International trade in oil and the World Trade Organization : towards the resolution of the producer-consumer dilemma

• Main Author: Ndoni, Erebi Doreen
• Other Authors: Dow, Stephen
• Published: University of Dundee 2016
• Subjects: 338.2
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.694995

Restrictions on the production of oil practiced by oil exporting countries under the auspices of the Organization of the Petroleum Exporting Countries (OPEC) has been the subject of contentions and debates over time. One of the dimensions of this discourse is in relation to the possible violation of the obligations stipulated by the General Agreement on Tariffs and Trade (GATT) by members of OPEC who are also members of the World Trade Organization (WTO). This research examines the issues arising therein as production restrictions and quantitative restrictions are analysed. It considers whether these production restrictions on oil qualifies as quantitative restrictions prohibited by Article XI of the GATT 1994 and as such whether oil exporting members of the WTO are in violation of the provisions of the GATT. The question hinges upon the classification of production restrictions, whether it falls under the same category as quantitative restrictions. This is based on the premise that the language employed in the regulations prohibits measures relating to the importation and exportation of goods; which leads this research to ascertain if production restrictions affect oil ready for importation or exportation. The concept of sovereigntyis intertwined in this discourse as oil exporting countries raise this as a defence, quoting the exclusive right to exploit their resources devoid of external influence or pressure. Membership of an international organization on the other hand indicates that a measure of sovereignty has been transferred through consent in becoming part of the organization and this inputs a level of responsibility and to an extent dictates certain expectations. For OPEC member countries that are also members of the WTO this expectation is not clear-cut as no mention is specifically made to oil resources in the text of the WTO regulations. Presumptions abound on the rationale for this perceived exclusion. From the notion that a ‘Gentleman’s Agreement’ was reached by the initial contracting parties of the Trade Organization to the perception that oil exploration and trade at that time was in the domain of the western world while the majority of the current exporters were colonies and as such did not have a say in trade discussions relating to the exploration of their natural resource. Moreover the peculiarities of this commodity inversely positions it in the international trade regime as it is devoid of the market access challenge which the international organization on trade set out to overcome through its furtherance on trade liberalization. No doubt the bias for import restrictions as against export restrictions by the organization based on the prevailing circumstances during its establishment makesloopholes in the strict interpretation of the provisions that border on export restrictions inevitable. This study therefore strives to analyse these surrounding issues and goes further to consider the relationship between oil exporting countries and their importing counterparts as it argues that the contention on production restrictions and quantitative restrictions transcend the interpretation of the provisions that are in contention. This is based on the notion that the relationship between members of an international organization is the pivot that determines the functionality of the regulations binding members. Thus where a viable relationship thrives, the operations of the organization will be at its peak and the interpretation and application of the letters of the regulations will not be in contention ‘stricto sensu’. This is the rationale behind the proposition by this study that theories of international relations especially that of liberalism is key in understanding and improving the relationship between oil exporting and importing countries. This work advocates that this is achievable under the auspices of the WTO based on its formidable qualities.