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Trade and Transit

In the early 1990s, approximately half the states that were to become the Energy Charter’s constituency were not Contracting Parties to the General Agreement on Tariffs and Trade (GATT), and this was the main reason for making the GATT 1947 (and later the World Trade Organisation (WTO) rules) applicable in the Energy Charter Treaty for trade relations involving non-WTO members. This allowed those member states that are not WTO members to benefit from stable, predictable and non-discriminatory trade rules, and has meant that all Energy Charter member states – whether WTO members or not, whether energy suppliers, transit or consumer countries – have benefited from the uniform application of the rules of the multilateral trading system in the energy sector.

In this way, the Energy Charter Treaty has provided a useful external anchor for trade reforms in those Energy Charter member states that are looking to join the WTO, by providing a 'stepping stone' for these countries in their efforts to prepare for WTO membership.

A strong advantage of the application of WTO rules through the Energy Charter Treaty is that this has avoided the creation of any alternative framework for regulation of trade in energy.

There are areas where the coverage of trade issues in the Energy Charter Treaty is more limited than in the WTO. The Energy Charter Treaty does not provide for legally binding tariff commitments, and the WTO Agreements on Trade in Services (GATS) and Trade-Related Intellectual Property Rights (TRIPS) do not apply.

However, there are other areas of particular strategic significance to the energy sector where the Energy Charter Treaty goes further than the WTO. Firstly, there is no counterpart in the WTO system to the Energy Charter Treaty's provisions on the protection of investment. Secondly, the Charter also covers in more detail the critical issue of energy transit, and includes a distinctive mechanism for the resolution of energy transit disputes.

Energy Transit

The Energy Charter Treaty is the only multilateral agreement that seeks to directly address the complex political, economic and legal problems associated with energy transit. The Treaty goes further than WTO/GATT in developing a specific transit-related regime for the energy sector.

The Energy Charter Treaty promotes the principles of freedom of transit and of non-discrimination, includes an obligation to provide national treatment for energy in transit, and prohibits interruption of flows and the placing of obstacles to construction of new energy transport facilities. It also contains a specific conciliation procedure for disputes over energy transit.

Trade and Transit Group

Latest Trade and Transit related Publications

This paper discusses the role of the World Trade Organization (WTO) and the Energy Charter Treaty (ECT) in the legal architecture regulating energy...

This publication compiles the relevant documents related to the dispute resolution mechanisms under the Energy Charter Treaty and provides some useful...

For more than 25 years the Energy Charter Process has set rules for good governance in the energy sector, starting with the European Energy Charter (1...

The aim of this paper is to analyse the existing potential conditions and economic opportunities for regional electricity cooperation in the South...

 The Energy Charter Secretariat has published the Annual Report 2015.