In the early 1990s, approximately half the states that were to become the Energy Charter’s constituency were not Contracting Parties to the General Agreement on Tariffs and Trade (GATT), and this was the main reason for making the GATT 1947 (and later the World Trade Organisation (WTO) rules) applicable in the Energy Charter Treaty for trade relations involving non-WTO members. This allowed those member states that are not WTO members to benefit from stable, predictable and non-discriminatory trade rules, and has meant that all Energy Charter member states – whether WTO members or not, whether energy suppliers, transit or consumer countries – have benefited from the uniform application of the rules of the multilateral trading system in the energy sector.
In this way, the Energy Charter Treaty has provided a useful external anchor for trade reforms in those Energy Charter member states that are looking to join the WTO, by providing a 'stepping stone' for these countries in their efforts to prepare for WTO membership.
A strong advantage of the application of WTO rules through the Energy Charter Treaty is that this has avoided the creation of any alternative framework for regulation of trade in energy.
There are areas where the coverage of trade issues in the Energy Charter Treaty is more limited than in the WTO. The Energy Charter Treaty does not provide for legally binding tariff commitments, and the WTO Agreements on Trade in Services (GATS) and Trade-Related Intellectual Property Rights (TRIPS) do not apply.
However, there are other areas of particular strategic significance to the energy sector where the Energy Charter Treaty goes further than the WTO. Firstly, there is no counterpart in the WTO system to the Energy Charter Treaty's provisions on the protection of investment. Secondly, the Charter also covers in more detail the critical issue of energy transit, and includes a distinctive mechanism for the resolution of energy transit disputes.