‘Unbundling’, ‘Reciprocity’ and the European Internal Energy Market: WTO Consistency and Broader Implications for Europe

Abstract: The aim of this paper is to focus on the now famous third country 'reciprocity' clause included within the 3rd energy package proposed by the European Commission in September 2007. The purpose of the clause is to limit the control of 'strategic' gas pipelines by third country undertakings. We will first examine the clause within the context of the 3rd package and the numerous policy papers published by the European Commission in the last two years, focussing on the link between 'unbundling', 'reciprocity' and the concept of 'security of supply'. Secondly we will examine the consistency of the clause with the WTO disciplines and more specifically the General Agreement on Trade in Services (GATS). The clause as it now stands will have important consequences on the gas transportation and distribution services within the European Union. Finally, we will try to see whether 'reciprocity' is really within the European Union’s best interest, focussing on the potentially conflicting European Energy Policy and the Russian policy concerning gas.