{"id":2021,"date":"2013-05-10T08:45:56","date_gmt":"2013-05-10T13:45:56","guid":{"rendered":"http:\/\/blogs.law.columbia.edu\/climatechange\/?p=2021"},"modified":"2013-05-10T08:45:56","modified_gmt":"2013-05-10T13:45:56","slug":"wto-appellate-body-finds-ontarios-renewable-energy-program-violates-international-trade-rules","status":"publish","type":"post","link":"https:\/\/blogs.law.columbia.edu\/climatechange\/2013\/05\/10\/wto-appellate-body-finds-ontarios-renewable-energy-program-violates-international-trade-rules\/","title":{"rendered":"WTO Appellate Body finds Ontario\u2019s renewable energy program violates international trade rules"},"content":{"rendered":"
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On May 6, 2013, the Appellate Body of the World Trade Organization (WTO)\u2019s dispute settlement system held<\/a> that Ontario\u2019s feed-in tariff (FIT) program to support renewable energy development was inconsistent with Canada\u2019s international trade obligations.\u00a0 The decision confirmed the conclusion reached by the dispute settlement panel which first ruled<\/a> on the case in December 2012, although the Appellate Body disagreed with that Panel\u2019s analysis and reasoning on some points of law.<\/p>\n

The first complaint against Ontario\u2019s scheme was made by Japan in September 2010, and a second complaint was made by the European Union (EU) in August 2011. \u00a0Both Japan and the EU alleged that the FIT program discriminated against foreign suppliers of renewable energy technologies, as participation in the scheme required electricity generators to \u00a0source a certain amount of their components from Ontario.\u00a0 For wind projects, the local content requirement was 25%, while for solar projects it was 60%. As neither complaint was able to be resolved through consultations between the parties, the two cases were submitted for joint adjudication by a Panel.\u00a0 The Panel held that the local content requirement of the FIT scheme accorded preferential treatment to products made in Ontario, in violation of the national treatment obligation set out in Article 2.1 of the Trade-Related Investment Measures (TRIMs) Agreement and Article III of the General Agreement on Tariffs and Trade (GATT).\u00a0 These conclusions were confirmed on appeal.<\/p>\n

In addition to claims under the TRIMs Agreement and the GATT, Japan and the EU had argued that the FIT scheme constituted a prohibited subsidy in violation of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).\u00a0 The Appellate Body found that the Panel\u2019s analysis of that agreement was flawed, because it held that the relevant \u201cmarket\u201d was a single market for electricity in Ontario regardless of the source of the energy.\u00a0 The Appellate Body\u2019s view was that the relevant market was \u201cshaped by the government\u2019s definition of an energy-supply mix,\u201d and the appropriate benchmark for comparison should have been \u201ccompetitive prices for wind power and solar [photovoltaic] generation.\u201d\u00a0 The Appellate Body drew a distinction between markets which only exist because of government intervention, such as measures to create a certain mix of energy supplies, and government interventions that may distort competition in existing markets.\u00a0 However, the Appellate Body reached no conclusion on whether Ontario\u2019s scheme was consistent with the SCM Agreement, as it had inadequate evidence before it to make the necessary factual determinations.<\/p>\n

While the Appellate Body therefore did not determine if Ontario\u2019s program was an impermissible subsidy, its discussion of the interpretation of the SCM Agreement may be important for pending cases concerning government support for renewable energy projects.\u00a0 In February 2013, the US made a complaint<\/a> against Indian government support of the Jawaharlal Nehru National Solar Mission, alleging that its domestic content requirements violate the SCM Agreement (in addition to the GATT and TRIMs Agreements).\u00a0 If consultations between the parties fail to resolve that dispute, then it may be heard by a dispute settlement panel.\u00a0 Although it has not yet made a formal complaint, in April 2013 India raised concerns about US support of renewable energy producers.\u00a0 In particular, it has questioned<\/a> whether schemes adopted by Connecticut, Delaware, Massachusetts and Minnesota are consistent with the SCM Agreement and the TRIMs Agreement.<\/p>\n","protected":false},"excerpt":{"rendered":"

On May 6, 2013, the Appellate Body of the World Trade Organization (WTO)\u2019s dispute settlement system held that Ontario\u2019s feed-in tariff (FIT) program to support renewable energy development was inconsistent with Canada\u2019s international trade obligations.\u00a0 The decision confirmed the conclusion reached by the dispute settlement panel which first ruled on the case in December 2012, […]<\/p>\n","protected":false},"author":837,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5680,5671,5669,5682],"tags":[6555,9388,9387,9385],"class_list":{"0":"post-2021","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-clean-energy","7":"category-international","8":"category-solar-power","9":"category-wind-power","10":"tag-canada","11":"tag-feed-in-tariff","12":"tag-fit","13":"tag-ontario","14":"czr-hentry"},"yoast_head":"\nWTO Appellate Body finds Ontario\u2019s renewable energy program violates international trade rules - 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