The organization of petroleum exporting countries, the World Trade Organization, and regional trade agreements

Journal of World Trade

Volumn 37, Issue 3, 2003, Pages 523-551

  Desta, Melaku Geboye ^a  

^a UNIVERSITY OF DUNDEE   (United Kingdom)

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EID: 65849512232     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: 10.54648/trad2003026     Document Type: Article

References (152)

1. Although, technically, the term "petroleum" covers both oil and gas, in this article the terms "oil" and "petroleum" are used interchangeably.
2. Data for 2000 show that fuel exports were worth $631 billion, accounting for 10.2 percent of world merchandise exports, while agricultural exports followed in second place with a value of $558 billion, and accounting for 9 percent of world merchandise exports. See WTO, International Trade Statistics 2001 (Geneva: WTO, 2001), p. 95. A 1988 GATT study observed that petroleum was "the single most important commodity, both in value and volume terms, traded internationally, accounting for nearly a third of world seaborne trade".
3. See GATT doc. MTN.GNG/NG3/W/16, para. 21.
4. According to ECOSOC, "... every sharp rise in oil prices since the early 1970s (such as in 1973-1974, 1979-1980 and 1990-1991) that was sustained for a period of 6 to 12 months has triggered a significant slowdown in growth, or even a recession, in many developed economies because of the sudden downward shift in consumer and business sentiment". ECOSOC, World Economic and Social Survey, 2001, p. 7. The IMF's "rule of thumb is a rise of $5 a barrel sustained over a year reduces world gross domestic product by 0.25 percent".
5. See Searching for Oil, Financial Times, 26 August 2002, p. 14.
6. See also The Economist, 25 November 1999, and 9 March 2000.
7. Article 7.C of the OPEC Statute. The founding members were five: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The current membership includes, in addition to the founders: Algeria, Indonesia, Libya, Nigeria, Qatar, and the United Arab Emirates.
8. Like most international organizations, OPEC and the WTO have several organizational features in common. To mention the major features: (1) they have fairly weak Secretariats with a (formal) mandate to give only administrative and analytical support to the decision-making inter-governmental bodies - the Conference in OPEC and the Ministerial Conference in the case of the WTO; and (2) in the area of voting, the one-country-one-vote principle applies in both cases. Moreover, they follow similar decision-making procedures - consensus in the case of the WTO and unanimity in the case of OPEC (see Article 11.C of the OPEC Statute; and Article IX.1 of the WTO Agreement). Note, however, that consensus is only a preferred line at the WTO - failing a consensus, there is a mechanism for decision-making by majority vote. In practice, the WTO, like its predecessor the GATT, still works largely by consensus.
9. For a discussion of these theoretical foundations in a modern setting, see A. Sykes, Comparative Advantage and the Normative Economics of International Trade Policy, 1 J.I.E.L. 1 (1998), 57 ff.
10. See preamble of the WTO Agreement.
11. See Article 2(b) of the OPEC Statute. In an effort to reconcile the conflicting interests of stakeholders in the industry (producers, consumers and intermediaries), the Statute provides that OPEC would give due regard to (i) the interests of the producing nations and to the necessity to secure a steady income for them; (ii) an efficient, economic and regular supply of petroleum to consuming nations; and (iii) a fair return on their capital to those investing in the petroleum industry. See Article 2(c) of the OPEC Statute. For current challenges and perspectives, see Ali Rodriguez, The Future of OPEC: New Realities, New Challenges: An open letter, XLV Middle East Economic Survey 26 (1 July 2002), at ;
12. and Bernard Mommer, Global Oil and the Nation State (Oxford: Oxford University Press, 2002).
13. See Robert Mabro, OPEC and the Price of Oil (Oxford: Oxford Institute for Energy Studies, 1992), p. 16.
14. According to this agreement, "... if the price of a basket of seven OPEC crudes stays below $22 for 20 trading days, ... then the cartel will cut production by 500,000 barrels a day. If it stays above $28 for such a period, it will raise production by the same amount". See The End of Opaque?, The Economist, 20 April 2000. But this band has "never been implemented seriously".
