Reciprocity Clause and International Trade Law

In an international context unfair competition might emerge between liberalised energy markets and closed energy markets. To avoid this, the European Union introduced a reciprocity clause in the third energy package. According to this clause, transmission systems or transmission system operators should not be controlled by a person or persons from third countries unless they are party to an agreement with the Community and apply the ownership unbundling requirements. Since the launch of the third energy package, serious concerns have been raised about the compatibility of the clause with the rules of the WTO. This article analyses the reciprocity clause and examines whether it would survive WTO scrutiny under the GATS.