Energy services and competition policies under WTO law
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Тематика:
Экономика промышленности
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НИЦ ИНФРА-М
Автор:
Нартова Ольга Владимировна
Год издания: 2010
Кол-во страниц: 320
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Монография
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Дополнительное профессиональное образование
ISBN: 978-5-16-004604-4
Артикул: 138200.01.01
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Olga Nartova ENERGY SERVICES AND COMPETITION POLICIES UNDER WTO LAW
НАУЧНАЯ МЫСЛЬ СЕРИЯ ОСНОВАНА В 2008 ГОДУ OLGA NARTOVA ENERGY SERVICES AND COMPETITION POLICIES UNDER WTO LAW Moscow INFRA-M 2010
Inauguraldissertation zur Erlangung der Wurde eines Doctor iuris der Rechtswissenschaftlichen Fakultat der Universitat Bern. Die Fakultat hat diese Arbeit am 17 Dezember 2009 auf Antrag der beiden Gutachter, Prof. Dr. Thomas Cottier und Prof. Dr. Christine Kaufmann, als Dissertation angenommen.
Nartova O.
Energy services and competition policies under WTO law. —
Moscow: INFRA-М, 2010. — 320 p. — (Научная мысль).
ISBN 978-5-16-004604-4
This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of the author except in cases permitted by law.
ISBN 978-5-16-004604-4 © Nartova O., 2010
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Preface
Trade in energy and energy services was not a focus of international trade law until recently. This was due, in part, to the high government ownership rate in energy companies, which frequently enjoyed the monopoly rights. Liberalisation of the energy industry in a number of countries together with the increasing number of oil producing countries joining the World Trade Organization (WTO) have changed the landscape and reinforced the need to address a sector which in many countries is still characterised by inefficient monopolies, waste and high levels of subsidization. Energy security concerns, the challenges of climate change and efficient use of energy set the scene for the complex multilateral negotiations.
This book launches an interdisciplinary dialogue on the needs of the energy sector and suggests a way forward for international regulation of energy services. Its main contribution consists of offering a comprehensive structure and listing of energy related services which may, in the future, serve as a basis for negotiations in this complex field. Moreover, it offers a reference paper addressing potential abuse of natural monopolies which are inherent to grid based energy supplies. In preparing for this, the book includes a comprehensive introduction to the economic and political background of the energy sector, of the international institutions involved, and of case studies showing the wide array of approaches and problems witnessed in selected countries around the globe.
Books of this type are not the fruit of individual efforts only and it is with great pleasure that I take the opportunity here to acknowledge all those who, in big and small ways, directly or indirectly, contributed to the completion of this study.
This monograph is a slightly revised version of my PhD dissertation and it would not have come together without the support of Prof. Thomas Cottier, my supervisor and the director of the World Trade Institute. I am grateful for his invaluable counsel and guidance, for his suggesting to me the outlines of this project and for assuaging my doubts. He truly exemplifies what it is to be a scholar, a teacher and a mentor; and I continue to draw upon his example in my own research and teaching. I owe a particular debt of gratitude to Prof. Christine Kaufmann, who served as my second examiner, for her suggestions, critique and kindness.
