The current crude oil price ($113 a barrel or $945 per tonne) is considered to be one of the cheapest commodities in the world. In comparison, Platinum is 52000 times more expensive than crude oil, Gold is 2350 times, IT is 112 times, Silver is 47 times, Nickel is 30 times, Zinc is 25 times, Copper is 11 times, and Aluminum is 4 times. Even food product prices are higher than crude oil price, such as meat, poultry and dairy prices are 3 times higher than crude oil price, while vegetable average prices are 5 times higher than crude oil price.
Since its founding on January 1st 1995, The WTO’s Dispute Settlement Body has reviewed 64 disputes related to quantitative quotas applied by certain WTO member countries, including three disputes on oil. All of these three disputes have been cleared of any quota abuse charges as oil is considered a natural resource such as gold, coal, other minerals, water resources and forestry. These national assets fall under the exclusive and sovereign right of countries’ properties according to Article 11-2 and Article 21 of the WTO rules and regulations. Also, there isn’t a single legal article in all international laws that prevents any country from monopolizing its minerals resources, such as preventing South Africa from stopping the extraction of its gold reserves, or blaming Britain for refusing to export its natural ground water, or punishing the USA, Canada, Brazil and Thailand because they stopped exporting their forestry natural resources.
Unfortunately, many (experts) mistakenly believe that oil is not included in the WTO agreements, and thus make the blunder when insisting that oil is a commodity that is governed quantitatively by the “quota rules” applied by the WTO on other commodities.
Last week, one of those (experts) in the US House of Representatives implicated his colleagues by passing a new bipartisan No Oil Producing and Exporting Cartels (NOPEC) bill with a 17-4 majority, in which they call on the US President and the US Trade Representative to file a lawsuit against OPEC members for being primarily responsible for higher oil prices as a result of its cartel to reduce production, which harmed the American economy. The House of Representatives erred in using the provisions of the WTO agreement because it has nothing to do with natural resources, including oil. In its first paragraph, Article 11 confirms that no country may impose or maintain any ban or restriction on industrial goods, other than duties, taxes or other charges, whether enforced by quotas, import or export licenses, or other measures. OPEC members do not use or apply such measures to their oil exports. Also, Article 21, which specifies in its three paragraphs exceptions to security interests related to goods imports and exports, have nothing to do with oil or other minerals, except for the ban imposed on fissile materials or materials derived from them, weapons, ammunition, military equipment, and other goods transported or supplied to a military institution, or the ban imposed on trading as a result of emergency situations in international relations.
Although WTO’s rules indicate that oil is included by its agreements that cover all types of commodities’ trading, the rules of the organization do not apply to oil and its derivatives the way they apply to other industrial products. While we find that customs duties imposed on all industrial products in developed countries are linked to specific ceilings, 22 WTO member states have not committed to defining customs duty ceilings on crude oil and its derivatives, including the United States. This non commitment gives these 22 countries the right to raise these duty ceilings in large proportions to cause a rise in oil commodities and their derivatives on consumers within these countries.
Moreover, the (experts) of the US House of Representatives have insisted on issuing the “NOPEC Bill” because they mistakenly believe that OPEC countries are practicing in a trade-distorting cartel by reducing oil production in order to raise oil prices. Those (experts) have based their wrongful theory on the “Sherman” act, which bears the name of the author of the anti-monopoly system, the Republican US Senator “John Sherman” issued on July 2nd, 1890. Here, also, the unfortunate (experts) failed to accuse the oil-exporting countries under the cartel theory, because crude oil, as a natural resource, is similar to other minerals, groundwater, watersheds and forests, which are the exclusive and sovereign property of producing countries and are not the property of the business sector. Therefore, the provisions of the Sherman Act do not apply to governments because it is limited to fighting cartels in the business sector only.
Those US (experts) should have held their governments and consuming oil countries accountable for the rise of oil derivatives and force them to cancel the discriminatory taxes imposed in their markets on oil derivatives, at rates that reached an average of 27% in America, 63% in Italy, 65% in the Netherlands, 67% in France, Germany and Belgium, in addition to 68% in Britain. It is these discriminatory taxes that the governments of these countries collect from consumers that distort free trade, impede the flow of oil between countries, exacerbate the prices of its derivatives, and incur the American and European consumer 3 to 4 times the price of oil sold by OPEC countries.
Furthermore, it would have been better for those (experts) to encourage their government to keep pace with OPEC countries in the amount of development funds contributions to developing and poor countries, which exceeded hundreds of billions of dollars and were spent on thousands of development projects to benefit 121 developing countries and contribute to increasing per capita income in 34 countries Poor to 80% on average.
We have to correct the misconceptions of oil consuming countries so that such (experts) do not succeed in enacting arbitrary laws such as the faulty “NOPEC Bill”.
Global Trade Consulting Office