15. See Robert Mabro, quoted in Financial Times, 2 September 2002, p. 21.
16. For more on this see section IV below.
17. Quota cheating is a common problem of cartels, and OPEC is no exception. Virtually every OPEC member has, at one time or another, been found cheating on their quotas, though to different degrees. See, inter alia, The Economist, 12 March 1998, 2 July 1998, 25 March 1999, and 27 September 2001.
18. See OPEC, General Information, at .
19. The foundations of the stillborn International Trade Organization were laid by the Suggested Charter which was prepared and submitted by the United States in 1946. The GATT as well as the WTO still owe much of their content, and even their very existence, to the domestic politics of the US administration. The tortuous history of the GATT - its provisional life for nearly half a century - and its organizational defects, are all results of the choice of a Protocol of Provisional Application (PPA) as a means of bringing GATT into force bypassing Congressional scrutiny in the name of an executive order within presidential prerogatives under US constitutional law.
20. Measures taken by the Organization of Arab Oil Exporting Countries (OAPEC) during the 1973 Arab-Israeli war are a prominent example here. For an extensive survey of this measure, see, Ibrahim Shihata, Destination Embargo of Arab Oil: Its Legality Under International Law, 68 A.J.I.L. 4 (October 1974), 591-627.
21. Former US Secretary of State Henry Kissinger wrote that "... both the Nixon and Ford Administrations had no higher priority than to bring about a reduction of oil prices by breaking the power of OPEC". Henry Kissinger, Years of Renewal: Memoirs, Vol. 3 (London: Simon & Schuster, 1999), pp. 668-669,
22. quoted in "Foreword" by Alí Rodríguez Araque to Mommer, as note 8 above, p. XV.
23. See also United States: Excerpts from a Report Prepared for the Federal Energy Administration on an Evaluation of Options of US Government in its Relationship to US Firms in International Petroleum Affairs, 14 Int'l Legal Materials 4 (July 1975), 1037 ff.
24. For more recent policy debates in this area, see David L. Goldwyn, The United States, Europe, and Russia: Toward a Global Energy Security Policy, 1 EastWest Institute Policy Brief 5 (August 2002).
25. See WTO Doc. WT/COMTD/33, 10 October 2001.
26. See WTO Doc. WT/CTE/COM/6, 18 September 2000. But the WTO has yet to decide on OPEC's application for observership. When the application was considered by the pertinent WTO bodies, the positions taken mirrored the existing tensions in international relations - Egypt, Cuba, etc., supporting the request while the United States and Israel was leading the opposition. See, inter alia, WTO Doc. WT/COMTD/M/32, 17 May 2001.
27. Saudi Minister of Commerce Osama Faqueh specifically noted that despite the voluntary nature of plurilateral agreements, "oddly, acceding countries are pressured into joining these agreements, otherwise their accession is hampered" (see WTO Doc. WT/MIN(99)/ST/107).
28. See BP Statistical Review of World Energy June 2001, available at .
29. See, e.g., Thomas Wälde, Managing the Risk of Sanctions in the Global Oil & Gas Industry: Corporate Response Under Political, Legal and Commercial Pressures, 36 Texas Int'l L.J. (2001), 183 ff.
30. Iran applied for accession to the WTO in 1996 (see WTO Doc. WT/ACC/IRN/ 1) and Libya in 2001 (see WTO Doc. WT/ACC/LYB/1) but, thanks to the consensus tradition which the WTO has inherited from GATT, their applications remain blocked by the United States and others to this day. See also Financial Times, 14 February 2002, p. 9.
31. See, inter alia, UNCTAD, Trade Agreements, Petroleum and Energy Policies (New York and Geneva: UNCTAD, 2000).
32. Ibid., pp. 1-2, emphasis added.
33. Saudi Arabia, Iran and Venezuela showed interest in the process for the creation of a multilateral trading system from quite early on. Indeed, Iran and Iraq even signed the Havana Charter for an International Trade Organization (see UNCTAD, as note 23 above, p. 149).
34. To cite an obvious example, the degree of economic dependence of individual OPEC countries on the oil sector, although often similar, is not always the same. For instance, fuel exports as a percentage of total exports for 1997 for the ten OPEC countries, excluding Iraq, are as follows: Indonesia, 14 percent; Venezuela: 79 percent; UAE: 78 percent; Qatar: 80 percent; Kuwait 84.8 percent; Iran: 85 percent; Saudi Arabia: 89.6 percent; Nigeria: 90 percent; Libya: 95 percent; and Algeria: 97 percent. See A.F. Alhaji, What have We Learned from the Experience of Low Oil Prices?, XXV OPEC Review: Energy Economics and Related Issues 3 (September 2001), 198.
