The World Trade Organization released its decision December 19 on complaints by Japan and the European Union regarding Ontario’s Feed-In Tariff local content rules. Japan and the EU complained that Ontario’s local content rules breach the General Agreement on Tariffs and Trade 1994 (“GATT”) by treating imported products less favorably than domestic products. They also argued that the premium electricity prices paid under the FIT program constituted a subsidy that is contingent on use of domestic rather than imported goods, and is therefore prohibited.
In its ruling, the WTO panel said Ontario’s FIT program local content requirements breached Canada’s obligations under the GATT and the international Agreement On Trade-Related Investment Measures by treating domestic renewable energy equipment and components more favorably than imported equipment. The WTO panel did not agree, however, with Japan’s and the EU’s claim that the local content rules constitute an illegal subsidy. As the Globe and Mail reported, “A spokeswoman for the federal Department of Foreign Affairs and International Trade said that ‘as this is the first time Canada has received a WTO panel ruling arising solely from provincial policy or legislation, the government of Canada will be appealing the decision as requested by the government of Ontario.’”
Ministry of Energy spokesperson Kirby Dier said, “We understand the federal government will appeal the WTO decision – this is good news for Ontario jobs. We continue to believe the Feed in Tariff (FIT) program is consistent with Canada's obligations under WTO agreements. The Green Energy Act is creating jobs and attracting private sector investment. Ontario's clean energy policies have already created more than 28,000 jobs and are well on the way to creating 50,000 jobs through investments in renewable energy and conservation, as well as smart grid technology, transmission and distribution upgrades.”
For a detailed review of the decision, readers may wish to consult the analysis published by Gowlings at this location: http://www.gowlings.com/KnowledgeCentre/enewsletters/energy/HtmFiles/V10N18_20121219.en.pf.html.
— With files from the Langford eBulletin, January 2013