|
The WTO and Oil If the Bush White House gets its way with energy services negotiations, the future of greenhouse gas emissions will be determined in the WTO, not in the UN’s Kyoto Protocol. While the oil and gas sector is largely exempt from current WTO rules, the broader energy sector could be penetrated by WTO’s proposed expansion. To understand how WTO might extend its disciplines over oil, it is useful to look at how other existing trade agreements have already handled the subject of energy, as well as how proposed expansions of WTO’s powers might advance the agenda of Big Oil. Energy in other International Trade Agreements Most relevant are the rules established by the United States for Canada under the existing North American Free Trade Agreement. NAFTA is widely considered to be the "state of the art" in trade deals because it goes more deeply into restricting government powers than any other agreement to date. As Maude Barlow, explains in a IFG Special Report "The Free Trade Area of the Americas," NAFTA removed Canada’s control over its vast energy resources by the following measures:
As a result, Canada’s exports to the US more than quadrupled in a decade while oil exports doubled (ibid., Barlow). Now, President Bush is preparing to deepen access to Mexico’s energy resources via expanded NAFTA talks. The US has also introduced this energy policy framework throughout the hemisphere, covering Venezuela, Colombia, Ecuador, via the so-called Free Trade Area of the Americas (FTAA). Building acceptance of this agenda in regional trade fora is important for introducing the topic, and similar agenda, at the global level in the WTO. Energy and WTO’s New Expansion WTO’s could penetrate the energy sector by either creatively expanding existing agreements, or by introducing new subject areas for negotiation. Below are three negotiating themes (Services, Investment, and Competition) currently in the WTO, in which new rules over energy and oil could expand to remove the ability of citizen’s to use their governments to control the oil and gas industry. Services "The US has called upon WTO members to open markets eligible for private participation in the entire range of energy services, from exploration tot he final customer. The energy service proposal would ensure non-discriminatory access to foreign provider energy services. Equally important, the US proposal suggests that WTO members consider how to create a "pro-competitive regulatory environment for energy services, so that opaque or discriminatory regulatory practices do not undermine their commitments to open their domestic markets to foreign service providers…The National Energy Policy Document (NEPD) group recommends that the President direct the Secretaries of Commerce, Energy, and the US Trade Representative, to support a sectoral initiative to expand investment and trade in energy-related goods and services that will enhance exploration, production, and refining, as well as the development of new technologies." http://www.bushenergy.com/energyplan.asp The General Agreement on Trade in Services, or GATS, is an existing accord in the WTO which is mandated to restrict government actions in a broad range of "services" via WTO-enforced trade sanctions. The WTO’s current work plan calls for an expansion of GATS, and negotiators in Geneva have been proposing which sectors might be covered in an expanded set of rules. According to a March 2000 proposal submitted to WTO Services negotiations: "oil and gas services include a wide range of services, such as: drilling services; derrick erection; repair and dismantling services; services necessary for oil or gas extraction such as well casing; cementing, pumping and plugging wells; as well as specialized fire extinguishing services…In addition to services incidental to mining, different related oil and gas services may be included in real estate services, rental/leasing services, technical testing and analysis services, services incidental to energy distribution, related scientific and technical consulting services, and construction and related engineering services... Typical obstacles to trade in energy services include:
It is clear from proposals such as the one above that nearly everything related to oil and gas is on the negotiating table in Geneva. One of the world’s largest oil services firms, Halliburton Energy Services (formerly operated by US Vice President Richard Cheney) describes itself as, "Capabilities range from initial evaluation of producing formations to drilling, completion, production enhancement and well maintenance." WTO talks on Services raise a number of questions about how Saudi Arabia would maintain current restrictions on foreign participation in the nation’s oil and petro-economy. Investment "The NEPD group recommends that the President direct the Secretaries of State, Commerce, and Energy to use our membership in WTO to implement a system of clear, open, and transparent rules and procedures governing foreign investment, to level the playing field for US companies overseas and to reduce barriers to trade and investment." (http://www.whitehouse.gov/energy/Chapter8.pdf, www.bushenergy.com) WTO currently has a narrow range of rules on investment, known as Trade Related Investment Measures, or TRIMs. A proposed expansion of WTO investment rules is an integral part of the WTO’s new Work Programme established during the November 2001 Ministerial in Doha, Qatar. Among other things, the new WTO investment agenda aims to:
Under the new WTO investment rules, authorities charged with regulating foreign investment could become politically irrelevant. An important question to ask in considering these issues is, for instance, how might major foreign investors gain new leverage over the country’s control of its own energy supplies when new WTO investment rules are applied? Competition WTO’s competition agenda would eliminate government practices that protect national monopolies, both state owned and private. To promote competition, disciplines on what governments can and can not do, including with state-owned businesses, are intended to break up national industries that restrict competition. China’s entry into the WTO scaled back the way in which its state-owned petro, trading, and financial services companies could operate. (See terms of WTO entry for China) Mexico’s state-owned oil company, PEMEX, managed to maintain significant barriers to US energy companies upon its entry to NAFTA. But now President Bush appears ready to widen access in ane round of negotiations to deepen NAFTA (See NAFTA Bush-Fox talks). Veteran WTO observer Chakravarthi Raghavan explains: "In terms of promoting competition policies in the WTO, the industrial countries seem to be moving in terms of cooperation among themselves, but not with developing countries. An EU Commission paper says that a WTO agreement for closer coordination and enforcement of domestic competition laws "might need to be limited initially to the industrialised economies and those developing countries which had the administrative machinery needed to handle sensitive commercial information". This approach has some serious implications for developing countries, who are much more the victims of such anti-competitive behaviour of transnational firms based in the industrial world, and have much difficulty in investigating and discovering evidence and ability to take action."(Raghavan, C., "The New Issues and Developing Countries," <www.twnside.org.sg/title/rag-cn.htm>) Restrictions on state-owned companies, such as Saudi Aramco, may come under new scrutiny. New WTO Competition over Saudi Arabia could give foreign oil companies new leverage to open up sectors of the oil and petro economy that KSA had previously been able to restrict. Return to the WTO page |