importantly, the point at which a natural resource
becomes a saleable commodity is often hard to
distinguish and remains controversial. A further
complexity is that while the General Agreement
on Trade in Services (GATS) provisions do not
include natural resources, a service relating to
natural resources (exploration, exploitation,
technical testing, transport) is subject to the
GATS disciplines unless provided by government authorities. This had led to calls for a more
coherent framework, specifying the rules that
apply to each resource type, the qualifications
needed for a resource to be considered a good or
a service, and important issues for oil and gas,
such as investment protection.
Another key issue is that while supply security concerns in consumer countries focus on the
ability to import goods, the WTO is focused on
avoiding import restrictions. Article XI of the
General Agreement on Tariffs and Trade (GATT)
1994 requires that exports should not be subject
to quantitative restrictions “other than duties,
taxes or other charges”, but it does not fix a
maximum level for border taxes, except for those
countries which accepted them within their
accession agreements (including China). Article XI has been interpreted as not prohibiting
export taxes, which explains why “more than a
third of notified export restrictions are in resource
sectors, where export taxes on natural resources
appear to be twice as likely as export taxes in
other sectors”. In recent years, several key raw
material suppliers have used export controls.
Indonesia has introduced a ban on exports of
unprocessed ores. Vietnam has also imposed
restrictions on iron ore and copper, and export
taxes have recently been debated in Brazil and
India. In 2012, the USA, EU and Japan lodged
complaints with the WTO over Chinese export
quotas of rare earth minerals, and the quota
system was withdrawn in late 2014. There have
been various proposals for voluntary avoidance
of export restrictions in times of crisis or extreme
price volatility, which such restrictions tend to
exacerbate.
Although there has been growing concern over
the functioning of resource markets, the much
delayed Doha round is unlikely to introduce
major changes to the treatment of extractive
industries at the WTO, partly because a significant constituency within the WTO negotiations
argue that “access to, and use of, natural resources
as well as the right to regulate, should remain
outside the scope of negotiations”. Past negotiations and instruments, such as the Generalized
System of Preferences (GSP), concerning natural
resources in GATT and WTO, were dominated by
concerns about developing country dependency
on raw material exports and structural inequalities
in the international economic system as a potential cause (dependency theory). Discussions during the resource boom reflected concerns around
high resource prices, extreme price volatility,
increasing restrictions on trade and the diminishing ability of the WTO dispute settlement regime
to solve resource trade disputes.
Annex A.8: Nuclear Power: Decline
or Resurgence?
Nuclear power generation, as a share of global
electricity supply, has decreased from a peak in
2006, when it provided 15%, to 10.8% in 2015.
Beyond public and political concerns over safety,
financing and the economics of nuclear power
have hampered deployment. Long construction
times and high capital expenditure result in
unfavourable risk-reward profiles, from the perspective of potential investors. Until 2013 the
global average levelised cost of energy (LCOE)
was $93–94/MWh, but this jumped to
$140/MWh in 2014. Estimates for the first half of
2015 put the high point valuation at $258/MWh,
rising to $290/MWh in the second half. This is
the direct result of infrastructure costs increasing
to $3.72–7.5/MWh. Gas-fired generator build
costs at the time were between $0.46–
1.65/MWh. The near 50% increase in nuclear
LCOE is due to underestimating the cost of
Special Report 5: International Energy Cooperation and Governance
699
becomes a saleable commodity is often hard to
distinguish and remains controversial. A further
complexity is that while the General Agreement
on Trade in Services (GATS) provisions do not
include natural resources, a service relating to
natural resources (exploration, exploitation,
technical testing, transport) is subject to the
GATS disciplines unless provided by government authorities. This had led to calls for a more
coherent framework, specifying the rules that
apply to each resource type, the qualifications
needed for a resource to be considered a good or
a service, and important issues for oil and gas,
such as investment protection.
Another key issue is that while supply security concerns in consumer countries focus on the
ability to import goods, the WTO is focused on
avoiding import restrictions. Article XI of the
General Agreement on Tariffs and Trade (GATT)
1994 requires that exports should not be subject
to quantitative restrictions “other than duties,
taxes or other charges”, but it does not fix a
maximum level for border taxes, except for those
countries which accepted them within their
accession agreements (including China). Article XI has been interpreted as not prohibiting
export taxes, which explains why “more than a
third of notified export restrictions are in resource
sectors, where export taxes on natural resources
appear to be twice as likely as export taxes in
other sectors”. In recent years, several key raw
material suppliers have used export controls.
Indonesia has introduced a ban on exports of
unprocessed ores. Vietnam has also imposed
restrictions on iron ore and copper, and export
taxes have recently been debated in Brazil and
India. In 2012, the USA, EU and Japan lodged
complaints with the WTO over Chinese export
quotas of rare earth minerals, and the quota
system was withdrawn in late 2014. There have
been various proposals for voluntary avoidance
of export restrictions in times of crisis or extreme
price volatility, which such restrictions tend to
exacerbate.
Although there has been growing concern over
the functioning of resource markets, the much
delayed Doha round is unlikely to introduce
major changes to the treatment of extractive
industries at the WTO, partly because a significant constituency within the WTO negotiations
argue that “access to, and use of, natural resources
as well as the right to regulate, should remain
outside the scope of negotiations”. Past negotiations and instruments, such as the Generalized
System of Preferences (GSP), concerning natural
resources in GATT and WTO, were dominated by
concerns about developing country dependency
on raw material exports and structural inequalities
in the international economic system as a potential cause (dependency theory). Discussions during the resource boom reflected concerns around
high resource prices, extreme price volatility,
increasing restrictions on trade and the diminishing ability of the WTO dispute settlement regime
to solve resource trade disputes.
Annex A.8: Nuclear Power: Decline
or Resurgence?
Nuclear power generation, as a share of global
electricity supply, has decreased from a peak in
2006, when it provided 15%, to 10.8% in 2015.
Beyond public and political concerns over safety,
financing and the economics of nuclear power
have hampered deployment. Long construction
times and high capital expenditure result in
unfavourable risk-reward profiles, from the perspective of potential investors. Until 2013 the
global average levelised cost of energy (LCOE)
was $93–94/MWh, but this jumped to
$140/MWh in 2014. Estimates for the first half of
2015 put the high point valuation at $258/MWh,
rising to $290/MWh in the second half. This is
the direct result of infrastructure costs increasing
to $3.72–7.5/MWh. Gas-fired generator build
costs at the time were between $0.46–
1.65/MWh. The near 50% increase in nuclear
LCOE is due to underestimating the cost of
Special Report 5: International Energy Cooperation and Governance
699