35. The same was true with Gabon, which became party to the GATT in 1963 and a member of OPEC in 1975, but later withdrew from OPEC as of 1 January 1995; this date coincided with the entry into force of the WTO Agreement of which Gabon was an original member.
36. Country-specific data taken from International Energy Agency: Monthly Oil Market Report, 13 May 2002, p. 47; available at .
37. Calculation based on data for 2000, taken from OPEC Annual Statistical Bulletin (Vienna: OPEC, 2001).
38. As note 20 above.
39. See GATT Articles II and XXVIII bis.
40. See Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (London: Simon & Schuster, 1991), p. 410;
41. and Forum, XXXIII OPEC Bulletin 2 (February 2002), 5. US crude oil production peaked in 1970.
42. See Mommer, as note 8 above, p. 152.
43. See, e.g., how trade in agricultural products has been treated by the multilateral trading system in its course of evolution in Melaku Geboye Desta, The Law of International Trade in Agricultural Products: from GATT 1947 to the WTO Agreement on Agriculture (The Hague: Kluwer Law International, 2002), p. 58.
44. Journal de Genève, quoted in GATT Focus Newsletter 41 (October 1986), p. 8.
45. The 23 founding "members" of the GATT were Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, Republic of China, Cuba, Czechoslovakia, France, India, Lebanon, Luxemburg, Netherlands, New Zealand, Norway, Pakistan, South Africa, Southern Rhodesia, Syria, the United Kingdom, and United States.
46. Note that the absence of a binding on oil import tariffs has allowed governments to impose restrictive measures in response to low oil prices, which are not always welcomed even by net importers. For example, several US presidents - including Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter and Reagan - have invoked Section 232, the national security clause, to impose import-restrictive measures on oil. See Jeffrey P. Bialos, Oil Imports and National Security: The Legal and Policy Framework for Ensuring United States Access to Strategic Resources, 11 University of Pennsylvania J. Int'l Business L. (1989), 243 ff. More recently, during the oil price collapse of the late 1990s, US domestic oil producers petitioned - although unsuccessfully - the US International Trade Administration for the imposition of anti-dumping and countervailing duties on crude oil imports coming from such countries as Venezuela, Saudi Arabia, Iraq and Mexico. See William C. Smith, Save Domestic Oil, Inc.'s Crude Oil Market Dumping Petition: Domestic and International Political Considerations, Tulsa J. Comparative and Int'l L. (Fall 2000). However, given that US customs duties for petroleum imports remain unbound and many of the source countries are not members of the WTO, the US government would not need to undergo complex anti-dumping and/or countervailing duty investigations to raise its duties on petroleum imports.
47. For more on this, see the following section on export restrictions.
48. See GATT Articles II and XXVIII bis.
49. See EC Treaty Article 28 (ex Article 30): "Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States"; and Article 29 (ex Article 34): "Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States."
50. See John Jackson, W. Davey and A. Sykes, Legal Problems of International Economic Relations: Cases, Materials and Text, 3rd edn (St Paul, MN: West Publishing, 1995), p. 946.
51. Several writers argue that export duties, although not explicitly mentioned under Article II, are still subject to periodic negotiations and that, if undertaken by a member and inserted in its schedules of concessions, their binding legal force is unquestionable. UNCTAD goes as far as arguing that Article II "maintains a symmetry between the treatment of export duties and import duties" (see UNCTAD, as note 23 above, p. 2). Frieder Roessler supports this view and argues that "export concessions can be bound in GATT schedules". See Frieder Roessler, GATT and Access to Supplies, 9 J. World Trade L. (1975), 27.
52. However, equally as many, including Professor John Jackson, have argued that countries are free to do whatever they like in respect of export duties, and any commitments they may have undertaken on export levies can only be taken as extra-GATT commitments whose nature and enforcement fall outside the multilateral trading system. See John Jackson, World Trade and the Law of GATT (New York: Bobbs-Merrill, 1969), p. 499, footnote 12.
