Date: 16/09/2010
Source: World Trade Organisation
Title: WTO: Lamy: Address by the WTO DG to the World Energy Congress 2010, Montreal

Ladies and gentlemen,

Thank you very much for having invited me to the XXIst World Energy
Congress. I had participated in your previous Congress in Rome, which was
held in November 2007. You have also participated in the WTO Public Forum
yesterday - and it is indeed the Public Forum that has kept me here in
Geneva. The joint WTO-WEC session in our Public Forum echoed some of the
very interesting discussions that you have been having in Montreal.

Now, in 2007, my principal message to you was that more predictable and
transparent trade rules in the energy field could benefit both energy
producing and consuming nations.

Today, I would like to take that message further. To fine-tune it in light
of the report that has been recently issued by the Task Force of the World
Energy Council on "Trade and Investment Rules for Energy."

I read the report with great interest, and certainly welcome the support
it expresses for the Multilateral Trading System throughout its many pages.
But I also see in the report a hope that the Trading System will be able to
do more for the energy sector.

I thank your Task Force for making the point that the international
community has yet to take a strategic approach to the rules of the
Multilateral Trading System with respect to energy trade. While several
portions of the WTO "rule-book" so-to-speak are relevant to energy, they
remain relatively scattered, with little over-arching global policy
consensus or goal. A stronger WTO rule-book could benefit the energy
sector, because just as with any sector where trade is feasible, trade
restrictions are feasible too. The WTO tackles these restrictions as its
daily business.

So what could be the goal then? Well first, we must recognize that what we
have before us is a complex web of trade-restrictive practices by
state-trading enterprises; subsidies; export restrictions of various sorts;
restrictions on transit; on investment; on the movement of energy service
providers; and more. The WTO rule-book addresses some of these issues,
sometimes deliberately, but other times only by default.

Now you, in the World Energy Congress, have defined your goals around
three As: "Access," "Availability" and "Acceptability" of energy sources.
Another way to call these issues is "long-term energy security." Were
long-term energy security to also become the defining principle of energy
trade rules, what would those rules look like?

The word "long-term" would suggest to me that social and environmental
goals would need to be at the heart of those rules. Today, 2 billion people
do not have access to commercial energy and 1 billion only have what is
termed as "periodic" or "unreliable" supply.

Clearly, the poor must see their access to energy increased. This will
happen when their levels of poverty decline, so part of the answer lies in
economic growth. But it will also happen if we can make energy cheaper,
which enhancing access, at the international level, to different energy
providers.

Similarly, today the energy issue cannot be divorced from the climate
crisis that our planet is facing. We need to reconcile the fact that the
world will clearly need more energy, with the knowledge that our current
patterns of energy-use are harming our planet. The answer can only lie in
greater energy efficiency, renewable sources, and improved lifestyles.

Energy security also implies that energy supply must be allowed to expand
and to travel more readily from countries where there is surplus, to
countries where there is demand (just as with any other natural resource).
We all know, of course, that traditional sources of energy are heavily
geographically concentrated. A clear element of energy security would
reside in the predictability of energy supply. A sense of certainty that
supply will be sufficient and available, and will not simply be cut-off.
This while striking a balance, of course, between the needs of energy
exporting and energy importing countries.

A more sophisticated WTO rule-book could actually take us closer to these
goals. Having said that, trade policy would still need to be couched in the
midst of many other accompanying policies, in both the social and
environmental spheres. For instance, it is not the rule-book of
international trade that will decide "how" energy gets distributed within a
country, or the ownership of natural resources. Nor is it that rule-book
that will ensure that environmental regulations are put in place. The need
for accompanying policies will remain.

The Doha Round of trade negotiations, behind which your Task Force has
thrown its full support, could be considered a first stepping stone towards
the emergence of a customized approach in the energy field. Towards greater
energy trade security. It would build on existing disciplines, such as the
non-discrimination principle, that forms the backbone of the WTO system as
a whole.

And if successfully completed, it could open the door for a more holistic
approach, possibly encompassing new issues such as competition policy. With
the changing composition of the WTO's membership, and with energy exporting
countries, such as Russia and Algeria negotiating their accession, the
imperatives could become stronger to address the energy sector more fully.

To give you a flavour, the Doha Round will reduce tariffs on various
renewable fuels (such as ethanol and biodiesel) and the equipment involved
in energy production and distribution; will improve WTO subsidy
disciplines; will improve the rules for transit under the Trade
Facilitation chapter of its negotiation; will open energy services in areas
such as drilling, engineering, technical testing, pipeline construction,
and distribution; and will accelerate trade opening in energy-efficient and
climate friendly technologies.

The latter, as you will have often heard me say, is a low-hanging fruit.
Today, the global value of the environmental goods and services industry is
estimated to be around US$800 billion, making it comparable in size to the
aerospace and pharmaceutical industries. Solar panels, fuel cells, and
climate consultancy services, are but a few examples of what is on the WTO
negotiating table. Barriers to the trade of these technologies penalize the
planet.

Through more open markets, greater competition, and the spread of clean
technology, the Doha Round would help stabilize the international trade and
investment landscape in the energy field.

Having said that, the Doha Round will not provide an answer to issues such
as export taxes. In addition, the many trade policies, that are being
contemplated in the climate sphere, may require examination at a future
date. I refer here to border measures that some countries may apply to
manage carbon leakage, or offset competitive disadvantage arising from the
carbon constraints imposed on production. How permits are allocated within
carbon markets may also need to be explored. The Doha Round would only be
the beginning of what the international community may need to do.

Now, I would be remiss if I did not draw your attention to this year's
World Trade Report of the WTO, that has been devoted to natural resources.
I would strongly recommend that the Congress examine the report, because of
its clear relevance to energy. You may also wish to note that the oil
crisis of the 1970s had already placed the issue of export restrictions in
the energy sector on the Tokyo Round's negotiating table. But this, without
success. Later, the Punta Del Este Declaration, that launched the Uruguay
Round, initiated negotiations on Natural Resource-Based Products, leading
to controversial and unresolved discussions on energy.

Let us remember that in the WTO, it would be neither the Secretariat, nor
the Director-General, that could mandate negotiations, nor even make
proposals for their initiation. This is the prerogative of WTO members, and
they would need to forge the necessary consensus to set the negotiating
machinery in motion.

Coming back to the themes of your Congress, I note that to your three As,
you have now also added a fourth, which stands for policy "accountability"
in the energy field. By placing international trade under that goal, your
message is loud and clear. A global framework for trade in energy would
bring accountability to a sector where various types of barriers remain
"unaccounted" for. As your Task Force has put it (I quote): "the global
economy requires concerted efforts to ensure that markets remain open to
energy goods, services, investments, and movement of personnel" (unquote).

A basic point that may enable you to convince the WTO to address energy
more fully, would be to reassure its members that in so doing, they would
not be ceding sovereignty. Quite to the contrary, they would be sovereignly
deciding to create a more reliable international system for trade in
energy. Bringing greater law and order to this complex field could turn out
to be one of the best sovereign decisions ever made. Thank you for your
attention.