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Energy security study: China and Europe profit from WTO rules on export restrictions

The World Trade Organization’s (WTO) rules on export restrictions can foster China-EU cooperation in the field of energy security, says Dr Ilaria Espa in a new article published in the China-EU Law Journal. However, she also identified a number of areas where existing WTO regulations could be improved.

The People’s Republic of China and the European Union’s consumption of energy is enormous. According to the latest figures by the International Energy Agency, in 2014, China was the world’s largest energy consumer with a share of 27.4 % of total global consumption, and the EU ranked fifth with 10.8 %. At the same time, China and the EU account for one third of global energy-related CO2emissions; in 2013, China left the world’s largest carbon footprint and Europe the fifth largest. To safeguard energy security, Beijing and Brussels face common challenges as major fossil fuel importers, and both seek to lead the shift towards more renewable energy. The number of China-EU cooperation projects in the energy sector, joint ventures and joint research projects, has accordingly risen in the past decades.

China and Europe in the energy sector: partners, not rivals

“China and Europe seem to be clear on the fact that the two fields of energy security and clean energy carry the highest potential for cooperation due to the convergence of their interests with regard to access to energy resources and renewable energy development,” says Dr Ilaria Espa. She is a Senior Research Fellow at the World Trade Institute at the University of Bern, Switzerland, and a Member of the Swiss National Centre of Competence in Research (NCCR) Programme in Trade Regulation. She has examined these issues in a new article published in the China-EU Law Journal. “China and Europe also insisted on the need for improved global energy governance in their latest cooperation efforts,” she says. “It is as if they were aware that unsuccessful cooperation efforts may still leave room for potential tensions, given that pursuing coincident interests in the international energy sector on an individual basis may turn them into rivals.”

Espa, a former Marie Curie Fellow from the European Commission and Visiting Scholar at Columbia Law School in New York, thus examined whether international trade rules are well-equipped to encourage Chinese-European cooperation in the energy sector or not. Her result: China and Europe profit from the existing WTO rules on export restrictions because they also support the free trade of energy commodities. However, WTO disciplines seem to be under-developed in the area of export duties, where they still leave too much room for single countries to impose such duties. “In this area, existing disciplines could be improved to ensure increased and fairer access to energy commodities for China and Europe,” says Espa. “A greater role for the WTO on this front would encourage the furtherance of China-EU relations in the energy sector, in addition to being beneficial for global energy governance.”

The article entitled “Climate, energy and trade in EU-China relations – synergy or conflict?” was written within the “EU-China Disputes on Trade Remedies, Climate Change and Natural Resources: A Legal Analysis for a Better Legal Framework and Cooperation” research project. The China-EU School of Law supported the project under the scientific supervision of Prof. Elisa Baroncini from the University of Bologna, Italy.

Full article (PDF)