The World Trade Organization and Electricity Trade: Iran's Preparation for Accession

The trade of energy including electricity has not been specifically dealt with in the World Trade Organization (WTO) Rules or Agreements. Thus, contrary to the other types of energy carriers such as oil, gas or coal, for the reasons of inherent characters and exclusive features of electricity such as its intangibility and non-storability, the application of current rules and regulations of WTO on trade of electricity faces considerable legal and technical complicities. However, until a comprehensive agreement is concluded by the Member States of the WTO, the current rules and regulations of the WTO should be interpreted in a way that keeps the challenges on trade of electricity amongst members as far as possible to minimal. This research paper explains the nature of electricity as a goods or a service and the method of application of current WTO rules and regulations to the International Trade of electricity amongst Member states. It also clarifies the legal requirements in the section of foreign trade of electricity for Iran to be prepared for the accession to the WTO. Based on the result of this research, electricity is a type of goods with specific characters and accordingly it can be placed under the rules and regulations of the WTO which are applicable to the trade of goods, especially under the rules of GATT 1994. Notwithstanding the specific characters, some exceptions which exist under the Rules of the WTO have the capacity, as justifiable ground, to be invoked by the Member states for the application of some restrictions in order to provide security for the supply of electricity, and the stability of the electricity network. In the same line, gradual elimination of the electricity subsides and monopoly in the section of electricity purchasing, developing and promoting international transmission lines and developing and strengthening energy exchange, are among Iran’s requirements for accession to the WTO.