Energy Services in International
Trade: Development Implications
Simonetta Zarrilli
UNCTAD
September 2002
Energy
Energy “business”
Turnover of about
US$ 2.4 trillion in 2000
Access to energy
1 billion people in industrialized
countries consume 60%
of total energy supply;
5 billion people in developing
countries consume 40 %
The productivity of 1/3 of
world’s people is compromised
by lack of access to
commercial energy.
Another third suffers economic
hardship due to unreliable energy supplies
Energy necessary
to achieving
sustainable
development
Structural reform of the energy
sector
 Privatization, increasing competition,
unbundling of monopolies, deregulation
Developed countries:
poor performance of state owned
energy companies;
subsidy burdens; over investment
Developing countries:
+
debt crisis; capital shortages
Externalization of services; new services
International Trade in Services
What energy services are?
 They are required at each step of the
energy process from the location of the
potential energy source to its distribution
to the final consumer
Value added in the energy chain
Energy services in the market

“Traditional services”
•
•
•
•
•
exploration
extraction
drilling
derrick building
pipeline construction
Increasingly
technology-intensive

“Emerging services”
• gas & electricity
transmission and
distribution
• operation of power
pools
• energy trading/
brokering
• energy management
Emerging from
structural reform
Energy services in GATS
Energy services are not listed
as a separate category
3 specific entries:
transportation of fuel; services incidental to mining;
services incidental to energy distribution
Energy services present in existing services
categories (e.g. engineering, construction,
transportation, financial services)
Problems
 The energy sector is a chain of interrelated
activities but the classification is
fragmented and non-exhaustive
Market access
conditions
unclear/unpredictable
Commitments made
in other sectors may
have implications for
energy services
The ongoing debate in the WTO
 Seven proposals on energy services:
•
•
•
•
•
•
•
United States
Venezuela
Canada
Norway
European Communities
Chile
Japan
Common elements
Improved market access in the sector
can be beneficial for all countries
Ownership of natural resources excluded
from negotiations
The energy sector will continue to be
regulated for achieving public goals
Countries are in different phases of
regulatory development: commitments
will reflect the levels of market reform
Common elements
Norway & Venezuela: promote trade for all
and secure a share for developing countries
USA & Norway: reference paper
EC: pro-competitive regulatory framework
EC, Japan & USA: neutrality of energy sources
Canada, Norway & EC: checklist
Specific elements
Venezuela: classification according to:
sources of energy; phases of energy process;
“core” and “non-core” services
USA: Index for classification of energy services;
Technological neutrality
Chile: comprehensive coverage; subsidies
Canada: oil & gas services
Japan: new classification;comprehensive coverage;
“core” and “non-core” services
Present situation
 Initial requests:
by 30 June 2002
 Initial offers:
by 31 March 2003
 Conclusion: not later than 1 January 2005
 Energy services included in the requests of
several developed countries
 Developing countries are not front-runners
Types of requests
 Seeking clarification and technical
improvement of existing commitments
 Seeking binding of the existing regimes
 Seeking further liberalization
commitments
 Seeking additional commitments under
Article XVIII
Developing country challenge
Achieving a broader, sustainable, and
more reliable and efficient
access to energy
Obtaining a greater share
of the energy “business”
Implications for developing
countries

Energy producers
developing countries
• import traditional
energy services
• few commitments in
their GATS schedules
• flexibility to
liberalize and seek
reciprocal
concessions

Developing countries
• limited experience
with reform in the
energy sector
• effective domestic
energy policies
promoted by a
better
understanding of
market reform
Questions for developing
countries
 Classification
A sufficient degree
of precision in the
definition of energy
services would
facilitate specific
commitments

Additional provisions
• Commitments in
the energy
services sector
result in effective
access to market
• Art. IV GATS
provisions
• Public services
obligations
Conclusions
Rapid developments in the
Access to energy is crucial sector: need to better understand
for development
the implications
Freer trade in energy
services may
facilitate access to energy
GATS-consistent ways
should be found to achieve
these goals
Energy services are the value
added in the energy chain:
developing countries wish
to increase their participation