As an update to our previous post, the World Trade Organization (WTO) has released its official ruling on Canada’s Appeal regarding Ontario’s Green Energy Act and its Feed-in Tariff (FIT) program. On Monday May 6, the WTO Appellate Body upheld the complaints from the European Union (EU) and Japan, stating that Ontario’s Feed-in Tariff (FIT) program discriminates against foreign suppliers of equipment and components for renewable energy facilities by requiring minimum thresholds for domestic content levels, and is not saved as government procurement.
To quickly summarize the claim, the EU and Japan first appealed to the WTO in 2011 claiming that the FIT program violated three WTO conventions: Article III:4 of the General Agreement on Tariffs and Trade; Article 2.1 of the Trade-Related Investment Measures Agreement; and Articles 3.1(b) and 3.2 of the Subsidies and Countervailing Measures Agreement (SCM). Specifically, Japan and the EU argued that the domestic content rules under the FIT program treat imported products less favourably than domestic ones and therefore violate the “national treatment” obligations under the General Agreement on Tariffs and Trade (GATT) and Trade-Related Investment Measures Agreement (TRIM). The complainants also argued that the programs constituted actionable subsidies under the SCM. The initial decision, released in December 2012, found the FIT program contravened GATT and TRIM but that the complainants had failed to show the program constituted a subsidy as defined in the SCM. Canada appealed the decision in February 2013 but in its May 6 report the WTO Appellate Body dismissed the appeal.
What this means for the Ontario’s Green Energy Act is yet to be determined. “As this is the first time Canada has received a WTO panel ruling arising solely from provincial policy or legislation, we will work with the Ontario government in order to respond to the decision,” said a Department of Foreign Affairs and International Trade spokeswoman. However, in formal terms, the WTO decision is not-binding on Ontario. The province plans to the review the ruling in consultation with the federal government before the next steps are determined.