TRADE IN SERVICES DIVISION WORLD TRADE ORGANIZATION 8... · 2016. 7. 12. · C. Pipeline transport of fuels Transportation of Petroleum and Natural Gas (CPC 7131) “Transportation

TRADE IN SERVICES DIVISION

WORLD TRADE ORGANIZATION

1

What are we talking about: Description of the sector

GATS relevance: classification; scheduling; domestic regulation

Negotiations in the WTO

PTA negotiations

2

Energy Sources Coal

Oil

Gas

Electricity

Nuclear power

Renewable Energy

Solar, hydro power, wind, ...

3

Energy Sector: Key Characteristics

One of the infrastructure sectors: fundamental to economic and social development

Hence, government intervention is required to pursue public service objectives: universal access, consumer protection, supply security, distributional considerations, etc.

“New” policy objectives: competitiveness and sustainability

4

Energy Sector: Key Characteristics Highly capital-intensive as exploration, production

and transportation all require significant investment

Energy infrastructure is costly Prevailing company structure: vertical integration across

all production stages

(e.g., from mining to electricity generation)

State used to be the main producer and supplier.

Recent trends towards privatization and liberalization, especially in the electricity sector: “unbundling” - vertical separation of generation, transmission, distribution and commercialization

5

Energy Sector: Key Characteristics Exhaustibility, scarcity and geographic distribution

imbalance of conventional energy resources constantly increase energy prices and cause tensions between countries.

Enviromental impact: pollution; climate change

Trends: to develop renewable energy resources and increase energy supply and consumption efficiency.

6

Goods or Services? Energy products are subject to classification problems:

Electricity: not tangible and transmitted through grids

Production or production-related activities?

Exploration, extraction, refinery, liquification, gasification

Problem: Legal treatment of investments

7

International Trade in Energy Products A lot of variation across sectors

In general, limited exposure to international trade: Monopolies and public enterprises, dependence on physical infrastructure (electricity grids, pipelines), etc.

Modes of supply: Mode 3: Importance of local presence

Mode 1: Increasing importance of electronic transmissions

Mode 4: Transfer of experts

8

Classification under the GATS

No separate energy sector in the Services Sectoral Classification List W/120 Several sub-sectors are related to energy

Important segments (or activities) are spread over a broad range of sectors Transport, distribution, construction, consultancy,

engineering, etc.

9

Energy-related sub-sectors listed in W/120

1.F (h) Services incidental to mining (services rendered at a fee or contract basis at oil and gas fields, e.g. drilling, repair and dismantling, etc.)

1.F (j) Services incidental to energy distribution (transmission and distribution on a fee or contract basis of electricity, gaseous fuels, steam and hot water)

11.G (a) Pipeline transport of fuels (transport of petroleum and petroleum products and natural gas)

10

Coverage? A closer look at relevant CPC definitions

A. Services incidental to mining (CPC 883 + 5115)

(i) CPC 883:

“Services rendered on a fee or contract basis at oil and gas field, e.g. drilling services, derrick building, repair and dismantling services, oil and gas well casings cementing services. Exclusion: Mineral prospecting services, oil and gas field exploration and geophysical [...] surveying services [...]” (Cont’d)

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(Cont’d)

(ii) CPC 5115:

Site preparation work for mining:

“Tunnelling, overburden removal and other development and preparation work of mineral properties and sites, except for mining oil and gas. Exclusion: [...]” Question: how about “coal”? Other related services?

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B. Services incidental to energy distribution

CPC 887:

“Transmission and distribution services on a fee or contract basis of electricity, gaseous fuels and steam and hot water to household, industrial, commercial and other users. Exclusion: Transport services via pipeline [...]” Question: Are transmission and distribution per se of

electricity and fuels are covered here? How about services incidental to energy transmission and

distribution: frequency control, metering, billing, certral network control, power management and monitoring, etc.

13

C. Pipeline transport of fuels

Transportation of Petroleum and Natural Gas

(CPC 7131)

“Transportation via pipeline of crude or refined petroleum products and of natural gas”

Question: where to draw the line between transportation of fuels, on the one hand, and transmission and distribution of fuels, on the other hand?

14

GATS Commitments (1)

Services incidental to mining (43):

Several limitations restrict coverage to consultancy activities, excluding e.g. prospection, exploration, and exploitation

MA and NT mostly liberal, including for modes 1 and 2

Services incidental to energy distribution (17)

Coverage in several cases confined to consultancy services and distribution of gas

MA and NT liberal, mainly for mode 3, but also modes 1 and 2

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Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons

Sector or subsector

Limitations on market access

Limitations on national treatment

Additional commitments

F. Other Business Services a. Services incidental to mining, incl. oilfield drilling (CPC 88+5115)

1) None 2) None 3) Foreign equity

limited to 51% 4) Unbound,

except as indicated in the horizontal section

1) None 2) None 3) None 4) Unbound


16

How Commitments are structured:

Oman

GATS Commitments (2) Pipeline transport of fuels

MA and NT quite liberal, only restrictions on mode 3 relate to concessions (1), most commitments on modes 1, 2 and 3 are without limitations

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Sector or subsector




G. Pipeline transport a. Transportation of fuels (CPC 7131)





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Saudi Arabia


Sector or subsector




G. Pipeline transport (a) Transportation of

fuels (CPC 7131) (b) Transportation of

other goods (CPC 7139)

(1) None (2) None (3) None (4) Unbound, except

as indicated in the horizontal section

(1) None (2) None (3) None (4) Unbound, except

as indicated in the horizontal section

Ukraine commits itself to provide full transparency in the formulation, adoption and application of measures affecting access to and trade in services of pipeline transportation. Ukraine undertakes to ensure adherence to the principles of non-discriminatory treatment in access to and use of pipeline networks under its jurisdiction, within the technical capacities of these networks, with regard to the origin, destination or ownership of product transported, without imposing any unjustified delays, restrictions or charges, as well as without discriminatory pricing based on the differences in origin, destination or ownership.