53. Chapter 6 of the NAFTA confirms these views. NAFTA Article 603, para. 1, incorporates the GATT provisions on quantitative restrictions with its own explicit and rather stringent interpretation: "The Parties understand that the provisions of the GATT incorporated in paragraph 1 prohibit, in any circumstances in which any other form of quantitative restriction is prohibited, minimum or maximum export-price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, minimum or maximum import-price requirements" (NAFTA Article 603, para. 2, emphasis added). Unlike the case of minimum export prices, of which NAFTA simply said that they are covered by the prohibition of GATT Article XI, and further confirming the view propounded earlier that export duties are permissible under the GATT, Article 604 of the NAFTA introduced a separate provision explicitly prohibiting the use of export duties as follows: "No Party may adopt or maintain any duty, tax or other charge on the export of any energy or basic petrochemical good to the territory of another Party, unless such duty, tax or charge is adopted or maintained on: a) exports of any such good to the territory of all other Parties; and b) any such good when destined for domestic consumption."
54. See Roessler, as note 41 above, pp. 30-31.
55. See WTO, Analytical Index: Guide to GATT Law and Practice, updated 6th edn (Geneva: WTO, 1995), p. 73.
56. See Mabro, as note 9 above, p. 16.
57. Worried about the potential implication of its GATT membership for its oil supply management practices, Mexico inserted a purportedly special treatment provision for the sector in its protocol of accession to the GATT as follows: "Mexico will exercise its sovereignty over natural resources, in accordance with the Political Constitution of Mexico. Mexico may maintain certain export restrictions related to the conservation of natural resources, particularly in the energy sector, on the basis of its social and development needs if those export restrictions are made effective in conjunction with restrictions on domestic production or consumption." Paragraph 5 of Mexico's protocol of accession, as quoted in UNCTAD, as note 23 above, p. 23. However, the wording of this provision being nearly identical to GATT Article XX(g), the legal significance of its separate insertion by Mexico is doubtful at best. Indeed, Venezuela - an OPEC Member country which acceded to the GATT after Mexico - opted not to follow Mexico's line because such a provision "did not grant any particular advantage". See UNCTAD, as note 23 above.
58. See also Reinier Lock, Symposium: Mexico-United States Energy Relations and NAFTA, 1 United States-Mexico L.J. (1993), 244.
59. Norway - a GATT founding member who turned an important petroleum exporter only later - routinely uses legislation to reduce oil production to stabilize prices. The IEA has recently observed that since 1998 alone, Norway has "on two occasions reduced the level of oil production by government regulation with a view to stabilizing oil prices at a higher level". See IEA, Energy Policies of IEA Countries: Norway 2001 Review, Executive summary.
60. Article XI:1 provides "No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party."
61. See European Communities - Programme of Minimum Import Prices, Licences, and Surety Deposits for Certain Processed Fruits and Vegetable, Panel Report (L/4687 BISD 25S/68), adopted on 18 October 1978 (hereafter the MIP case), para. 4.1.
62. See Japan - Trade in Semi-Conductors, Panel Report (L/6309 BISD 35S/116) adopted on 4 May 1988 (hereafter Japan - Semi-Conductors), para. 105.
63. Adelman noted that "Control of supply is the essence of monopoly; price fixing the result ... The OPEC nations can raise or lower prices at will by controlling output. Most of the (crude oil) price increases since 1970 have in fact resulted from output restriction. Prices have also been raised by taxation and by direct price quotation. These two methods are convenient, but not necessary." Adelman, as quoted in International Association of Machinists and Aerospace Workers v. OPEC and Member Countries, 477 F. Supp. 553, (18 September 1979), p. 566 (emphasis added).
64. See, generally, Articles XI(2), XX and XXI.
65. See, e.g., United States - Standards for Reformulated and Conventional Gasoline, Panel Report (WT/DS2/R) issued on 26 January 1996, paras 6.20, 6.31, 6.35;
66. and Appellate Body Report (WT/DS2/AB/R), adopted on 20 May 1996, (hereafter Gasoline), pp. 22-23
67. In Shrimp/Turtle, the WTO Appellate Body indirectly recognized petroleum as an exhaustible natural resource. Rejecting complainants' arguments that the concept of "exhaustible natural resources" under Article XX(g) applied only to "finite resources such as minerals, rather than biological or renewable resources", the Appellate Body said: "Article XX(g) is not limited to the conservation of 'mineral' or 'non-living' natural resources ... Living resources are just as 'finite' as petroleum, iron ore and other non-living resources." See United States - Import Prohibition of Certain Shrimp and Shrimp Products, Appellate Body Report (WT/DS58 /AB/R), issued on 12 October 1998 (hereafter Shrimp/Turtle), para. 128.