vi Preface Funds and facilities are an important part of any project. I started my PhD as a research fellow at the World Trade Institute and financial support for this work was provided by the SNF NCCR Trade Regulation programme. Over the years many have contributed to the effort and I am particularly indebted to my colleagues at the World Trade Institute: Susan Kaplan, Jane Muller, Joёlle de Sepibus, Marion Panizzon, Mira Burri-Nenova, Julien Chaisse, Panagiotis Delimatsis, Pierre Sauve and many others who have helped in various ways. Preliminary findings were discussed at doctoral workshops held in Bern and I benefited immensely from the comments of many participants. Inevitably, I am unable to acknowledge by name everyone who provided inputs at these events but I am grateful to each one of them. Special thanks are due to Sofya Matteotti-Berkutova for numerous discussions on third-party access to energy facilities, as well as for keeping me sane and encouraging me to continue. But books do not live on academic and institutional contributions alone. My family and friends have been more a part of this work than they imagine, their contribution to this thesis cannot be expressed in words. Berne, December 2009 Olga Nartova
Summary of Contents
Part One - Foundations of Energy Trade
I Energy Markets: Setting the Scene 2
II Emergence of Energy Services,
Development of Competition and Trade Liberalisation 42
III Regulatory Challenges for the Energy Services in
International Trade 79
Part Two - The Instruments of Energy Regulation
IV WTO Provisions Regulating Energy Services and
Its Limitations 107
V Energy Regulation on the Country Level
(Case Studies) 131
VI Commercial Reality and Trade Barriers 192
Part Three - Energy Services a Way Forward
VII Reclassification of Energy Services 201
VIII Essential Regulatory Ingredients
for a Competitive Market 219
IX Reference Paper on Energy Services 234
X Conclusions and Policy Recommendations 258
Table of Contents
Preface ............................................................ v
Summary of Contents ...............................................vii
Table of Contents ................................................. ix
Abbreviations ....................................................xvii
Part One
Foundations of Energy Trade
Chapter I Energy Markets: Setting the Scene
A. Introduction.....................................................2
B. Energy services as the object of regulation .................... 3
1. Worldwide energy market ..................................... 4
2. Energy consumption patterns ................................. 4
3. Types of energy sources ...................................... 5
a) Fossil fuels ............................................ 6
b) Renewable energy......................................... 9
c) Biofuels................................................ 13
d) Nuclear electric power ................................. 24
4. Demand for energy services ................................. 25
5. Types of energy services ................................... 26
a) Upstream services ........................................ 27
b) Downstream services ...................................... 28
6. The future of the energy services market.................... 31
C. Energy regulators ............................................. 32
1. International framework .................................... 33
a) The International Energy Agency of the Organisation for Economic Cooperation and Development ....................... 33
b) The Energy Charter Treaty ................................ 34
c) The Organization of the Petroleum Exporting Countries..... 35
d) The World Trade Organisation ........................... 36
e) United Nations Development Programme ..................... 37
f) The International Energy Forum........................... 37
x
Table of Contents
2. Multilateral environmental agreements ........................ 37
3. Bilateral and regional trade agreements...................... 38
a) The North American Free Trade Agreement ................. 38
b) The Association of Southeast Asian Nations and the Asia-Pacific
Economic Cooperation Forum ................................... 39
D. Concluding remark .............................................. 40
Chapter II
Emergence Of Energy Services, Development Of Competition And Trade Liberalisation
A. Introduction ................................................... 42
B. Metamorphosis of regulation: from monopolies to liberalised markets .. 42
1. Monopoly markets ............................................. 42
2. WTO move towards trade opening .............................. 43
3. Assumptions and reasons for liberalisation .................. 44
C. Liberalisation of energy services .............................. 47
1. Energy liberalisation objectives ............................. 48
2. Problems and challenges ..................................... 49
3. Barriers to liberalisation ................................... 51
a) Past energy failures ..................................... 51
b) Fragmentation in energy services sector ................. 54
c) Associated risks ......................................... 55
4. Impacts of energy liberalisation............................. 57
a) Impact on energy service suppliers ...................... 60
b) Impact on end-users ..................................... 63
c) Impact on industry ...................................... 64
5. Role of governments ......................................... 69
a) In achieving public policy objectives .................... 69
b) In preventing market power abuse ........................ 70
D. Competition in energy services markets ........................ 72
1. Competition and market efficiency ............................ 72
2. Competition models ........................................... 74
3. Competition in liberalized energy markets ................... 76
E. Concluding remark ............................................... 77
Energy Services and Competition Policies under WTO law
xi
Chapter III
Regulatory Challenges for the Energy Services in International Trade
A. Introduction .................................................... 79
B. Challenges in defining energy services .......................... 79
1. Basis for definition .......................................... 79
2. Case of electricity .......................................... 80
