Oil Fuels Alternatives

Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the European Union.

Oil Stocking obligations that currently apply to the UK (and other EU member states) are established by the EU Directive 2009/119/EC. Oil stocking is not covered by WTO rules. Internationally, the International Energy Association (IEA) sets oil stocking requirements are set for its 29 member countries, which include the UK.

Both the EU and IEA rules are designed to ensure member countries uphold a certain level of stored oil supplies, which can be used to address short term supply disruptions. The EU obligation is currently higher than enforced by the IEA (the IEA obligation representing around 60% of the EU requirement). When the UK leaves the EU, IEA rules will continue to apply to the UK.

Free-trade Agreements (FTA) are agreements between states and include trade extractive industries material. Such agreements involve cooperation between at least two countries to reduce trade barriers – such as import quotas and tariffs – and to increase trade of goods and services with each other. They also aim to ensure timely and frictionless import/export processes.

The Comprehensive Economic and Trade Agreement (CETA) – an agreement between Canada and the EU – seeks to strengthen economic relationships through the creation of an “expanded and secure market” for goods and services that are covered by the agreement. Beneficial aspects of the agreements include: savings on customs duties; the creation of a more level playing field for intellectual property rights; ease of access to professionals on account of mutual recognition of professional qualifications; and commitment from both sides to sustainable development.

CETA has secured preferential tariffs of 0% on a variety of oil and gas products, such as non-crude petroleum products, and petroleum oils. Other examples of Free Trade Agreements between the EU and third countries which are beneficial to the sector include the 2011 EU-Korea Free Trade Agreement, which grants zero tariff access for South Korea’s crude oil exports.

European Economic Area Agreement (EEA) extends EU internal market rules to the participating EFTA States — Iceland, Liechtenstein and Norway. In order to be part of the EEA, and be part of the Internal Market, states incorporate a wide range of EU rules including the third energy package, with some derogations. However, EEA EFTA States do not get to vote on the adoption of EU rules that will apply to them as EEA members.

World Trade Organisation’s (WTO) General Agreement on Tariffs and Trade (GATT) is the WTO’s principal rule-book for trade in goods. The WTO rules also include rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations. The EU’s current external tariffs on oil products are low, ranging from 0 to 3.9% applied rates. In the cases of substances such as refined oil products from crude oil, they are zero.