68. See also United States - Taxes on Automobiles, Panel Report (DS31/ R, issued on 11 October 1994, not adopted), para. 5.57.
69. Canada - Measures Affecting Exports of Unprocessed Herring and Salmon, Panel Report adopted on 22 March 1988, BISD 35S/98 (hereafter Salmon/Herring).
70. Ibid., para. 4.5.
71. Ibid., para. 4.6 (italics added).
72. In Gasoline, the Appellate Body said: "All the participants and the third participants in this appeal accept the propriety and applicability of the view of the Herring and Salmon report and the Panel Report that a measure must be 'primarily aimed at' the conservation of exhaustible natural resources in order to fall within the scope of Article XX(g). Accordingly, we see no need to examine this point further, save, perhaps, to note that the phrase 'primarily aimed at' is not itself treaty language and was not designed as a simple litmus test for inclusion or exclusion from Article XX(g)." Gasoline, as note 53 above, p. 19.
73. Gasoline, as note 53 above, pp. 20-21.
74. The only case so far where an export restriction was found to violate this condition was Salmon/Herring. But, in that case, unlike OPEC measures, there was competition between domestic and foreign processors of herring and salmon, and the restriction on the exportation of unprocessed herring and salmon was designed to protect domestic processors by giving them exclusive access to fresh fish (since no corresponding restrictions were imposed on domestic processors and consumers) while denying such raw material to foreign processors. This was thus a case where the requirement of even-handedness would make sense. See Salmon/Herring, as note 55 above, para. 5.2.
75. See Jackson et al., as note 40 above, p. 946.
76. As Rueda put it, until 1950, "the United States, Britain, and the Netherlands effectively controlled the production and distribution of world oil through their influence over the 'Seven Sisters' ...". See Andres Rueda, Price-Fixing at the Pump - Is the OPEC Oil Conspiracy Beyond the Reach of the Sherman Act?, 24 Houston J. Int'l L. 1 (2001), 9.
77. See, inter alia, Alí Rodríguez Araque, Geopolitics of the International Oil and Gas Industry and OPEC, opening address delivered on 30 April 2001 at the Dundee International Oil and Gas Conference, University of Dundee, Scotland, available at .
78. For further information, see Gavin Brown (ed.), OPEC and the World Energy Market: A Comprehensive Reference Guide, 2nd edn (London: Longman, 1990), pp. 411-433.
79. See ibid., pp. 81-91.
80. Agreement on an International Energy Program (signed in Paris on 18 November 1974). At the core of the IEP is the obligation created under Article 2 of the Agreement by which participating countries undertook to establish "a common emergency self-sufficiency in oil supplies" requiring them to "maintain emergency reserves sufficient to sustain consumption for at least 60 days with no net oil imports". For more on this, see Richard Scott, IEA: The First Twenty Years, Vol. I (Paris: OECD/IEA, 1994).
81. Mason Willrich and Melvin Conant, The International Energy Agency: an Interpretation and Assessment, 71 A.J.I.L 2 (1977), 202.
82. The European Coal and Steel Community (ECSC) Treaty and the Euratom Treaty "were adopted primarily to ensure regular and equitable supplies of coal and nuclear energy in the Community". See European Commission, Green Paper: Towards a European Strategy for the Security of Energy Supply (2001, hereafter EC Green Paper), p. 10.
83. An important aspect of the new US energy policy is also to further strengthen NAFTA's energy element: "to develop closer energy integration among Canada, Mexico, and the United States and identify areas of cooperation, fully consistent with the countries' respective sovereignties". See US National Energy Policy: Report of the National Energy Policy Development Group, May 2001, pp. 8-4, available at (hereafter US National Energy Policy 2001).
