WTO hearing: Canada defends its FITs

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A three person dispute panel heard the opening arguments in the cases that were launched by Japan and the European Union on Ontario’s local content requirements in its feed-in tariff (FIT) scheme.The provision calls for suppliers to have a minimum level of equipment manufactured in Ontario – 60 percent for solar projects and 25 percent for wind.

The first part of the hearing took place this week on March 27 and 28, and was open to the public. The second part was a closed hearing. The main arguement brought forth by Japan and the EU was that Ontario’s FIT program unfairly discriminates against foreign renewable energy products with its domestic content clause.

"Through these measures, the Government of Ontario provides subsidies contingent upon the use of domestic over imported goods," said the Japanese delegation in its statement. "This … discriminatory measure is designed to promote the production of renewable energy generation equipment in Ontario rather than to promote the generation of renewable energy."

Canada argued that the FIT program was designed to make clean energy generation in Ontario affordable and thereby, the program is shielded from GATT (General Agreement on Tariffs and Trade) and TRIMS (Trade-Related Investment Measures) agreement provisions. The only WTO agreement that specifically addresses such governmental purchases is the plurilateral Government Procurement Agreement (GPA). Canada is a party to the GPA, while the Ontario Power Authority (OPA) – the agency that implements Ontario’s FIT programme – is not covered by Canada’s concessions in the plurilateral pact. As a result, Ontario is under no obligation to grant access to its energy procurement market. Japan and the EU have argued against this rebuttal.

A second oral hearing will be held after the parties submit their written rebuttals by the end of April. A public ruling is not expected before late October this year. More information can be found at the International Center for Trade and Sustainable Development’s website here.

Japan requested consultations with Canada with regards to the country’s domestic content requirements in September 2010. Japan had claimed that the measures seemed to affect the internal sale, offering for sale, purchase, transportation, distribution, or use of equipment for renewable energy generation facilities that accord less favorable treatment to imported equipment.

On August 11, 2011, the EU joined in and requested consultations with Canada as well. On August 25, the U.S. further requested to join in the consultations. Under the request of the EU, the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO), which makes decisions on trade dispute cases, established a panel in January this year.

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