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Ukraine


Sector or subsector




G. Pipeline transport (a) Transportation of fuels (CPC 7131)

(1) Unbound. (2) None. (3) None, except the

following: - commercial

presence is allowed only in the form of a juridical person of the Republic of Tajikistan;

(4) Unbound, except as indicated in the horizontal section.

(1) Unbound. (2) None. (3) None, except as

indicated in the column "Limitations on market access".

(4) Unbound, except

as indicated in the horizontal section.

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Tajikistan

... and other Sectors Business Services

Engineering Services (CPC 8672-8673), technical analysis and testing services (CPC 8676), services incidental to mining (CPC 883), etc.

Construction (CPC 513)

Construction of long distance pipelines and power lines, construction for mining, etc.

Distribution (CPC 62271 and 63297)

Wholesale trade services of solid, liquid and gaseous fuels, retail services of fuel oil, bottled gas, coal and wood, etc.

Transport (CPC 7422)

Bulk storage and warehousing services of liquids or gases

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Sector or subsector




A. Professional services e. Engineering services (CPC 86721)

1) None, other than: Consulting Engineers (Manitoba): Requirement of commercial presence for accreditation 2) [...] 3) None 4) Unbound except as

indicated in the horizontal section, and [...]

1) None, other than: Engineers (Saskatchewan): Residency requirement for for accreditation 2) [...] 3) None 4) Unbound except as

indicated in the horizontal section,

and [...]

22


Canada

Sector or subsector




1. BUSINESS SERVICES F. Other Business services (e) Technical

testing and analysis services

(CPC 8676)

(1), (2) None only with

respect to testing of core samples in relation to mining, and subject to respective authorization for export of samples, otherwise unbound.

(3) None, except the following:

- commercial presence

is allowed only in the form of a juridical person of the Russian Federation.

(4) Unbound, except as indicated in Part I "Horizontal commitments".

(1), (2) None only with

respect to testing of core samples in relation to mining, and subject to respective authorization for export of samples, otherwise unbound.

(3) None, except as indicated in the column "Limitations on Market Access".

(4) Unbound, except as

indicated in Part I "Horizontal commitments".

23


Russia

Sector or subsector




1. BUSINESS SERVICES F. Other Business services (h) Services incidental to mining (CPC 883*) only with respect to consulting services

(1) None. (2) None. (3) None, except the

following: - commercial presence


(4) Unbound, except as indicated in Part I "Horizontal commitments".

(1) None. (2) None. (3) None, except as

indicated in the column "Limitations on Market Access".

(4) Unbound, except as


24


Russia

Sector or subsector




1. BUSINESS SERVICES F. Other Business services (j) Services

incidental to energy distribution (CPC 887*)

only with respect to consulting services

(1) Unbound. (2) None. (3) None except the

following: - commercial presence


(4) Unbound except as indicated in Part I "Horizontal commitments".

(1) Unbound. (2) None. (3) None, except as

indicated in the column "Limitations on Market Access".

(4) Unbound except as


25


Russia

Scheduling quiz: “Suppliers of electricity transmission services are

not permitted to distribute to end-consumers.”

“Commercial presence is required for cross-border supply of consulting services in relation to energy distribution.”

“Design, construction, operation and maintenance of oil and gas pipeline.”

26

‘Behind the Scene’: Relevant GATS Disciplines

The Agreement contains general obligations that apply across all service sectors, except governmental services and air traffic rights: unconditional obligations (including MFN treatment).

Other obligations are conditional on the existence of commitments (incl. certain transparency requirements, regulatory disciplines, constraints on using foreign exchange restrictions).

27

New Round: Plurilateral request addressed at 23 WTO Members

Based on an ad hoc list of 12 sub-sectors

For example, engineering, management consulting, consultancy services, technical analysis, mining, maintenance, construction (pipelines, …), distribution.

Excludes ‘Services incidental to energy distribution’ and ‘Pipeline transportation of fuels’. Call for commitments on modes 1, 2 and 4. “Neutral” with respect to energy source and technology.

Ownership of energy resources is excluded from the negotiations.

28

Classification: What next? (In the absence of an ‘Energy’ Sector in W/120)

Several delegations proposed ‘checklists’

Important:

Virtually all relevant services are contained in W/120 …

… with some possible exceptions (electricity)

But: Classification issues do not determine the scope of the GATS!

29

Negotiation of additional sector disciplines ? Proposals to negotiate a ‘Reference Paper’ on energy

services:

Analogies with telecommunications

Possible content of disciplines: transparency, non-discriminatory network access and interconnection, independent regulator, prevention of anti-competitive practices, etc.

No relevant work at present

30

Is a separate category needed for “energy services”? A Member has inscribed in their offers a separate

category “Energy services”.

Another Member has offered commitments on a list of energy related services ranging from construction, transportation, storage to distribution.

31

Energy services in PTAs “NAFTA-type” agreements vs. “GATS-type”

agreements

High level of liberalization in negative-listing agreements

More exhaustive disciplines regarding investments and transparency in “NAFTA-type” agreements

No specific competition rules for energy services

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Documents

TRADE IN SERVICES DIVISION WORLD TRADE ORGANIZATION 8... · 2016. 7. 12. · C. Pipeline transport of fuels Transportation of Petroleum and Natural Gas (CPC 7131) “Transportation