84. See also Lock, as note 46 above, pp. 235 ff.
85. See US National Energy Policy 2001, ibid., pp. 8-10.
86. For more on this, see section III:E.2, below.
87. For more on the ECT, see Thomas Wälde (ed.), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (London, The Hague and Boston, MA: Kluwer Law International, 1996).
88. At the time of writing (January 2003), the ECT has 51 signatories and 46 Contracting Parties. Of the 46 Contracting Parties, 37 are already members of the WTO; eight (Armenia, Azerbaijan, Bosnia and Herzegovina, Kazakhstan, Tajikistan, F. Y. Macedonia, Ukraine, and Uzbekistan) are observers negotiating their accession; and only one (Turkmenistan) remains totally outside of the WTO. See and .
89. See ECT Article 29;
90. see also ECT Transparency Document: Applicable Trade Provisions of the Energy Charter Treaty (1998), p. v.
91. Italics added.
92. NAFTA Article 604.
93. See NAFTA Article 605.
94. See NAFTA Annex 603.6. As a result, some Canadian critics contend that these NAFTA provisions reaffirm "Canada's flawed United States-Canada Free Trade Agreement (CFTA) commitment to supply US energy needs with only limited exception, thus restricting Canada's sovereignty over its own resources". Robert F. Housman and Paul M. Orbuch, Integrating Labor and Environmental Concerns into the North American Free Trade Agreement: a Look Back and a Look Ahead, 8 American University J. Int'l L. & Policy (Summer 1993), 719.
95. See International Association of Machinists and Aerospace Workers v. OPEC and Member Countries, 477 F. Supp. 553 (18 September 1979).
96. The court noted that this was because "FSIA applies only to foreign sovereignties, which OPEC is not; and, IOIA applies only to those international organizations 'in which the United States participates'". Ibid., p. 560.
97. Ibid., p. 567.
98. According to this doctrine, "the courts of one country will not sit in judgment on the acts of the government of another done within its own territory" and that "a United States court will not adjudicate a politically sensitive dispute which would require the court to judge the legality of the sovereign act of a foreign state". See International Association of Machinists and Aerospace Workers v. OPEC and Member Countries, 649 F.2d 1354, (9th Cir. 1981), p. 1358.
99. See ibid., p. 1360
100. Ibid., p. 1361.
101. For a comment, see Monroe Leigh, Judicial decisions, 76 A.J.I.L. (1982), 160 ff.
102. This ruling has since served as an important authority on what the US courts call "the principle of supreme state sovereignty over natural resources." See World Wide Minerals, Ltd., et al. (appellants) v. Republic of Kazakhstan, et al. (appellees), United States Court of Appeals for the District of Columbia Circuit, 296 F.3d 1154 (2 August 2002).
103. See James Norman, "Gas" Station Owner Wins OPEC Injunction, 29 Platt's Oilgram News 62 (30 March 2001), 4, and at .
104. See Prewitt Enterprises, Inc. v. Organization of the Petroleum Exporting Countries, United States District Court for the Northern District of Alabama, Southern Division, Civil Action Number Cv-00-W-0865-S (21 March 2001), pp. 4-5.
105. See ibid., pp. 18-19.
106. See ibid., pp. 19-20.
107. See ibid., pp. 20-21.
108. See ibid., p. 22.
109. See ibid., pp. 28-29.
110. For a supportive argument, see Rueda, as note 62 above, p. 56.
111. Cathy Landry, Senators Seek Anti-Trust Move Against OPEC, 79 Platt's Oilgram News 64 (3 April 2001), 2, and at .
112. See statement by Alí Rodríguez-Araque, Secretary General of OPEC, "US Congress bill against OPEC violates most basic legal principles", OPEC Press Release No. 6/2001 (Vienna: OPEC, 5 April 2001).
113. See XLV Middle East Economic Survey 32 (12 August 2002), at . The judge further wrote: "The notion of wholly insulating from service of process an entity such as Opec - whose decisions surely affect the daily lives of most Americans - is, for many, a bitter pill to swallow. But the court must apply the rules as they are written." Quoted in Oil Daily (8 August 2002).
114. Mommer has noted that the US share of global oil production stood at two-thirds in 1940, one-third in 1960, one-sixth in 1973 and one-tenth today. See Mommer, as note 8 above, p. 63.
