Trade in natural resources: are there any gaps in the rules?

Dr Melaku Desta: Reader in International Economic Law and Director of PhD programme, The University of Dundee
in collaboration with Vitaliy Pogoretskyy (PhD Student, The University of Dundee)


The International Economic Law and Policy Blog hosted a week-long discussion on various legal issues related to trade in natural resources (10-17 March 2010). The text below highlights some of the comments posted.

The discussion started with a brief summary of the WTO working paper written by Professors Paul Collier and Anthony Venables. The paper covers a number of natural resources–related issues that the trade lawyer might be tempted to consider as outside the scope of international trade law, such as investment and investment dispute settlement, competition law, taxes and the like. The key questions addressed in the course of the discussion were whether there is a need for any of the above disciplines to be brought within the WTO, and whether there are other international law rules that take care of such issues adequately?

One comment stated the following: 1) In relation to investment, there has been already an effort to bring investment law issues into the WTO in the 1990s, which was unsuccessful; 2) Regarding competition issues, the MFN obligation in the GATT Article I partly addresses them (further it was submitted that this obligation does not extend to activities of private entities); and 3) Referring to the issue of taxes and subsidies and, in particular, the authors view that “it is potentially possible to reach a mutually beneficial deal […] in which world prices were gradually harmonized […]”, it was noted that such a deal could have competition-related implications as a price-fixing regime. Following up on the second point, it was discussed whether activities of state trading enterprises involving the sales of natural resources would be captured by the GATT Article XVII (i.e., State Trading Enterprises)?

Another question addressed during the discussion was whether there is a room in the WTO legal system for an international law obligation to allow investment, including foreign investment, in any of the sectors involving natural resources, and limiting the power of the Member States only to the administrative functions, such as licensing, which would be based on certain standards (e.g. non-discrimination, fair and equitable treatment, etc).