According to a leaked confidential World Trade Organization (WTO) interim ruling, a three member panel has sided with Japan and the European Union (EU) on their challenge of Ontario’s domestic content requirements under its Feed-in-Tariff (FIT) Program. In order to qualify for FIT, renewable energy projects must include a minimum quota of Ontario goods and services. Wind projects over 10kW require a minimum domestic content level of 25% prior to January 2012 and 50% for projects with a milestone date for commercial operation on or after January 1, 2012. In the case of solar projects, as of January 1, 2011, 60% of the goods and services must come from Ontario for projects over 10kW.

The EU and Japan appealed to the WTO in 2011 claiming that the FIT program violated three WTO conventions:  General Agreement on Tariffs and Trade (GATT); Trade-Related Investment Measures Agreement (TRIM); and the Subsidies and Countervailing Measures Agreement (SCM). The WTO panel issued its confidential interim ruling finding in favor of EU and Japan and stating that the FIT program discriminates against foreign suppliers of equipment and components for renewable energy facilities under GATT and TRIM, but not under SCM. The EU, Japan, and Canada will now have the opportunity to submit comments on the interim report before a final ruling is issued in November.

What this means for Ontario is yet to be determined. The Globe and Mail reported that, when asked for comment, “a spokesman for the Ontario energy ministry said in an e-mail that the department does not comment on confidential reports, and that the province still believes its program is consistent with Canada’s WTO obligations.” When the final report is released, if the panel maintains its position, the provincial and the federal government will have to decide whether to appeal the decision or work to bring the FIT legislation on side with WTO requirements.