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Tackling Energy Issues Under TTIP:
Toward multi-speed energy regulation?
Ilaria Espa & Kateryna Holzer, World Trade Institute
ASIL-IEcLIG Biennial Conference, Denver, 13-15 November 2014
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
Transatlantic Trade and Investment
Partnership
½ of world’s
GDP & 1/3 of
world’s trade
Elimination of tariffs &
non-tariff barriers,
regulatory convergence
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
mutual benefit
of about 100
billion USD
annually
Energy is a
separate topic of
negotiations
TTIP Negotiations on Energy
• EU proposal (leaked on 19 May 2014): Chapter on Energy and Raw
Materials
– Prohibition of trading and export monopolies
– Prohibition of dual pricing
– Transit facilitation
– Ban of local content requirements in renewable energy support
schemes
– Access and national treatment to enterprises of one party
established on the territory of the other party in matters of exploring,
production, purchase, sale, import and export of energy
• Exception for measures necessary for the safe operation of energy
networks
• EU particular interest: the abolishment of US energy export restrictions
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
Energy under trade agreements
• FTAs usually do not deal with energy separately, neither
does the WTO (has no separate agreement on energy)
• International trade rules have nothing to do with energy?
• Or WTO rules and FTA rules apply to energy on a
general basis?
• Special needs of regulation of energy trade:
facilitation of access to energy supplies (export
restrictions)
• Whereas GATT is about market access (import
restrictions)
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
Energy in agreements with participation
of the EU
• The European Coal and Steel Community (1951) created a common
European market for coal and steel and neutralised competition
between West European countries
• The Energy Charter Treaty (1994) aims to integrate the ex-USSR
energy sector and its pipeline system with the European energy
market on the principles of market economy but also national
sovereignty over energy resource: no obligations with respect to the
structure of national energy sectors, privatisation of state-owned
enterprises, breaking-down of vertically integrated energy companies,
foreign investor access to energy sector
• EU FTAs have no specific provisions on energy: general rules apply
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
Energy in agreements with participation
of the US
•NAFTA Chapter 6 on Energy and Basic Petrochemicals
- Prohibits export restrictions (export quotas and duties)
- Prohibits dual pricing
- Limits the use of exceptions
•Energy-related matters are subject to NAFTA’s mandatory dispute
settlement, including investor-state arbitration
•In practice, NAFTA energy regulation is a bilateral deal between the US
and Canada.
•Under US domestic legislation, FTA status grants access to US natural
gas exports.
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
US and EU negotiating positions
US:
EU:
• Potential big energy exporter
• Major net energy importer
• Complex export regime on
crude oil dating back to the
1970‘s
• Increasing energy security
problems
• Stringent export licensing
regime on natural gas
differentiating between FTA and
non-FTA partners
• US public interest as a key
criterion for permission of energy
exports
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
• Pursuing WTO-plus approach to
export restrictions under FTAs
and hence with respect to energy
under TTIP
Driving forces and inhibiting factors
for a US/EU deal
•
•
•
Geopolitical situation and oil&gas prices
– escalation of the Russian/Ukraine conflict
– competition among major oil and gas exporters
Political economy interests
– conflict between potential winners and losers in the US and around the
world
Infrastructural problems
– location of crude oil and configuration and location of US refineries
leading to local oversupply of light domestic crudes
– huge investment need in regasification capacity in the EU
Environmental concerns
– risks associated with hydraulic fracturing and fugitive methane
emissions
– competing interests with renewable energy
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
Conclusions
• TTIP presents an opportunity to conclude a legal
framework for energy trade beyond existing WTO rules
• The EU is the demandeur but isn’t it a win-win?
• Ultimate result of energy negotiations depends on the
interplay of geopolitical situation, price dynamics,
infrastructural changes and the outcome of US energy
policy debate
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)
Thank you!
[email protected]
[email protected]
The National Centres of Competence in Research (NCCR)
are a research instrument of
the Swiss National Science Foundation (SNSF)