The Effect of Dual Pricing Practices on Trade, the Environment, and Economic Development: Identifying the Winners and the Losers Under the Current WTO Disciplines

Abstract

Dual pricing is a practice that has garnered significant attention recently as either a potentially prohibited export subsidy or an actionable de facto specific subsidy under the WTO. Dual pricing practices by natural resource-endowed countries allow for the domestic price of natural resources to be set significantly lower than export market prices. Such practices permit countries to provide energy inputs to its consumers and domestic industries at discounted prices. These practices are of particular concern in industries that require either large energy inputs (such as the steel industry), or a large provision of resource-based energy commodities (such as the petro-chemical industry). While the practice of dual pricing of resource-based energy inputs is likely to be found to be WTO-consistent, many countries looking to future accession into the WTO may be politically pressured into halting such practices as a condition of accession under what is commonly referred to as WTO-plus obligations. This paper will explore the issues relating to dual pricing practices in the resource-based energy sector, while at the same time considering the possibility of creating a framework for the expansion of the practice into other renewable and non-renewable natural resource-based industries.