WORLD TRADE
ORGANIZATIONS/CSS/W/69
29 March 2001
(01-1552)
Council for Trade in Services
Special SessionOriginal:  Spanish
COMMUNICATION FROM VENEZUELA
Negotiating Proposal on Energy Services
The following communication has been received from the delegation of Venezuela with the
request that it be circulated to Members of the Council for Trade in Services.
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I. INTRODUCTION
1. Venezuela presents this negotiating proposal under paragraph 2(c) of the programme of work
for the first phase of negotiations under GATS Article XIX (document Job No. 3573), adopted by the
Council for Trade in Services at its Special Session of 26 May 2000, which appears in the report ofthe Special Session of the Council of 26 June 2000, (document S/CSS/M/3).  It is an initial
contribution to the discussion with the other Members of the Council for Trade in Services on the
issue of energy services.
2. Venezuela reserves the right, provided for in document Job No. 3573, to add to or alter this
proposal in the course of the negotiations on this issue.
II. ENERGY SERVICES:  BACKGROUND
3. The supply of energy is fundamental to any country's development, given that energy is an
essential intermediate input for almost all economic activity, as well as having a direct impact on the
welfare of end-users, and because energy production is for many countries a direct driving force in
their development.  Hence the strategic role that has traditionally been attached to energy supply and
the need to ensure that this supply is both stable and secure.
4. Furthermore, the dividing line between the generation of a good and the provision of a service
for the various activities which make up the chain of production, transformation, transportation,
distribution and sale of energy is a matter for discussion.  In addition, many of these activities have
been carried out, for economic or strategic reasons, under natural or de facto monopolies or conditions
of exclusivity.  These are some of the reasons for which trade in energy services was left out of the
negotiations on services during the Uruguay Round.
5. In recent years, technological changes have oc curred in some activities in the energy chain,
making it economically possible for competition to be introduced in traditionally monopolistic areas.
The trend towards outsourcing in various production sectors and the liberalization of world services
trade have also been reflected in energy services, which have become more varied and have increased
their participation in the services market in general.  In a large number of countries, including manydeveloping countries, this has led to the development and introduction of new regulatory and legalS/CSS/W/69
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frameworks for energy services, with two complementary objectives:  firstly, to use them as effective
instruments in these countries' development strategies, and secondly, to improve the economic
efficiency of these services, by including measures to facilitate competition in some of the activities
they involve.
6. These factors mean that it is now possible to consider conducting negotiations on trade in
energy services, and to believe that they might have a good chance of succeeding, provided that from
the outset such negotiations accept, and in some cases take advantage of, the specificity of these
activities and the importance they have for all countries, especially developing countries.  The
advantages derived from the competitive, reliable and efficient supply of energy services for all
countries are obvious.
7. It would be in the interests of developing countries if these negotiations were approached with
a wider focus than a merely trade-based perspective,  and if the results could help to enable them to
achieve their objectives linked to the strengthen ing of their domestic entrepreneurial capacity,
technological development and the protection of the environment and natural resources.
III. NEGOTIATING PROPOSAL ON ENERGY SERVICES
A. GENERAL OBJECTIVES
8. These negotiations should ensure that energy services are made accessible to as many people
as possible, in order to improve their standard of living, and to as many industries, businesses and
services as possible, in order to promote economic growth.
9. The market-opening resulting from the negotiations should help to increase the energy supply
capacities of all Members.
10. Furthermore, the agreements resulting from the negotiations should help developing countries
to achieve improved access to technology and, in general terms, to pursue services-related policies
designed to increase the competitiveness of all their production sectors.
11. Consequently, the results of the negotiations should enable countries which use the supply of
energy services as an instrument for boosting their development and as a means of diversifying their
economy and strengthening the private sector, to continue to pursue and to consolidate these policies.
B. BASIS FOR NEGOTIATIONS
12. The negotiations should guarantee the right of Members, especially developing countries, to
regulate the supply of energy services within their territories in order to meet national policy
objectives and to facilitate their increasing part icipation in international trade in these services,
through the strengthening of their domestic capacity, in accordance with the preamble to the GATS.
