Renewables Trade Disputes Far From Over
BMI View: Canada has challenged a World Trade Organization dispute panel finding, which stated that local content requirements for renewable energy generation in the province of Ontario violate international trade rules. The decision, together with two investigations into Chinese solar products by the European Commission, corroborate our view that unresolved trade disputes between key markets will continue to be a prominent theme in the renewables segment in 2013; as governments attempt to shield domestic producers from intense competition.
In December 2012, a World Trade Organization ( WTO ) dispute panel established that local content requirements for renewable energy generation in the province of Ontario discriminated against companies in the EU and Japan, thus viol ating international trade rules . However, the finding left all parties involve d in the d ispute unsatisfied. On one side of the spectrum , the EU cross-appealed the panel finding that , whilst Ontario's Feed-in Tariff ( FIT ) programme was a subsidy under the Subsidies and Countervailing Measures (SCM) Agreement, it did not violate the agreement , because Japan and the EU failed to establish that the programme conferred a benefit to electricity producers.
On the other side, Canada's challenge to the panel ' s finding is based upon a government procuremen t argument. The country claims that u nder the government procurement exclusion of the General Agreem ent on Tariffs and Trade (GATT) , a country can exempt itself from GATT trade restrictions if the regulation or programme involves a government making purchases for its own needs and not for commercial resale. According to Canada, the resale of electricity through the FIT programme is not commercial in nature, thus challenging the panel ' s characterisat ion of the electricity market.
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