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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)