. (2014, August 7). China—Measures related to the exportation of rare earths, tungsten and molybdenum. WT/DS431/AB/R, WT/DS432/AB/R, WT/DS433/AB/R [hereinafter Appellate Body Report, China—Rare Earths].
Appellate Body Report. (2014, July 7). United States—Countervailing and anti-dumping measures on certain products from China. WTO Doc. WT/DS449/AB/R.
Barton, J. H. (2007). Intellectual property and access to clean energy technologies in developing countries, ICTSD Programme on Trade and Environment.
Bast, E. et al. (2014, November). The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration, Overseas Development Institute and Oil Change International 32.
Bown, C. P. (2004). Developing countries as plaintiffs and defendants in GATT/WTO trade disputes. World Economy, 27, 59.
Burns, T. J. (2010). The liberalisation of environmental goods and services (EGS) trade and the need for a distinct EGS agreement. In Joost Pauwelyn (Ed.), Global challenges at the intersection of trade, energy, and the environment (pp. 95–96). Geneva: Graduate Institute, Centre for Trade and Economic Integration.
Callen, T., Cherif, R., Hasanov, F., Hegazy, A., & Khandelwal, P. (2014, December). Economic diversification in the GCC: Past, present, and future. International Monetary Fund Staff Discussion Note 8. Available at: https://www.imf.org/external/pubs/ft/sdn/2014/sdn1412.pdf
Charnovitz, S. (1991). Exploring the environmental exceptions in GATT Article XX. J World Trade, 25, 37–55.
Davey, W. J. (2003). The WTO dispute settlement mechanism. Illinois Public Law Research Paper No. 03–08. Available at: http://ssrn.com/abstract=419943
Davey, W. J. (2009). Compliance problems in WTO dispute settlement. Cornell International Law Journal, 42, 119.
General Agreement on Tariffs and Trade. (1994, April 15). Marrakesh Agreement establishing the World Trade Organization, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125.
General Agreement on Trade in Services. (1994). Marrakesh Agreement establishing the World Trade Organization, Annex 1B, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125.
Guzman, A. T., & Simmons, B. A. (2005). Power plays and capacity constraints: The selection of defendants in WTO disputes. J Legal Studies, 34, 557.
Helm, S., Tannock, Q., & Iliev, I. (2014). Renewable energy technology: Evolution and policy implications—Evidence from patent literature. World Intellectual Property Organization. Available at: http://www.wipo.int/edocs/pubdocs/en/wipo_pub_gc_3.pdf
Kutas, G., Lindbery, C., & Steenblik, R. (2007). Biofuels—At what cost? Support for ethanol and biodiesel in the European Union. Report Series for the Global Studies Initiative.
Lamy, P. (2013, April 29). Remarks to the workshop on the role of intergovernmental agreements in energy policy. Available at: http://www.wto.org/english/tratop_e/envir_e/wksp_envir_apr13_e/wksp_envir_apr13_e.htm
Leal-Arcas, R., Filis, A., & Gosh, E. S. A. (2014). International energy governance: Selected issues. Cheltenham: Edward Elgar.
Marceau, G. (2010). The WTO in the emerging energy governance debate. In J. Pauwelyn (Ed.), Global challenges at the intersection of trade, energy, and the environment. Geneva: Graduate Institute, Centre for Trade and Economic Integration.
Marceau, G. (2012). The WTO in the emerging energy governance debate (Vol. 106). Washington, DC: American Society of International Law Proceedings.
Marrakesh Agreement establishing the World Trade Organization, April 15, 1994, 1867 U.N.T.S. 410
Meyer, T. (2012). The architecture of international energy governance (Vol. 106, p. 389). Washington, DC: American Society of International Law Proceedings.
Meyer, T. (2015). How local discrimination can promote global public goods (Vol. 95). Boston: Boston University Law Review.
Milthorp, P., & Christy, D. (2011). Energy issues in selection WTO accessions. In Y. Selivanova (Ed.), Regulation of energy in international trade law: WTO, NAFTA, and Energy Charter. Alphen aan den Rijn: Kluwer Law International.
Nedumpara, J. J. (2014). Energy security and the WTO agreements. In S. Mathur (Ed.), Trade, the WTO, and energy security: Mapping the linkages for India. New Delhi: Springer.
