Importance of Energy Services in Global Trade 

Worldwide demand for energy services will greatly expand as a result of increased energy­consumption, which is projected to grow by nearly 60 percent over the next twenty years. More than two-thirds of this increase is projected to occur in the developing world. Energy services include geological mapping, drilling and managing upstream oil and gas development, construction and management of pipelines, power plants and other energy infrastructure, and wholesale trading and marketing. Services also include end-use activities such as metering, billing, energy­efficiency auditing, and facilities management. These and other services underpin the production, transport, and distribution of oil, coal, gas, and other energy products, which drive economic growth and prosperity. 

Significant Trade and Investment Barriers Confront Energy Service Providers 

Privatization and energy market restructuring over the past decade have created more flexible­regulatory regimes, permitting energy services to be bundled and delivered in new and innovative ways. However, extensive trade barriers remain in this sector. Those barriers negatively affect the diffusion of advanced technology and management skills; they drive up costs and undermine the environmental benefits of cleaner, more efficient energy production and distribution. Econometric studies have yet to estimate the cost of restrictive trade practices, but they easily run into the hundreds of millions of dollars, if not more, annually. 

WTO/GATS Talks Have Largely Ignored Energy Services As a Sector Until Recently 

Trade rules that would support crossborder trade and investment in energy services remain weak at both the global and regional level.  Few countries have made energy-related commitments for market access and national (equal) treatment through the General Agreement on Trade and Services (GATS) during the Uruguay round or thereafter. 

Doha Trade Round Offers an Opportunity to Hammer Out Significant Trade Commitments in Energy Services 

For the first time, energy has been made a priority within the World Trade Organization’s (WTO) negotiating agenda. The Doha trade round, launched in November 2001, has created a new focus on energy services and an opportunity for WTO member countries to expand their commitments to market access and national (equal) treatment in this area.

Need for a “Reference Paper” on Rules for International Competition in Energy Services, and for Commitments for Additional Liberalization. 

The GATS provides a means for countries to negotiate additional energy-related concessions such as most favored nation, market access, and national (equal) treatment, which are not covered in the basic GATS framework. It is necessary to liberalize trade rules in at least four additional areas to enhance crossborder trade and investment in energy services:  

• Open access to essential facilities such as natural gas pipelines, electric power transmission, and, depending on the circumstances, gas storage facilities, oil storage facilities, and liquified natural gas terminals.
• Market transparency, including real-time access to price information, capacity for energy transmission, congestion, and upcoming demand.
• Competition safeguards, particularly regarding potential horizontal market power (such as a substantial ownership of facilities).
• Regulation through an independent body to counter rent-seeking (supernormal profits) and attempts at political interference by private and public officials and bodies.