C. Ownership unbundling ............................................ 82
1. Concept of ownership unbundling .............................. 82
2. Different types and approaches of ownership unbundling in the energy
markets .......................................................... 86
3. Political and legal implications and challenges of ownership unbundling ....................................................... 87
4. Cost of services and unbundling in energy services market .... 89
D. Energy security concerns ....................................... 90
1. Importance of energy security ................................ 90
2. Impact of energy trade on energy security .................... 92
3. Energy security and international law ......................... 93
E. Energy efficiency ............................................... 94
1. Energy efficiency and energy consumption ..................... 94
2. Reluctance to invest in energy efficiency ..................... 95
3. Promotion of energy efficiency ................................ 96
4. Energy efficiency at the household level ..................... 98
5. Energy efficiency at the industrial level .................... 99
F. Environmental implications ..................................... 100
1. Global warming .............................................. 100
2. Energy demand and supply .................................... 100
3. The impact of fossil fuels .................................. 101
4. Emissions and climate change .................................. 102
5. Mitigation initiatives ........................................ 103
G. Concluding remark ............................................... 104
xii
Table of Contents
Part Two
The Instruments Of Energy Regulation
Chapter IV
WTO Provisions Regulating Energy Services and Its Limitations
A. Introduction ................................................. 107
B. Origins of discussions on energy ............................. 109
C. Energy services and the GATS ........................................ 111
1. Modes of Supply............................................ 111
2. General obligations ....................................... 114
a) Article II: Most-Favoured-Nation treatment (MFN) ............. 115
b) Article III: Transparency .................................... 115
c) Article IV: Increasing participation of developing countries . 118
d) Domestic regulation and monopoly service providers (Articles VI,
VIII and IX) ..................................................... 119
e) Specific commitments: market access (Article XVI) ............ 122
f) National treatment (Article XVII) ............................. 125
D. Other WTO Agreements ................................................ 125
1. The Technical Barriers to Trade (TBT) ............................ 125
2. Trade-Related Investment Measures (TRIMs) ........................ 126
3. Agreement on Government Procurement ....................... 127
4. Subsidies and Countervailing Measures (SCM) Agreement ............ 127
E. Concluding remark ................................................... 129
CHAPTER V
Energy Regulation on the Country Level: Case Studies
A. Introduction ........................................................ 131
B. Analysis of market policies in selected countries ................... 131
1. Australia ........................................................ 131
a) Country profile .............................................. 131
b) Energy services market structure ............................. 132
c) Specific areas of concern in the energy services market ...... 134
d) Energy policies and regulatory environment ............ 137
Energy Services and Competition Policies under WTO law
xiii
2. Brazil ...................................................... 140
a) Country profile ......................................... 140
b) Energy service market structure ......................... 141
c) Specific areas of concern in the energy services market . 142
d) Energy policies and regulatory environment .............. 143
3. China ....................................................... 147
a) Country profile ......................................... 147
b) Energy services market structure ........................ 147
c) Specific areas of concern in the energy services market . 149
d) Energy policies and regulatory environment .............. 149
4. European Union .............................................. 152
a) Country profile ......................................... 152
b) Energy service market structure ......................... 152
c) Specific areas of concern in the energy services market . 156
d) Energy policies and regulatory environment .............. 159
e) Recent developments ..................................... 162
f) Third Energy Package .................................... 164
5. United States of America .................................... 168
a) Country profile ......................................... 168
b) Energy services market structure ........................ 168
c) Specific areas of concern in the energy services market . 170
d) Energy policies and regulatory environment .............. 170
e) Recent developments ..................................... 172
6. Ukraine ..................................................... 180
a) Country profile ......................................... 180
b) Energy services market structure ........................ 180
c) Specific areas of concern in the energy services market . 182
d) Energy policies and regulatory environment .............. 183
C. Concluding remark .............................................. 188
Chapter VI Commercial Reality and Trade Barriers
A. Introduction .................................................. 192
B. Barriers types ................................................. 192
C. Political sensitivity .......................................... 194
xiv
Table of Contents
D. Foreign ownership..............................................194
E. Structural issues ............................................ 196
F. Expertise, technology and equipment .......................... 198
G. Concluding remark............................................. 198
Part Three
Energy Services : A Way Forward
Chapter VII
Reclassification of Energy Services
A. Introduction.................................................. 201
B. Classification of Energy Services .............................202
1. Services sectoral classification list ..................... 202