13. The strategic character of energy services makes it essential that such negotiations should:
(a) Include the definition of mechanisms to put into practice the provisions of GATS
Article IV, especially with regard to access to technology and the treatment of least-
developed countries (paragraphs 1(a) and 3);
(b) take special care to advance in coordinatio n with negotiations related to other aspects
of the GATS, particularly emergency safeguard measures, government procurementand subsidies (Articles X, XIII and XV respectively);S/CSS/W/69
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(c) not impair the right of governments to determine conditions of access to their markets
and to set obligations with regard to public services.
14. The negotiations should respect the appropriate flexibility for individual developing country
Members to open fewer sectors, liberalize fewer types of transactions and progressively extendmarket access in line with their development situation, in accordance with Article XIX of the GATS.
15. The negotiations should respect the developing countries' space to implement policies aimed
at domestic capacity-building, in particular the capacity of their small and medium-sized energy
service suppliers.
16. The ownership and rights of access to and use of natural resources are issues that should not
be addressed in these negotiations.
17. It must be clear that the treatment of all goods, including energy goods, involved in the
production and supply of energy services, is covered exclusively by GATT rules, disciplines and
access commitments, and not by the GATS.
18. Recognizing that the supply of services in the energy sector is often linked to the use of
specialized tools and equipment, the negotiations should facilitate requirements on the temporary
admission of goods, with respect for the principle that these requirements must be governed by thedomestic rules applicable in each country.
19. It would be highly desirable for the Secretariat, to revise document S/C/W/52 of
9 September 1998, in tandem with the work being carri ed out with a view to the possible negotiation
of specific commitments in trade in energy services, so as to ensure that it reflects statistics and
analysis relating to trade flows in energy services, which could serve as an input and stimulus fornegotiations in this sector.
20. The current market realities with regard to the recent appearance of new energy services
based on electronic commerce and information technology, must be taken into account, and prior to
any negotiations, an assessment must be made of the viability and bases of the negotiations, bearing in
mind, amongst other things, the impact that these services could have on price and financingconditions in energy markets.
C. 
RESULTS OF THE NEGOTIATIONS
21. The outcome of these negotiations should be instruments, commitments and measures
designed to:
(a) Facilitate the effective participation of all Members in the supply of energy services,
and in particular liberalize access to energy service markets for suppliers from
developing countries, and eliminate the barriers which have prevented these countriesfrom benefiting from trade opportunities in these services;
(b) strengthen the capacities, efficiency and competitiveness of suppliers of energy
services from developing countries and improve instruments for their access to
technology on a commercial basis;
(c) improve the transparency of government measures which affect the supply of energy
services;S/CSS/W/69
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(d) implement GATS Articles IV and XIX through significant trade commitments, and
provide for the Council for Trade in Services to assess on an ongoing basis the
effective application of these Articles and the extent to which developing countries
are benefiting from increased participation in trade in energy services.
D. CLASSIFICATION OF ENERGY SERVICES
22. The adoption of a classification of energy services is of key importance for any negotiation of
commitments.  The services sectoral classification list contained in document MTM.GNS.W/120,
does not reflect the current reality of the market in energy services.
23. In the energy sector, both at the international level and within countries, there are different,
clearly differentiated subsectors, with different levels of development, regulatory frameworks and
technological characteristics.
24. Members will be able to make significant specific commitments in such an important,
complex and strategic sector as this,  insofar as they may do so progressively and selectively.  The
availability of a classification with greater disaggregation for energy services, taking into account the
current market, regulatory and technological situations, is something that could facilitate the making
of possible commitments.
25. Consequently, a clear, precise and unambiguous classification of energy services is required.
We therefore propose that the WTO Members consider the following approach:
(a) To begin to revise the classification included in W/120, dividing services by
subsectors associated with energy sources;
(b) subsequently, to incorporate a series of other criteria so as to be able to specify the
activities which correspond to the production, transformation, transportation,
distribution and sales processes;
(c) finally, to attempt to identify and organize energy services so as to be able to
distinguish between those which constitute or can be included in the category of core
processes in the energy chain, and those which belong to or support non-core
processes of the chain.1
26. The classification needs to be drawn up with great care so as not to alter the balance of rights
and obligations negotiated during the Uruguay Round on the basis of other classifications.
27. Venezuela will in due course submit for consideration by the other Members of the Council
more precise contributions concerning the classification of energy services.
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1 According to this conception, core services are those which are directly involved in the main
processes of the value chain, whereas non-core services correspond to processes which support this chain.