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Energy Systems and Technologies for the Coming Century ...

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<strong>the</strong> European Union, <strong>the</strong> North American Free Trade Agreement, <strong>the</strong> Association ofSou<strong>the</strong>ast Asian Nations.When a WTO member enters into a regional integration arrangement through whichit grants more favourable conditions to its trade with o<strong>the</strong>r parties to that arrangementthan to o<strong>the</strong>r WTO members’ trade, it departs from <strong>the</strong> guiding principle of nondiscriminationunder <strong>the</strong> WTO. Normally, setting up a customs union or free tradearea would violate <strong>the</strong> WTO’s principle of equal treatment <strong>for</strong> all trading partners. But<strong>the</strong> WTO agreements allow regional trading arrangements to be set up as a specialexception, provided certain strict criteria are met.RTA arrangements should help trade flow more freely among <strong>the</strong> countries in <strong>the</strong>group without barriers being raised on trade with <strong>the</strong> outside world. In o<strong>the</strong>rwords, regional integration should complement <strong>the</strong> multilateral trading system<strong>and</strong> not threaten it.If a free trade area or customs union is created, duties <strong>and</strong> o<strong>the</strong>r trade barriersshould be reduced or removed on substantially all sectors of trade in <strong>the</strong> group.Non-members should not find trade with <strong>the</strong> group any more restrictive thanbe<strong>for</strong>e <strong>the</strong> group was set up.Developing countries are allowed to enter into regional or global agreements thatinclude <strong>the</strong> reduction or elimination of tariffs <strong>and</strong> non-tariff barriers on tradeamong <strong>the</strong>mselves.There<strong>for</strong>e, within <strong>the</strong> WTO rule, a RTA member country can in its renewable energysupporting policies offer more favourable treatment to goods <strong>and</strong> services from o<strong>the</strong>rmembers of <strong>the</strong> same RTA. For example, an EU member could levy lower tariff onwind turbines imported from ano<strong>the</strong>r EU member than those from outside EU, withoutviolating <strong>the</strong> WTO rule.5.4.2 Preferential treatment <strong>for</strong> developing countriesSpecial <strong>and</strong> Differential Treatment (SDT) <strong>for</strong> Developing CountriesSpecial <strong>and</strong> Differential Treatment (SDT) is <strong>the</strong> term used <strong>for</strong> <strong>the</strong> way in whichdeveloping countries are treated differently to developed countries within <strong>the</strong> WTOsystem. The principle of SDT is that international trade rules should be adapted to<strong>the</strong> particular economic situation of developing countries. Within <strong>the</strong> WTO, SDTtreatment has taken two main <strong>for</strong>ms:With respect to market access commitments, SDT treatment has taken <strong>the</strong><strong>for</strong>m of allowing non-reciprocal trade preferences designed to providepreferential access <strong>for</strong> developing country exports to <strong>the</strong> markets todeveloped countries.With respect to trade rules <strong>and</strong> disciplines, STD treatment means thatdeveloping countries can be exempted from <strong>the</strong> need to implementmultilaterally agreed rules or might be asked to accept less onerousobligations. In <strong>the</strong> Uruguay Round, SDT treatment also meant offeringdeveloping countries longer implementation periods <strong>and</strong> possibly technicalassistance to help <strong>the</strong>m meet multilaterally agreed commitments.This also includes <strong>the</strong> Generalized System of Preferences (GSP), a preferential tariffsystem extended by developed countries (also known as preference giving countries)to developing countries (also known as beneficiary countries). It involves reducedMFN Tariffs or duty-free entry of eligible products exported by beneficiary countriesto <strong>the</strong> markets of preference giving countries. The GSP treatment is given by a givingcountry to <strong>the</strong> beneficiary country <strong>for</strong> certain period of time <strong>and</strong> based on regularRisø International <strong>Energy</strong> Conference 2011 Proceedings Page 109

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