115. By proration, "the oil-producing states, acting through administrative commissions, have set production quotas for each pool as a whole and allocated these quotas among the variously owned wells within the pools". See J. Howard Marshall and Norman L. Meyers, Legal Planning of Petroleum Production: Two Years of Operation, 42 Yale L.J. (1933), 702-703;
116. see also J. Howard Marshall and Norman L. Meyers, Legal Planning of Petroleum Production, 41 Yale L.J. (1931).
117. See Gary D. Libecap, The Political Economy of Crude Oil Cartelization in the United States, 1933-1972, 49 J. Economic History 4 (December 1989), 840.
118. Yergin, as note 32 above, p. 523.
119. See, e.g., Big US Gas Producing States Fan Prorationing Controversy, Oil & Gas J. (4 May 1992), where consuming state congressmen have been cited as saying that "prorationing smacks of a producing state cartel like the Organization of Petroleum Exporting Countries with the goal of restricting production to increase prices".
120. Williams has observed that "Price-fixing, a new movement marching under the banner of 'conservation', was recently given the imprimatur of the Supreme Court". Howard R. Williams, Conservation of Oil and Gas, 65 Harvard L. Rev. (1952), 1180.
121. Section 2 of the challenged Act provides as follows: "That the taking of crude oil or petroleum from any oil-bearing sand or sands in the State of Oklahoma at a time when there is not a market demand therefor at the well at a price equivalent to the actual value of such crude oil or petroleum is hereby prohibited, and the actual value of such crude oil or petroleum at any time shall be the average value as near as may be ascertained in the United States at retail of the by-products of such crude oil or petroleum when refined less the cost and a reasonable profit in the business of transporting, refining and marketing the same, and the Corporation Commission of this State is hereby invested with the authority and power to investigate and determine from time to time the actual value of such crude oil or petroleum by the standard herein provided, and when so determined said Commission shall promulgate its findings by its orders duly made and recorded, and publish the same in some newspaper of general circulation in the State." Champlin Refining Co. v. Corporation Commission of Oklahoma et al., 286 U.S. 210 (1932).
122. See ibid.
123. Marshall and Meyers (1933), as note 96 above, at 729.
124. Cities Service Gas Co. v. Peerless Oil & Gas Co. et al., 340 U.S. 179 (1950).
125. See ibid.
126. See Burford et al. v. Sun Oil Co. et al., 319 U.S. 315 (1943).
127. See Big US Gas Producing States Fan Prorationing Controversy, Oil & Gas J. (4 May 1992).
128. See Black's Law Dictionary, 7th edn (St Paul, MN: West Publishing, 1999).
129. Note, however, that this is a matter of controversy for economists. See Anas Alhajji and David Huettner, OPEC and Other Commodity Cartels: A Comparison, 28 Energy Policy 15 (2000), 1151-1164.
130. Zuhayr Mikdashi wrote "Perez Alfonzo, the Venezuelan minister who is credited with conceiving the OPEC idea, told this author that his model for OPEC was that of a governmental cartel. Its aim is to protect the public interest of the countries concerned, as opposed to a private cartel which promotes the commercial interest of stockholders of the constituent firms". Zuhayr Mikdashi, Cooperation among Oil Exporting Countries with Special Reference to Arab Countries: A Political Economy Analysis, 28 Int'l Organization 1 (1974), 1-30, at 6.
131. See Luncheon Address by former OPEC Secretary General Rilwanu Lukman to the 16th World Petroleum Congress, Calgary, Canada, 13 June 2000, at .
132. According to a BP data for 2000, OPEC countries accounted for 77.8 percent of the world's proved oil reserves. BP Statistical Review of World Energy June 2001, available at .
133. Proven reserves are "quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions". See ibid.
134. Noting OPEC's price band of between $22 and $28 per barrel, the US District Court for the Northern District of Alabama which decided the latest judicial challenge to OPEC at first instance level observed that OPEC's implementation of the price band "must be interpreted as a balancing of the cartel's short-term and long-term interests. By setting the lower limit of the band at $22 per barrel, prices are kept consistently above competitive levels, thus securing monopoly profits. In the longer term, the price band discourages development of more expensive supply sources in at least two ways. First it eliminates the prospect of constant escalation in prices. It was not only high prices that drew out expensive supplies in the past, but also the then-current forecasts of constantly escalating future prices. Second, a formal (but ambiguously defined) $28 upper limit to the band makes development and exploration of high cost reserves more risky. The openly stated threat of supply increases to drive down prices in the event they exceed $28 would make it chancey to rely upon prices anywhere near this level in making development decisions. In fact, confusion over if and when such a supply increase might occur or with regard to dissention within OPEC over the cap itself only serves to increase the uncertainty about prices and to discourage development investments in more costly reserves." Prewitt Enterprises, Inc. v. OPEC Countries, as note 86 above, pp. 10-11.
