SERVICES: SECTOR BY SECTOR
Energy services
Energy is an essential input to economic activity, with access to reliable and affordable energy supply fundamental for social and economic development. Services play a key role in the production, transformation, transportation, distribution and sale of energy. The market for the supply of energy services differs for each energy source (i.e. petroleum, natural gas, coal, nuclear energy, renewable energy and electricity).
The dividing line between the production of an energy source and the supply of a service is not always clearly delineated. This explains in part why energy services were not negotiated as a distinct sector in the services negotiations during the Uruguay Round. At the time, the energy market was largely controlled by state-owned utilities operating across the entire chain of activities.
The trend towards the privatization and liberalization of national energy markets since the 1990s has increased the participation of private operators in the sector; clean technologies and innovation have led to the emergence of new service activities; and many WTO members have adopted regulatory frameworks that affect the supply of energy services.
Energy services may encompass services supplied in relation to upstream activities (such as exploration and extraction, as well as related construction services), transportation and transmission of energy, as well as downstream activities, including those relating to the commercialization and supply of energy to the final consumer.
Current market access commitments and most-favoured-nation (MFN) exemptions
Compared with other sectors, such as tourism, financial services or telecommunications, WTO members have undertaken a low level of commitments in relation to energy services under the General Agreement on Trade in Services.
The limited number of commitments concern market access or national treatment in three energy-specific sub-sectors, namely "services incidental to mining rendered on a fee or contract basis at oil and gas fields", "transportation via pipeline of crude or refined petroleum and petroleum products and of natural gas" and "services incidental to energy distribution".
As of 1 December 2020, 49 members (counting EU-25 as one) had made commitments on services relating to mining, 19 on services relating to energy distribution and 13 on transportation of fuels. In addition, several members with commitments on services relating to mining and to energy distribution have limited the scope of their commitments to advisory and consultancy services.
One exemption to most-favoured nation (MFN) treatment (i.e. non-discrimination) has been made in relation to the pipeline transportation of fuels.
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Energy services were included in the services negotiations, which began in January 2000. In the early phase of negotiations, negotiating proposals relating to energy services were submitted by Canada (S/CSS/W/58), Chile (S/CSS/W/88), Cuba (S/CSS/W/144), the European Union (S/CSS/W/60), Japan (S/CSS/W/42/Suppl.3), Norway (S/CSS/W/59) and the United States (S/CSS/W/24).
Most of the proposals tabled in the first few years of the negotiations stressed that the services sectoral classification under the GATS did not define energy services as a distinct sector. The negotiating proposals defined the scope of energy services as covering the whole range of activities along the energy chain and suggested different approaches for their classification.
Following the exchange of bilateral requests for enhanced market access, offers of improved commitments were exchanged among members, including on energy services.
After the Hong Kong Ministerial Conference in 2005, a group of 11 members submitted a plurilateral request to a group of 23 other members. The request identified 12 types of activities of relevance to the energy industry, belonging to three main sectors, namely business services (such as engineering, technical testing and analysis, services incidental to mining, etc.), construction (of long-distance and local pipelines, for instance) and distribution (wholesale and retail of certain energy products).
The request sought new or improved commitments across the four modes of supply, with a particular emphasis on mode 3 (a foreign company setting up a subsidiary or branch to provide services in another country). The request was neutral with respect to energy source, technology and whether services were offered onshore or offshore. Furthermore, the request did not extend to the ownership of energy resources, which remained under the sovereign rights of each member and was not affected by GATS negotiations.
Information on sectoral and modal negotiating objectives expressed by members is contained in reports from the Chair of the negotiating group issued in 2005 (TN/S/20 and TN/S/23). The Chair of the Special Session of the Council for Trade in Services provided an assessment of the plurilateral negotiations in different sectors and areas in a report to the Trade Negotiations Committee in 2011 (TN/S/36).
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