Brussels, 21/11/2006 (Agence Europe) - As the first speaker of a panel on “energy and international trade” as part of the Forum on the external energy policy, Trade Commissioner Peter Mandelson said on Tuesday that the trade policy could, through a set of rules for the energy sector, calm geopolitical tensions linked to the rush for energy security.
“We cannot afford to have energy become a geopolitical bargaining chip. More international rules can provide stability and fill the legal vacuum that is currently the source of international tension and insecurity,” said Mr Mandelson. He felt trade policy could contribute to energy security and “calm tensions”, on the one hand by helping producer countries to find outlets and consumer countries resources, and on the other, by creating, through binding rules, the conditions needed for massive investment (according to the latest World Energy Outlook, as much as $20 trillion investment in exploration and infrastructure will be needed in the next twenty five years, he said). But, in arguing for better international rules, he asked for a “balanced two-way bargain”, he said, stressing the need for improved dialogue between consumer and producer countries. He felt consumer countries had to “confirm that their wish to maximise state income from their natural resources is entirely legitimate”, “recognise the sovereign right of nations further upstream when they decide whether or not to approve exploitation of resources” and “recognise the legitimate interest of producing countries in investing downstream in the countries they sell to”. Producer countries need, for their part, to “recognise that they can increase their gains through stronger international legal commitments and competition in the energy field”.
He argued that a better international legal arsenal would facilitate and protect the investment needed in exploration and infrastructure and would allow producer countries to find outlets more easily. Without these rules, he said, importer countries would seek to diversify more and the demand security that producer countries are seeking would be eroded. Good rules are good for bother consumer and producer countries, Mr Mandelson stressed, saying that one can improve rules governing the trade in energy by applying WTO rules for freedom of transit, transparency and non-discrimination. Acknowledging, however, that the rules of the WTO are not a cure-all, as the first founding texts of the GATT established rules on market access and not on access to resources, Mr Mandelson stressed the need to develop balanced, equitable and negotiated solutions for global resources and markets. The Trade Commissioner said bilateral energy agreements and regional agreements between consumer and producer countries or transit countries are above all an effective way of finding balanced solutions to problems relating to market access, resources and infrastructure, to transit problems, and for finding improved solutions for investment and competition rules. For Europe, the most promising area of application of such agreements is on our own continent with Russia, Ukraine and Turkey, he concluded.
These ideas were shared by several speakers. The Austrian Minister for the Economy, Martin Bartenstein, asserted that, as Peter Mandelson had said, “a rules-based approach for the energy trade is necessary”. He cited the principles of the Energy Charter and of the WTO. Mr Bartenstein also stressed the need to reach a “very high” level of trade cooperation in the field of energy, to facilitate WTO accession for major partners like Russia and Ukraine and favour bilateral energy agreements incorporating the Singapore subjects and ensuring the protection of investments. “The WTO has to include the energy sector,” added the Secretary General of the Energy Charter André Mernier, who felt that the rules of the energy markets game were different for two reasons: hydrocarbon resources were determined by geological conditions and sovereign exploitation decisions, and international oil and gas trade was linked to fixed infrastructure and was capital intensive; Mr Mernier also said that, despite the Russia's transitional application of the Charter working in practice, the EU insisted that Moscow ratify the Charter to remove any ambiguities from the transitional application system and the validity of the rules as they are understood by Moscow. The Director of the IEA Claude Mandil emphasised the importance of defining reciprocity: he said it was about market trade. “The EU must ensure that the Community market is more and more open,” he stressed. Dieter Helm, a professor at the University of Oxford, said that Gazprom's logic was “rational”. “90% of world gas reserves are controlled by governments. This involves rationalisation of resources and public control of the infrastructure,” he said. “It is not in the interests of Russia, then, to apply internal market rules,” he concluded. (eh)