Panel Report. (1996, January 29). United States—Standards for reformulated and conventional gasoline. WT/DS2/R.
Panel Report. (2011, July 5). China—Measures related to the exportation of various raw materials. WT/DS394/R, WT/DS395/R, WT/DS398/R.
Request for consultations by Argentina. (2013, May 23). European Union—Certain measures on the importation and marketing of biodiesel and measures supporting the biodiesel industry. WTO Doc. WT/DS459/1.
Request for consultations by Argentina. (2014, January 8). European Union—Anti-dumping measures on biodiesel from Argentina. WTO WT/DS473/1.
Request for consultations by China. (2012, November 5). European Union and certain member states—Certain measures affecting the renewable energy generation sector. WTO Doc. WT/DS452/1.
Request for consultations by Indonesia. (2014, June 17). European Union—Anti-dumping measures on biodiesel from Indonesia. WTO Doc. WT/DS480/1.
Request for consultations by Russia. (2014, May 8). European Union and its member states—Certain measures relating to the energy sector. WT/DS476/1.
Request for consultations by the United States. (2013, February 11). India—Certain measures relating to solar cells and solar modules. WTO Doc. WT/DS456/1.
Selivanova, Y. (2010). Managing the patchwork of agreements in trade and investment. In A. Goldthau & J. M. Witte (Eds.), Global energy governance: The new rules of the game. Berlin: Global Public Policy Institute.
Selivanova, Y. (2012). International energy governance: The role of the Energy Charter, 106 American Society of International Law Proceedings 394.
Schill, S. W. (2009). The multilateralization of international investment law 3.
Steinberg, R. H. (2002). In the shadow of law or power? Consensus-based bargaining and outcomes in the GATT/WTO, 56 INT’L ORG. 339.
Understanding on rules and procedures governing the settlement of disputes arts. 16.4 & 17.14, (1994, April 15), Marrakesh Agreement establishing the World Trade Organization, Annex 2, 1867 U.N.T.S. 410.
United Nations conference on trade and employment. (1948). Havana Charter for an International Trade Organization, articles 10 & 45, U.N. Sales No. 48.II.D.4, E/CONF.2/78.
Van de Graaf, T. (2013). The politics and institutions of global energy governance. Basingstoke: Palgrave.
Vienna Convention on the Law of Treaties. (1969, May 23). 1155 U.N.T.S. 331.
Winter, B. (2012, September 14). Insight: U.S. and Brazil—At last, friends on ethanol. Reuters.
World Energy Outlook. (2013). International Energy Agency. Available at: http://www.iea.org/textbase/npsum/weo2014sum.pdf
World Trade Organization. (2001). Ministerial Declaration of November 14, 2001, WT/MIN(01)/DEC/1.
World Trade Organization. (2010). World trade report 2010: Trade in natural resources. 114–15; 194–95.
World Trade Organization. (2013). International trade statistics 2013. Available at: https://www.wto.org/english/res_e/statis_e/its2014_e/its14_merch_trade_product_e.pdf
World Trade Organization. (2015a). Members and observers. Available at: https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm. Accessed 10 Sept 2015.
World Trade Organization. (2015b). The 128 countries that had signed GATT by 1994. Available at: https://www.wto.org/english/thewto_e/gattmem_e.htm. Accessed 10 Sept 2015.
WTO-UNEP. (2009). Trade and climate change. Report by the United Nations Environment Programme and the World Trade Organization 118.
Yanovich, A. (2011). WTO rules and the energy sector. In Y. Selivanova (Ed.), Regulation of energy in international trade law: WTO, NAFTA, and Energy Charters. Alphen aan den Rijn: Kluwer Law International.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 2016 The Author(s)
About this chapter
Cite this chapter
Meyer, T. (2016). The World Trade Organization’s Role in Global Energy Governance. In: Van de Graaf, T., Sovacool, B., Ghosh, A., Kern, F., Klare, M. (eds) The Palgrave Handbook of the International Political Economy of Energy. Palgrave Handbooks in IPE. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-55631-8_6
Download citation
DOI: https://doi.org/10.1057/978-1-137-55631-8_6
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-137-55630-1
Online ISBN: 978-1-137-55631-8
eBook Packages: Political Science and International StudiesPolitical Science and International Studies (R0)