Energy discrimination and international rules in hard times: what's new this time around, and what can be done

Abstract

International trade and investment in the energy sector takes place in a framework of treaties based on the conviction that all boats rise on the tide of free trade and underpinned by legal obligations, including the commitment to treat foreign products no less favourably than domestic products. Although international treaty obligations should limit violations of basic trade rules, in times of economic crisis domestic political imperatives of collecting revenue and protecting local employment often trump economic wisdom and lead to violations of international trade treaties. That the current global economic crisis has produced its share of trade protectionism comes as no surprise. However, the ever expanding substantive and geographic scope of international trade rules forces governments to seek out increasingly nuanced and creative modes of protection in order to disguise treaty violations. The recent trend toward unapologetic protectionism may indicate a new direction in trade policy. This article reviews trade protectionism that affects businesses in the energy sector, discusses attendant violations of international trade law, and identifies actions that could be taken to counter trade protectionism affecting the energy sector.