2. Proposals on classification improvements................... 204
a) Communication from the United States .................. 204
b) Communication from Venezuela ...........................206
c) Communication from the European Union and member states . 208
d) Communication from Japan ...............................209
e) Communication from Chile and Cuba ..................... 210
f) Communication from Canada ............................211
g) Communication from Norway ............................211
3. Necessary features of energy services classification ....... 212
C. Draft classification list .....................................214
D. Concluding remark............................................. 217
Chapter VIII
Essential Regulatory Ingredients for a Competitive Market
A. Introduction................................................... 219
B. Third party access to essential facilities ....................221
Energy Services and Competition Policies under WTO law xv C. Independent regulatory authorities .......................... 227 D. Transparency ................................................ 228 E. Public policy objectives .................................... 229 F. Concluding remark ........................................... 232 Chapter IX Reference Paper on Energy Services A. Introduction ................................................ 234 B. Lessons that can be learned from telecommunication services . 235 1. Annex on telecommunication services ...................... 235 2. Reference paper on telecommunication services ............ 236 3. Lessons from Mexico-Telecoms case ........................ 237 C. The doctrine of essential facility .......................... 242 D. Analysis of proposals for reference paper ................... 244 1. Reference paper proposed by the United States ............ 244 2. Reference paper proposed by Norway ....................... 244 3. Reference paper proposed by Japan ........................ 245 4. Reference paper proposed by the European Union ........... 245 5. Comparative analysis ..................................... 246 E. Necessary elements of energy services reference paper ....... 248 F. Draft Energy Services Reference Paper ....................... 249 G. Concluding remark ........................................... 256 CHAPTER X Conclusions and Policy Recommendations A. Energy services market in XXI century ....................... 258 1. Reasons for revisiting energy issues in the international trade regulation ................................................... 258
xvi Table of Contents 2. Transformation of the energy market ..................... 259 B. Policy recommendations ..................................... 261 1. Considerations for a successful reform................... 261 2. Agenda for reform ........................................262 C. Towards a coherent energy regulation ........................263 Bibliography.....................................................265
Abbreviations
AB Appellate Body
ABR Appellate Body Report
ADA Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 (Anti-dumping Agreement)
AoA Agreement on Agriculture
ACP African, Caribbean, and Pacific (countries)
ACWL Advisory Centre on WTO Law
APEC Asia Pacific Economic Cooperation
Art. Article
ASCM Agreement on Subsidies and Countervailing Measures
ASIL American Society of International Law
AT Annex on Telecommunications (to the GATS)
BTA Border Tax Adjustment
bcm. billion cubic meters
CHP combined heat and power
CPC Central Product Classification
CRTA Committee on Regional Trade Agreements
CTE Committee on Trade and Environment
DG Directorate General (EC)
Dir. Directive
DSB Dispute Settlement Body
DSU Dispute Settlement Understanding
EC European Community / European Communities
ECJ European Court of Justice
ECT Energy Charter Treaty
ed. / eds. editor / editors
EE Energy efficiency
EEC European Economic Community
xviii Abbreviations e.g. exempli gratia (for example) EGS Environmental Goods and Services EIA Energy Information Administration (U.S.) EPA Environmental Protection Agency (U.S.) et al. et alii (and others) etc. et cetera (and so forth) EU European Union EURATOM European Atomic Energy Community FDI Foreign Direct Investment FTA free trade agreement GATS General Agreement on Trade in Services GATT 1947 General Agreement on Tariffs and Trade 1947 GATT 1994 General Agreement on Tariffs and Trade 1994 GDP gross domestic product GHG greenhouse gases HS Harmonized Tariff System i.e. id est (that is) Ibid. ibidem (at the same place) IEL International Economic Law ICJ International Court of Justice IEA International Energy Agency ISO Independent State Operator IT information technology ITO International Trade Organisation LDC least-developed countries LNG liquefied natural gas LPG liquefied petroleum gas MEAs Multilateral Environmental Agreements MFN most-favoured-nation (principle, clause or treatment)
Energy Services and Competition Policies under WTO Law
xix
MtC million tonnes of carbon
Mtoe million tonnes of oil equivalent
N., No. number
NAFTA North American Free Trade Agreement
NGO non-governmental organization
NT national treatment (principle or clause)
OECD Organisation for Economic Cooperation and Development
OJ. Official Journal (EC)
p. / pp. page / pages
para. / paras. paragraph / paragraphs
p.a. per annum
PPM / PPMs Process and production method / methods
RE Renewable Energy
RP Reference Paper
SMEs Small and Medium-sized Enterprises
SPS Agreement Agreement on the Application of Sanitary and
Phytosanitary Measures
STE State Trading Enterprises
TBT Agreement Agreement on Technical Barriers to Trade
TFC Total Final Consumption
TJ terajoules
TPA third-party access
TPES Total Primary Energy Supply
TPF Third-Party Financing
TRIPs Agreement on Trade-Related Aspects of Intellectual Property
Rights
UK United Kingdom
UN United Nations
UNCTAD United Nations Conference for Trade and Development
UNDP United Nations Development Programme
xx Abbreviations UR Uruguay Round U.S., US(A) United States (of America) USITC United States International Trade Commission USSR Union of Soviet Socialist Republics USTR United States Trade Representative VAT Value added tax VCLT Vienna Convention on the Law of Treaties W/120 list the WTO services classification WCO World Customs Organization WTO World Trade Organization WTO Agreement Marrakesh Agreement establishing the WTO