Report: Delays in LNG Export Permitting May Run Afoul of U.S. Treaty Obligations

Unnecessary delays in the liquefied natural gas and coal export permitting process may run afoul of U.S. international treaty obligations under World Trade Organization (WTO) agreements, according to a report by former WTO Appellate Body Chairman James Bacchus.

The report, which the National Association of Manufacturers (NAM) commissioned, examines two central questions:

• Do unreasonable delays by the Department of Energy to issue licenses to export LNG to foreign countries constitute, in and of itself, a violation of our international obligations under the WTO?
• Do efforts by state and local authorities in the Pacific Northwest to broaden unduly the scope of the environmental review process for planned coal export terminals beyond the federal scope, and the resulting delay, constitute a violation of our international obligations under the WTO?

As a member of the WTO, the United States is bound to comply with trade rules contained in WTO agreements. A key provision, the General Agreement on Tariffs and Trade 1994, forbids export restrictions, including those made effective through licenses or other measures. Bacchus concludes that the implementation of U.S. rules in ways that unnecessarily impede exports of LNG and coal likely violate WTO trade rules.

“Manufacturers need strong and smart energy and trade policies to expand manufacturing in the United States and remain globally competitive. Unfortunately, it has become increasingly difficult to get a permit to do just about anything in the United States, and infrastructure projects like LNG and coal export terminals are crippled by delays and regulatory obstacles,” said NAM President and CEO Jay Timmons in reaction to the report. “As former Chairman Bacchus highlights, there is another set of obligations that apply when it comes to exports—our international obligations as a member of the WTO. This report confirms manufacturers’ view that principles of open markets and free trade should govern whether projects are approved on U.S. soil and that all permits deserve up-or-down approval in a timely manner.”

“The United States has always been a strong advocate of rules that forbid export restrictions and has been forceful in challenging export restrictions imposed by other countries,” said Bacchus. “In short, the tables may be turned on the United States directly in the WTO, but also through other countries walking away from core principles that have long been critical to U.S. success in the global economy.”

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LNG World News Staff, December 05, 2013