Considerations for the Treatment of Energy in the US–EU Transatlantic Trade and Investment Partnership

DESCRIPTION: While the negotiations between the United States and the European Union for the Transatlantic Trade and Investment Partnership (TTIP) have not received as much US press attention as the proposed US-Pacific basin TransPacific Partnership (TTP) has, the two deals are of a similar magnitude and importance in terms of total global GDP and trade potentially at issue. The dynamics of the negotiation put both sides in potential unusual positions. The United States, long a champion of removing export barriers in energy goods and of the European Union diversifying its energy supplies, has to wrestle with restrictions on crude oil exports and the potential strong domestic political opposition to relaxing them. The European Union, which supports alternative energy sources and reducing fossil fuel consumption, faces becoming entangled in the environmental controversies around the rapidly expanding oil and gas production in North America – including hydraulic fracturing and the exploitation of the Canadian oil sands. This paper provides background on how the existing global and regi

OUTCOMES: Key Findings
• There are no energy-specific provisions in the WTO agreements but this does not mean energy is not covered by the WTO. The general WTO provisions apply to trade in energy goods and services.
• The EU’s insistence on an energy chapter with an ally that is a potential exporter of oil and natural gas is similar to past United States positions where Washington insisted on separate energy chapters in its FTAs with neighbor countries that are large oil exporters to the United States.
• The EU has identified a list of energy-specific provisions for consideration in TTIP covering issues on which it often shares a common position with the United States.
• To determine what energy-specific provisions should be in TTIP, the United States and the European Union should consider whether a provision is necessary to improve the transatlantic trade relationship; how likely it is that a provision will be influential as a model provision; and the potential unintended consequences of including a provision in TTIP.
• Whether to consolidate any energy-specific provisions in a separate chapter on energy can have political or symbolic importance, but does not alter the substance or legal impact of the individual provisions.
• The most significant risk is entangling TTIP approval in additional, politically contentious issues, such as crude oil exports, and sensitive environmental issues, such as the exploitation of Canadian oil sands.
• Including provisions in a treaty can help establish model rules or norms for future negotiations, but there are reasons to be cautious about how much influence the proposed EU provisions might have in the future for two reasons.