135. Larry R. Stewart, Canada's Role in the International Uranium Cartel, 35 Int'l Organization 4 (Autumn 1981), 658.
136. Interestingly, the cartel operated in secrecy for about four years until it was exposed by the Australian Friends of the Earth in the summer of 1976. Id.
137. See Japan - Semi-Conductors, as note 50 above.
138. See Washington steels itself for big push to cut output, Financial Times (26 November 2001).
139. Back in history as well, when industrialized countries were hit by the first oil crisis in 1974, among the alternatives they considered against OPEC were "the imposition of an oil import quota, the withholding of bushels [of wheat] for barrels [of oil], and the creation of an industrial country buyers' cartel to negotiate guaranteed long-term prices for OPEC oil". See Edward John Ray, The Political Economy of International Trade Law and Policy: Changing Patterns of Protectionism: The Fall in Tariffs and the Rise in Non-Tariff Barriers, 8 J. Int'l L. & Business (Fall 1987), 285 (emphasis added).
140. See International Association of Machinists and Aerospace Workers v. OPEC and Member Countries, 649 F.2d 1354 (9th Cir. 1981) 1354.
141. Shipping cartels are a good example here as they are exempt from the purview of competition law in the United States, the European Union, etc.
142. On illegal cartels in the European Union, see ;
143. and for the United States, see .
144. Libecap, as note 97 above, p. 834.
145. As Robert Mabro said, "By its very nature OPEC arouses emotions, and brings to the surface deep-seated, sometimes subconscious value judgements and prejudices. We are all human and in scientific endeavours our objectivity is a function of our emotional distance from the object of inquiry. OPEC is an organization of developing countries which seemed to be wielding power. Whether they admit it or not many cannot help but feel a bit suspicious. Like Nathanael the disciple who, according to St John, did ask rather bluntly: 'Can there any good thing come out of Nazareth?', some quietly wonder: 'Can there any good thing come out of the third world?' Perhaps yes, or maybe not. But one should at least wait and heed first the advice of Philip, the other disciple, 'Come and see'." Mabro, as note 9 above, p. 7.
146. For a contrary view, see Note: The Applicability of the Antitrust Laws to International Cartels Involving Foreign Governments, 91 Yale L.J. (1982), 780-782.
147. On the vices of regional trading arrangements in general, see Jagdish Bhagwati, Free Trade Today (Princeton, NJ: Princeton University Press, 2002), pp. 106-120.
148. John H. Jackson, The WTO "Constitution" and Proposed Reforms: Seven "Mantras Revisited", 4 J.I.E.L. (2001), 67, 68.
149. OPEC has repeatedly expressed its willingness to enter into what it calls "a fair agreement" that recognizes, on the one hand, owners' rights to a just price for their exhaustible and non-renewable resources, and, on the other, consumers' rights to a guaranteed oil supply at reasonable prices. See OPEC, Forum, XXXIII OPEC Bulletin 2 (February 2002), 6.
150. See also the two "Solemn Declarations" of OPEC Countries' Heads of States and Governments, made on 4-6 March 1975 in Algiers, and on 27-28 September 2000 in Caracas, Venezuela. Likewise, leading powers on the consumer end, including the United States and the European Union, often talk in identical terminology about their determination to strengthen trade alliances and establish dialogue with oil producers. The US government talks in terms of the "need to strengthen our trade alliances, [and] to deepen our dialogue with major oil producers". See US National Energy Policy 2001, as note 69 above, pp. 8-4.
151. The EC Commission Green Paper also declared that the European Union must "establish an ongoing dialogue with producer countries". See EC Green Paper (2001), as note 68 above, p.73.
152. Article 2.B of the OPEC Statute.