OIL AND GAS SERVICES COMPANIES ON TIME OF WTO
On July 27, 2015, Kazakhstan officially joined the World Trade Organization (hereinafter - the “WTO”). On January 1, 2021, the transitional period will end and Kazakhstani business will find itself in a tougher competitive environment with rivals from around the world. At the same time, there are more than 100 measures to support domestic producers and local content, which are spelled out in a number of regulatory documents of Kazakhstan, which partially contradicts WTO rules and regulations.
For a more detailed explanation of the mechanisms of work in the conditions of the WTO, the Council for the Development of Strategic Partnerships in the Oil and Gas Industry, with the participation of the Association KazEnergy and NPP Atameken, on February 22, 2019, organized the Forum “Oil and Gas Industry of Kazakhstan in the WTO”. The Forum addressed issues such as the Pros and Cons of the WTO for the oil and gas industry; how the Central Asian oil and gas market will change; the future of Free Economic Zones; legal aspects of the WTO and Local Content in the oil and gas sector; human capital development in the context of the WTO.
About 200 oil and gas professionals from Atyrau, Uralsk, Aktau, Astana came to the Forum, including representatives from the Ministry of Energy of the Republic of Kazakhstan, the Ministry of National Economy of the Republic of Kazakhstan, the Association “KazEnergy”, NPP RK “Atameken”, JSC “NADLoC”, FEZ NINT, PSA, and the largest oilfield service companies operating in Western Kazakhstan.
Mira Dosova, partner of Dasco Consulting Group, suggested paying attention to the fact that the WTO rules themselves do not contain direct provisions banning local content requirements. “However, their legality is determined in terms of the presence / absence of contradictions to the rules of the WTO, and in particular to the provisions:
· General Agreement on Tariffs and Trade (GATT - GATT);
· General Agreement on Trade in Services (GATS - GATS);
· Trade-Related Investment Measures Agreements (TRIMs):
· Agreements on subsidies and countervailing measures (SCM - SCM Agreement);
· Government Procurement Agreements (GPA).
Article III of the GATT (trade in goods) contains the key principle of the GATT - the principle of national treatment - according to which discrimination against imported goods should not be allowed vis-à-vis similar goods of local origin. WTO member countries should establish equal conditions of competition for imported and domestic goods. This means that they are required to provide goods of foreign origin with exactly the same treatment as their national goods in the area of domestic taxes and fees, as well as with regard to national laws, regulations and rules governing domestic trade, ”Mira Dosova said.
In world practice, local content measures are not something new. According to experts, such measures are taken especially in times of crisis. For example, in the wave of the 2008/2009 crisis, more than 100 new local content requirements were accepted, among others, by Australia, the USA, Argentina, Brazil, China, India, Indonesia and Kazakhstan.
Moreover, many WTO member countries in awarding licenses (for example, broadcasting) or subsurface use contracts, and more recently in the provision of preferential fixed tariffs (feed-in tariff) for renewable energy projects (RES), one way or another, often included and continue to be different local content requirements.
Asylbek Dzhakiyev, official representative of NPP RK "Atameken" on interaction with oil and gas operators, said: “In many countries, the correct local content development strategy based on interaction and equal value of business and society has proved its own effectiveness. Such a strategy leads not only to improving the competitiveness of the project, but also to the stability of the economic development of the host country. At the same time, work in the context of the WTO will have a positive effect on the sustainable development of the economy: it will provide anti-dumping, countervailing and special protective measures in accordance with agreements approved by the WTO, promotes transparency of trade and privatization processes, and also remove technical barriers to trade.”
After the Forum, all guests and speakers were able to hold talks on a single platform in the framework of B2B meetings. Also at the forum was the presentation of the International Women's Club, created under the Strategic Partnerships Development Council in the Oil and Gas Industry to consolidate women leaders at the highest level to solve vital problems and develop solidarity in the issues of improving the status of women in the context of globalization. Dameli Bakiyeva, Head of the Chairman’s Protocol and questions on interaction with Members and partners of the KazEnergy Association will become the head of the MLC.